Culture at the Center of Economic Development, Stability and Growth

Abstract

This paper stresses the importance of culture in understanding and, perhaps more accurately, predicting economic development. It’s intended to initiate, or re-initiate, the discussion of culture as the core of economic development, stability and growth. My interest in the discussion of the economy is from a behavioral perspective, taking behavior as an outcome of culture, a factor that remains neglected in most economic literature explaining or forecasting the economy. It seems to me that because the existent literature in economics remains incomplete in terms of culture, predicting the success or failure of any economic model, applied within different cultural settings, may be inaccurate. Hence, the fundamental assumption presented in this document is that different regions in the world develop different economic levels due to cultural differences. I take example in East Asia in general and China in particular to explain cultural factors that have contributed to the economic development in the region. The following discussion has been divided into five parts, as follows: First, an introduction to the main arguments. Second, a short discussion of the definition of culture developed by several scholars in the past. Elaborating on those earlier definitions, I propose a definition that may best suit the economic issue at hand. Third, a review of some of the most important economists and their key arguments, upon which I elaborate from a cultural perspective. Fourth, a discussion of East-Asian countries and China’s economic development from a cultural perspective. Fifth, my conclusions and a proposed model that includes culture as a factor in the decision-making process when choosing an economic strategy and its corresponding models.