Trust and Economic Growth

Economies in which people trust each other grow at lot faster than ones in which there's lots of mutual suspicion. That's the message of this new paper.
This finding is not new, and it accords with common sense. People who trust each other are more likely to invest in physical or human capital, more likely to engage in market for lemons transactions, more likely to exchange know-how, and more likely to invest in productive activity rather than rent-protection or extraction.
But until now, the link between trust and growth has been difficult to unravel...more>>