Culture, Institutions and Financial Development

When culture and institutions coevolve, which means that these are changing simultaneously and in the same direction, financial development is facilitated. In contrast, when institutions and the cultural background deviate from this development, their asynchronous and different direction changes may lead to a series of failed attempts to implement a modernized financial development framework. Thus, the purpose of the paper is to highlight whether the institutional and cultural backgrounds operate in a complementary or substitute way in terms of their role in financial development. An unbalanced panel dataset comprising 98 countries over the last four decades (1981-2019) is used. The empirical results indicate that both the institutional background and the cultural background positively affect financial development. Furthermore, there is a complementary relationship between the institutional background and the cultural background in terms of their role in financial development; when both sizes are at a strong level, this leads to the highest level of financial development, while when at least one or both are at a weak level, the financial development is lower. Moreover, the interaction term of the two sizes has a positive and statistically significant effect on financial development in all tests performed. Lastly, the institutional background seems to have a greater impact on the formation of the level of financial development in relation to the cultural background. To upgrade the financial development of their economies, policymakers have to realize economic policies that change the institutional background and simultaneously change the cultural background in the same direction

Entrepreneurial Creativity and Growth

The concept of creativity is multidimensional, helping to take advantage of entrepreneurial opportunities and favoring in this way economic growth. Next to this basic argument of neoclassical theory, which ignores the role of entrepreneurship in growth, the present chapter states that entrepreneurship should be included as a contributing factor of growth. Through this key argument, this chapter attempts to clarify the importance of creativity to entrepreneurial activity, concentrating on the factors that influence entrepreneurial creativity that in turn lead to economic growth, as well as to capture the way in which entrepreneurial creativity is affected by this procedure. These factors are knowledge and education, the management of disrupting technologies, spill-over creativity, the role of cultural background and personal characteristics of individuals, the motives and incentives of individuals, the existence of—and access to—resources, and the institutions that delineate the environment of action of the entrepreneur

Why Coevolution of Culture and Institutions Matters for Economic Development and Growth?

Theoretical considerations that choose to make reference to the institutional and cultural considerations presuppose that these are in an optimal form. However, this is not the case in the real world. This chapter argues that the coevolution requirements of institutional and culture change are critical for economic outcomes. When institutions and culture coevolve in an optimal pattern, economic development and growth are facilitated. In contrast, when institutions and culture deviate from the optimal pace of coevolution, incompatible alterations of institutions and culture may end up causing an inability of the policy designers to implement the required changes in institutions and/or cultural behaviors. The result can be a series of failing attempts to implement a modernized progrowth framework of institutional settings and cultural behaviors. Using a dataset of 80 countries for the period 1981–2019, the analysis concludes that institutions and culture are complements—and not substitutes—in terms of their role in economic development, as when both sizes are strong it leads to higher levels of GDP per capita. When either or both of them are at a weak level, economic development is much lower

The Dual Pillars of Progress: Institutional and Cultural Dynamics in Economic Development

This study examines the critical interplay between institutional and cultural backgrounds and their collective impact on economic development, suggesting that their synchronized evolution—timing, pace, and direction—boosts economic development, while misalignment hinders it. It seeks to determine if these backgrounds complement or substitute each other in fostering economic development. The analysis employs an unbalanced panel dataset encompassing 113 countries across four decades (1980–2019) through a fixed-effects model enhanced by robustness checks (adding control variables, using alternative analysis methods, and applying adjustment criteria). The analysis uncovers a synergistic relationship between institutional and cultural backgrounds in which each element reinforces the other’s impact on economic development. Countries with robust institutional and cultural backgrounds exhibit the highest levels of economic development, whereas those with weaker backgrounds experience diminished economic progress. This study further reveals that the influence of institutional background on economic development is more pronounced than that of cultural background. However, this effect is significantly amplified when both institutional and cultural backgrounds are considered. Considering these insights, this study recommends that effective development strategies prioritize simultaneously nurturing institutional and cultural backgrounds. This approach is essential for crafting a successful and comprehensive development roadmap

Examining the Interplay of Climate Change, Cultural Dynamics, and Sustainable Development: A Global Perspective

This study undertakes a comprehensive multi-country analysis to investigate the intricate relationships among climate change, cultural dynamics, and sustainable development. Leveraging a robust, unbalanced panel dataset that encompasses one hundred and eight countries or regions over nearly four decades (1981–2019), this study employs fixed-effects estimation techniques to mitigate the impact of time-invariant heterogeneity across observational units. Structural equation modeling (SEM) is also employed as an advanced analytical tool to explore complex causal pathways and latent variables. Conducted in Stata, this multifaceted approach allows us to delve into the causal interconnections between climate change indicators, various cultural attributes, and indices of sustainable development. The findings reveal a negative influence of climate change on cultural background formation, which in turn impacts sustainable development. On the other hand, it is found that cultural background contributes positively to sustainable development. This suggests integrating cultural considerations into climate change adaptation, mitigation strategies, and sustainable development interventions. These strategies account for diverse societal values and behaviors, facilitating more effective climate change mitigation and adaptation. This study contributes to the growing research on the interplay between climate change and sustainable development by emphasizing a culturally informed policy framework. Its findings stand to inform national and international policymaking and enrich the discourse surrounding the creative economy’s role in promoting sustainable development in the face of climate change