Individualism-Collectivism, Governance and Economic Development

Andreas Kyriacou

MPRA Paper from University Library of Munich, Germany

Abstract: While an individualist society prizes personal control, autonomy and individual accomplishments, a collectivist society puts a premium on loyalty and cohesion and imposes mutual obligations in the context of in-groups. It has been argued that individualism will promote economic development directly by sharpening individual incentives to invest, innovate and accumulate wealth. In this article, I argue that the individualist-collectivist dimension can also affect development through its impact on governance. The in-group favoritism inherent to collectivist societies is likely to engender corruption, nepotism and clientelism in the public sphere. In individualist societies, the relative weakness of in-group pressures and an emphasis on personal achievement and worth will contribute towards a more meritocratic and efficient public sector. My empirical evidence confirms the strong positive relationship between individualism and government quality. Moreover, I provide robust empirical evidence showing that the expected direct positive impact of individualism on economic development disappears when additionally controlling for governance, a finding which suggests that insofar as individualism affects development it does so because it promotes good governance.

Keywords: culture; individualism; collectivism; in-group favoritism; governance; economic development (search for similar items in EconPapers)
JEL-codes: D02 D73 E02 O43 Z10 (search for similar items in EconPapers)
Date: 2015-06-20
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Individualism–collectivism, governance and economic development (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:65151

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