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Which Type of Trust Matters?:Interpersonal vs. Institutional vs. Political Trust

Author

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  • In Do Hwang

    (Economic Research Institute, The Bank of Korea)

Abstract
Although an increasing number of studies demonstrate the importance of trust in economic growth, they only focus on interpersonal trust. This paper considers various types of trust including interpersonal trust (i.e., trust in people), institutional trust (e.g., trust in the fair administration of justice, or trust in the protection of property rights), and political trust (e.g., trust in government or political parties), and investigates their impacts on growth. Using novel cross-country survey data, this paper finds that institutional trust is most robustly related to the economic growth in a cross-section of 46 countries. This paper also shows that there is a causal relationship between institutional trust and growth using panel data from those 46 countries. Hence, in contrast with the previous trust literature which focuses on trust in "people" as a "time-invariant cultural feature," this paper stresses trust in "social system" as an "institutions- dependent feature."

Suggested Citation

  • In Do Hwang, 2017. "Which Type of Trust Matters?:Interpersonal vs. Institutional vs. Political Trust," Working Papers 2017-15, Economic Research Institute, Bank of Korea.
    • Handle: RePEc:bok:wpaper:1715
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    File URL: http://papers.bok.or.kr/RePEc_attach/wpaper/english/wp-2017-15.pdf
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    4. Pál Czeglédi, 2022. "Why does the confidence in companies, but not the confidence in the government, affect the demand for regulation differently across countries?," Public Choice, Springer, vol. 193(3), pages 211-231, December.

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    More about this item

    Keywords

    Institutions and economic growth; Trust; Social capital;
    All these keywords.

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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