Trust and Prosperity: A Conditional Relationship

African Governance and Development Institute WP/13/024

17 Pages Posted: 10 Sep 2014

See all articles by Simplice Asongu

Simplice Asongu

African Governance and Development Institute

Oasis Kodila-Tedika

University of Kinshasa - Department of Economics

Date Written: May 8, 2013

Abstract

The paper extends Breggren et al. (2008, EE) on 'trust and growth: a shaky relationship' by incorporating recent developments in the trust-growth literature and using a robust methodological underpinning that accounts for the presence of outliers. The empirical evidence is based on 63 countries. Two main findings are established. Firstly, the substantially documented positive trust-growth nexus is broadly confirmed. Secondly, when initial levels of growth come into play in determining the relationship, only 0.25 and 0.90 quantiles confirm the positive nexus. The results suggest that the trust-growth nexus cannot be generalized for all countries as some previous studies have concluded. Accordingly, trust-growth policies should be contingent on existing levels of development and tailored differently across rich and poor countries.

Keywords: Trust; Growth; Conditional Effects

JEL Classification: A13; O40; Z13

Suggested Citation

Asongu, Simplice and Kodila-Tedika, Oasis, Trust and Prosperity: A Conditional Relationship (May 8, 2013). African Governance and Development Institute WP/13/024. Available at SSRN: https://ssrn.com/abstract=2493375 or http://dx.doi.org/10.2139/ssrn.2493375

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

Oasis Kodila-Tedika

University of Kinshasa - Department of Economics ( email )

Kinshasa
Democratic Republic of the Congo

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