Culture And Economic Growth:Literature Review And Cross-Country Empirical Study

The following paper aims to analyze the causal relationship and the significance of cultural factors for recent economic growth. While including standard neo-classical growth model variables such as investment rates and a proxy for human capital, the impact of cultural variables like religion, language group, colonial history, Huntington typology, Hofstede’s dimensions, trust, ethnical fragmentation, institutions and the adherence to the socialist regime are investigated.Moreover, the following study conducts a broad literature review on previous works investigating the links between culture and economic outcomes. To obtain first insights, current GDP per capita, and growth data is linked to the investigated cultural indicators within descriptive and correlation analysis. Also, a framework for measuring and quantitatively grasping culture within economic study is provided.In the course of the regression analysis the cultural variables ethnic fragmentation, language group Slavic, religion Protestant, the institutional proxy government effectiveness, as well as Hofstede’s dimension uncertainty avoidance have found to be significant for building a good fit economic growth prediction model. These results are consistent with the previously reviewed theoretical fundament which is among others reflected in the corresponding vectoral direction of the coefficients. Thus, the hypothesis of culture having a multidimensional and significant impact on recent economic growth is supported.As such the paper provides some more insights into the relations between culture, measured by means of different concepts, and contributes therefore to the study of cultural economics.