A Road to Trust
The authors explore the relationship between transaction costs and generalized trust. Using panel data from 2,100 households in 135 rural communities of the Philippines, the paper shows that where transaction costs are reduced (proxied by road cons...
| Main Authors: | , |
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| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2008/09/9813814/road-trust http://hdl.handle.net/10986/6772 |
| Summary: | The authors explore the relationship
between transaction costs and generalized trust. Using panel
data from 2,100 households in 135 rural communities of the
Philippines, the paper shows that where transaction costs
are reduced (proxied by road construction), there is an
increase in generalized trust. Consistent with the argument
that generalized trust is built through repeated
interactions, the authors find that the individuals most
likely to engage in exchange exhibit an increase in trust
after road construction. These results suggest that, rather
than being an input to economic growth, trust might be a
product of reduced transaction costs (which also favors growth). |
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