The impact of trust on reforms

Type Journal Article - Journal of Economic Policy Reform
Title The impact of trust on reforms
Volume 11
Issue 3
Publication (Day/Month/Year) 2008
Page numbers 173-185
In a constantly changing economic environment, a country's ability to undertake institutional reforms is crucial to maintain economic growth and to promote the welfare of its citizens. A wide range of determinants for institutional reforms have been identified. However, the impact of trust on reforms has not been fully addressed. We provide theoretical arguments why trust should influence institutional changes and test the relationship empirically. We find a significant positive relation between trust and the success of reforms with regard to government size, the legal system, and deregulation of private businesses and the labor market. Other policy fields are ambiguous.

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