Trust and Identity in a Small, Post-Socialist, Post-Crisis Society

58 Pages Posted: 20 Apr 2016

See all articles by Christian Bjornskov

Christian Bjornskov

Aarhus University

Zeljko Bogetic

World Bank

Arye L. Hillman

Bar-Ilan University - Department of Economics; Centre for Economic Policy Research (CEPR)

Milenko Popovic

Mediterranean University

Date Written: April 1, 2014


The principal focus in the substantial literature on impediments to economic development has been on the inadequacies of policies and governance. However, successful economic development requires effectiveness of markets and incentives for investment, which in turn require trust. This paper reports on trust in a development context. The paper uses trust experiments, a post-experiment survey, and econometric analysis relating trust to identity and other personal attributes in the setting of Montenegro, a small, recently-independent, post-socialist, post-crisis society. External validity was sought by providing sufficient material reward to balance identity-related expressive motives and by having two groups of subjects, one usual university students and another group that, while also students, was somewhat older and had had greater market or commercial experience. The paper reviews cultural priors that can be expected to affect trust and distinguishes between generalized trust that can be socially beneficial and particularized trust that can be disadvantageous for development. The empirical results suggest that trust among private individuals is not an impediment to development in Montenegro. As a result, policy reform can improve economic and social outcomes. However, the results redirect the focus to issues of governance and political entrenchment as potential explanations for impediments to development.

Keywords: Post Conflict Reconstruction, Social Capital, Political Economy, Ethics & Belief Systems, Business Ethics, Leadership and Values

Suggested Citation

Bjornskov, Christian and Bogetic, Zeljko and Hillman, Arye L. and Popovic, Milenko, Trust and Identity in a Small, Post-Socialist, Post-Crisis Society (April 1, 2014). World Bank Policy Research Working Paper No. 6828, Available at SSRN:

Christian Bjornskov (Contact Author)

Aarhus University

Nordre Ringgade 1
DK-8000 Aarhus C

Zeljko Bogetic

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Arye L. Hillman

Bar-Ilan University - Department of Economics ( email )

Ramat-Gan, 52900
+97 29 774 6424 (Phone)
+97 29 771 5628 (Fax)

Centre for Economic Policy Research (CEPR)

United Kingdom

Milenko Popovic

Mediterranean University

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