Effect of Trust on Economic Growth in Selected Countries with High and Low Levels of Corruption

In the last half century, the issues related to social capital, especially trust and its impact on the economic growth have been of particular importance. In this regard, the main purpose of this study is to investigate the effect of trust on the economic growth of selected groups with high and low corruption perception level over the period ۲۰۰۷-۲۰۲۰. We used the Trust Index from the World Value Survey. Then, the generalized method of moment (GMM) method was used for estimation. Gross domestic product, capital formation (at fixed price), human development index, consumer price index, innovation, labor force, economic freedom index, trade openness index, corruption, and democracy were the study variables. All explanatory variables were stationary; therefore, they had a long-run relationship with economic growth. Based on the results, trust had a positive and significant effect on economic growth in both groups of the countries. Due to the fact that trust changes and is affected by the environment, policies should be adopted to increase the level of trust in society. Some policies such as improving the transparency and integrity of institutions and also educational programs (the main emphasis should be placed on the joint work of students and strengthening cooperation between new generations) can increase social capital and, as a result, increasing public trust.

Keywords:

Trust , Corruption , Economic Growth , World Value Survey