Culture and Growth

In: Business and Management

Submitted By 2009011527
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C 2010 The Authors. Bulletin of Economic Research C 2010 Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research. Published by Blackwell Publishing, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main St., Malden, MA 02148, USA.

Bulletin of Economic Research 64:4, 2012, 0307-3378 DOI: 10.1111/j.1467-8586.2010.00364.x

CULTURE AND GROWTH: SOME EMPIRICAL EVIDENCE
Dustin Chambers and Susan Hamer Department of Economics and Finance, Salisbury University, Salisbury, USA

ABSTRACT
Using Hofstede’s cultural data set, this paper examines the impact of cultural characteristics on a nation’s economic performance. Using a two-step estimation procedure, we first estimate a panel growth regression and obtain estimates of each nation’s fixed effects, which reflect idiosyncratic differences in growth performance. In the second step, we regress the fixed effects on invariant cultural and institutional variables. Our estimation results suggest that individuality and tolerance for uncertainty are the most important cultural factors in explaining nation-specific growth performance. Furthermore, our findings suggest that political and property rights play a major role in determining idiosyncratic growth. Keywords: culture, economic growth, freedom, property rights JEL classification numbers: C23, O1

I. INTRODUCTION

Using several measures of culture, we seek to determine the effect of culture on a nation’s economic performance. Among the cultural characteristics that we examine, individuality and uncertainty avoidance are found to be the most important in predicting economic growth that is not otherwise explained by economic fundamentals. Moreover, we discover that these cultural characteristics indirectly influence growth by shaping the legal framework of the nations in our study. On an intuitive level, these findings are not particularly…...

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