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TopLiterature Review: Culture And Economic Development
The Nobel laureate economist Amartya Sen has lamented that social scientists have often commented on the tendency of economists to pay inadequate attention to culture in investigating the operating of societies in general and the process of development in particular (Sen, 2004). Economists have been reluctant to rely on culture as a possible determinant of economic phenomena as the notion of culture is so broad and so vague that it is difficult to design testable hypotheses. A narrower definition of culture that allowed for a simpler methodology was developed to test cultural-based definitions (Guiso, Sapienza, and Zingales, 2006). Subsequently, numerous attempts were made to empirically identify the effects on culture and to answer the question, ‘does culture matter and, if so, how much?’ (Palgrave, 2008).
Fukuyama (2001) posited that there is a cultural dimension to economic behavior and that cultural factors affect economic development in four ways: through its impact on organization and function; through attitudes towards consumption and work; through the ability to create and manage institutions; and through the creation of social networks. Papamarcos and Watson (2006) empirically examined the role of culture in encouraging or discouraging country-level economic performance. They found that, when it comes to economic growth, not all cultures are created equal.
The finding has been that cultural values and attitudes have a direct effect on economic development. Johnson and Lenartowicz (1998) found a significant relationship between measures of culture, economic freedom, and economic growth. Williamson and Mather (2011) found that culture and economic freedom are both independently important for economic prosperity. In an Asia specific empirical study on cultural values and economic growth, Khan, Zhang, Hashmi and Bashir (2010) created a model which incorporates both cultural and economic variable and were able to measure the impact of certain cultural factors on economic growths of selected Asian countries.
A research study Route Mapping Culture and Development (Vincent, 2005) found that cultural activities were widespread in development. But despite 350 examples from five development agencies over two years, the research found limited explicit policy on cultural issues. The study found a lack of consistency in implementing projects, little understanding of how cultural processes work, and few examples of appropriate evaluation. Four aspects of the use of culture in development were identified: