Academic journal article Journal of Economics and Economic Education Research

Can Culture Explain Economic Growth? A Note on the Issues regarding Culture-Growth Studies

Academic journal article Journal of Economics and Economic Education Research

Can Culture Explain Economic Growth? A Note on the Issues regarding Culture-Growth Studies

Article excerpt

INTRODUCTION

Intuition will tell us that economic growth is affected by culture. History supports us in this as it shows how civilization with distinct culture was able to develop and grow economically. The ruins in Machu Picchu of Peru, Pyramids in Egypt, and the Angkor Wat in Cambodia are just but some evidence that we can see. In this modern age, we are again challenged to show this empirically using data rather than ruins. This is a challenge for most researchers and this paper summarizes the issues and provides some resolutions moving forward regarding this significant phenomenon.

LITERATURE REVIEW

Traditionally, literature presents culture and its different constructs and economic determinants of growth as separate and distinct. Political economists and political sociologists, even social psychologists, view their respective methodologies as mutually exclusive perhaps primarily due to the level of analysis employed by each and the underlying assumptions about human behavior. After all, culture is all about behavior and how it changes over time - on a collective basis. Additionally, there is the issue of inadequate measures of cultural factors because until these factors enter into a quantitative analysis, the hypothesis that it affects growth (or vice versa) cannot be tested.

Previously, studies attempting to establish the role of culture either infer culture from economic performance or estimate cultural factors from impressionistic historical evidence such as the obvious results of the industrialization and the Protestant Ethics to growth. We can see from history that all cultures of virtually all pre-industrial societies are hostile to social mobility and individual economic accumulation. These cultures are mostly influenced by religious beliefs. Both medieval Christianity and traditional Confucian culture stigmatized profit- making and entrepreneurship. Hence, there is some degree of hostility to social mobility and indirectly, growth. That may be the case until a Protestant version of Christianity played a key role in the rise of capitalism and much later, a modernized version of Confucian society which encourages economic growth through its support of education and achievement. As constructs, these are represented by values on thrift (which affects investment and savings), achievement motivation and post- materialism.

Motivational literature stresses the role of culture on economic achievement. It grows out naturally of Weber's Protestant Ethic thesis which gave rise to historical research by Tawney (1926, 1955), case studies by Harrison (1992), empirical work by McClelland et all (1953) and achievement motivation by McClelland (1961). In the 1970s, this was expanded by Inglehart (1971, 1977, 1990) by examining the shift from materialist to post-materialist value priorities which illustrate how culture can change and can thus explain a more dynamic phenomena called economic growth.

In the preceding arguments, culture is viewed as a system of basic common values that help shape the behavior of the people in a given society. This value system in most pre-industrial times takes the form of a religion and thus changes very slowly. But with industrialization and accompanying processes of modernization, these worldviews tend to become more secular, rational and open to change and thus dynamic and variable enough to be quantified.

VARIOUS CULTURAL MODELS

Extant literature shows that there are five important and significant models and concept of culture which are mostly cited in studies on culture and growth Kluckhohn and Strodtbeck (1961), Hofstede (1980, 1983, 1993), Rokeach (1960), Bond (1988) and Trompanaar (1993).

Model 1: Kluckhohn and Strodbeck

The work of Kluckhohn and Strodtbeck (KS)(1961) is one of the earliest cultural comparative models designed where they hypothesized that people of different cultures tend to have different orientations toward the world and people who are different from themselves. …

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