Culture Matters: A Test of Rationality on Economic Growth

Asian Social Science; 2013; Vol. 9, No. 9; pages 287-300

14 Pages Posted: 5 Jul 2013 Last revised: 23 Jun 2014

See all articles by Joseph Forson

Joseph Forson

Ghana Institute of Management and Public Administration (GIMPA), School of Business

Jakkaphong Janrattanagul

Xiamen University - Wang Yanan Institute for Studies in Economics (WISE)

Emmanuel Carsamer

National Institute of Development Administration (NIDA)

Date Written: June 29, 2013

Abstract

There are widespread debates as to whether cultural values have a bearing on economic growth. Scholarly articles have actually had conflicting results with proponents arguing there is whiles opponents have thought otherwise. The aim of this paper is to verify the assertions made by these two schools of thought from the perspective of culture as a rationality component using an input-output growth model. We basically employed an approach that sought to define and aggregate cultural values under rationality indices: instrumental, affective, value and traditional rationality from 29 countries with data from world value survey (1981-2009). We systematically had them tested in an endogenous growth model alongside traditional economic variables. We conclude that when these cultural variables are combined with the so-called economic variables, there is an improvement in the model explanation than before. In addition, two of these cultural indices indicated a statistically positive effect on economic growth (instrumental and affective rationality). However, traditional rationality index was also robust but with a negative coefficient. Value rationality showed a somewhat weaker link to economic growth and was statistically insignificant. The policy implications of these findings are also discussed.

Keywords: Economic growth, Rationality, Cultural traits

JEL Classification: F43, O1

Suggested Citation

Forson, Joseph and Janrattanagul, Jakkaphong and Carsamer, Emmanuel, Culture Matters: A Test of Rationality on Economic Growth (June 29, 2013). Asian Social Science; 2013; Vol. 9, No. 9; pages 287-300 . Available at SSRN: https://ssrn.com/abstract=2287854

Joseph Forson (Contact Author)

Ghana Institute of Management and Public Administration (GIMPA), School of Business ( email )

P. O.BOX AH 50
Accra
Ghana
00233-202672680 (Phone)

HOME PAGE: http://www.gimpa.edu.gh/

Jakkaphong Janrattanagul

Xiamen University - Wang Yanan Institute for Studies in Economics (WISE) ( email )

A 307, Economics Building
Xiamen, Fujian 10246
China

Emmanuel Carsamer

National Institute of Development Administration (NIDA) ( email )

118 Seri Thai Road
Bangkok, 10240
Thailand

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