There is a well established literature in economics (see e.g. the study by Stephen Knack and Philip Keefer ) which shows that country level trust increases economic performance, as measured by GDP growth. These studies measure country trust by the percentage of respondents from the World Values Survey who agree that "most people can be trusted"; the alternative being that one "need[s] to be very careful when dealing with people". When it comes to what drives country trust, the literature is somewhat less consistent. Broadly speaking however, country trust is negatively affected by income inequality, ethno-linguistic diversity and the importance of hierarchical religions. Contradicting the "trickle-down" wealth effect, this literature finds that income inequality is bad for economic wealth, via the decrease in country trust which in turn hurts economic growth. Ethno-linguistic diversity is normally measured by the probability that two randomly selec
I am a full professor at IE Business School in Madrid. In this blog, I discuss my research on corporate governance as well as topical issues on corporate governance and related issues.