Can Integrity Replace Institutions? Theory and Evidence
36 Pages Posted: 4 Aug 2009
Date Written: July 2009
Abstract
Institutions are important for proper economic performance, but are replaceable by trust or other social norms. We show that when proper institutions and trust are missing, integrity of the individuals can replace them. We construct a model of a transactions-based economy with contracts preceding the transactions, and show that any one of (1) institutions, (2) trust, or (3) integrity, foster economic growth. We construct data of economic performance of social groups in Lebanon, measure integrity and other values of these groups, and use this data and data from Kenya to support one of the model’s predictions. Policy implications are discussed.
Keywords: economic development, institutions, integrity, Lebanon, social norms, trust
JEL Classification: A13, C73, E19, O43, Z10
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
The Role of Social Capital in Financial Development
By Luigi Guiso, Paola Sapienza, ...
-
The Role of Social Capital in Financial Development
By Luigi Guiso, Paola Sapienza, ...
-
Does Culture Affect Economic Outcomes?
By Luigi Guiso, Paola Sapienza, ...
-
Does Culture Affect Economic Outcomes?
By Luigi Guiso, Paola Sapienza, ...
-
Does Culture Affect Economic Outcomes?
By Luigi Guiso, Paola Sapienza, ...
-
People's Opium? Religion and Economic Attitudes
By Luigi Guiso, Paola Sapienza, ...
-
People's Opium? Religion and Economic Attitudes
By Luigi Guiso, Paola Sapienza, ...
-
People's Opium? Religion and Economic Attitudes
By Luigi Guiso, Paola Sapienza, ...