The Soft Stuff of Institutional Development

Abstract

What are the effects of culture on economic institutions? Many see an essential role for culture in institutional development. This paper systematically considers twelve dimensions of culture on two dimensions of economic institutions: liberal economic institutions and the building of large, effective states. Dimensions of culture adjacent to one another are shown to correlate differently with the two measures of institutions. This analysis is, in part, framed in terms of the debate regarding the relationship between migration, culture, and institutions, and it casts doubts on positions that these variables are as tightly or as consistently related as is at times portrayed.

Keywords: Economic Institutions, Culture, Social Capital, Social Trust, Deep Roots, Migration, Economic Freedom, State Economic Modernity, State Capacity

JEL Classification: O43, F22, Z13, D02