Culture and Economic Development
Book Forum
About This Event

The continuing sharp disparities in economic progress, democratic stability, and social justice among nations--a decade after the fall of communism, and in the face of the global spread of democratic--capitalist policies and institutions---have raised anew the issue of cultural inheritance as a central factor in development. The significance of culture is energetically explored in a widely reviewed and debated new book, Culture Matters: How Values Shape Human Progress (Basic Books, 2000), edited by Lawrence E. Harrison and Samuel P. Huntington. This AEI Book Forum will begin with a presentation of the book’s essential arguments by its editors, followed by commentary by several development experts of varying perspectives and a general discussion. Copies of Culture Matters will be available for purchase.

Agenda

9:45 a.m.

Registration

10:00

Introduction:

Christopher DeMuth, AEI

Presentations:

Lawrence E. Harrison, Harvard University

Samuel P. Huntington, Harvard University

Comments:

Michael Novak, AEI

Nicholas Eberstadt, AEI

Frank Vogl, Vogl Communications and Transparency International

Noon

Adjournment

Event Summary

October 2000
Culture and Economic Development

The continuing sharp disparities in economic progress, democratic stability, and social justice among nations-a decade after the fall of communism, and in the face of the global spread of democratic-capitalist policies and institutions-have raised anew the issue of cultural inheritance as a central factor in development. The significance of culture is energetically explored in a widely reviewed and debated new book, Culture Matters: How Values Shape Human Progress (Basic Books, 2000), edited by Lawrence E. Harrison and Samuel P. Huntington. On October 12, AEI hosted a book forum featuring Culture Matters. The session began with a presentation of the book’s essential arguments by its editors, followed by commentary by several development experts of varying perspectives.

Samuel P. Huntington
Harvard University

Culture comprises the values, attitudes, and beliefs prevalent among people in a society. Human progress is the movement toward economic development, material well-being, and democracy. With regard to human progress today, culture does matter.

A comparison of South Korea and Ghana strikingly illustrates the effect of culture on development. In the 1960s, the two countries had almost identical economies. In the 1990s, however, South Korea emerged as an industrial giant with a GNP fifteen times as large as Ghana’s. Why? South Korean culture, which values hard work, discipline, thrift, and organization, is highly conducive to economic progress. In fact, the relative rates of progress among countries show a strict division along cultural lines.

When certain cultures raise obstacles to human progress, how can these cultures be altered to become more favorable? Obviously economic development can change a culture, but if the culture presents an obstacle to economic development, this is not possible. Severe traumas often alter cultures, as was the case for Germany and Japan, both of which became more pacifist after World War II. Religious conversion can also alter cultural values. The increase in Christianity in South Korea between the 1950s and the 1980s and the rise in evangelical Christianity in Latin America both contributed to cultural shifts. Finally, political movements and the actions of political leaders can greatly affect culture. The strong leadership of Lee Kuan Yew in Singapore has played a significant role in the country’s development, whereas the oppressive political leadership of North Korea has suppressed its culture and impeded its development.

Lawrence E. Harrison
Harvard University

Throughout the examination of the link between culture and progress, twelve primary differences between progress-prone and progress-resistant nations emerge:

Time orientation.

Progress-prone nations tend to focus on the future, whereas progress-resistant nations focus on the present and past.

General mindset.

Citizens of developed countries believe that they can influence their own destiny, while citizens of less developed countries tend to be more fatalistic.

Dissent.

In progress-prone countries, dissent is encouraged, while it is often discouraged and perceived as a threat in resistant countries.

Work and achievement.

Citizens of developed nations often "live to work," whereas those in less developed nations "work to live."

Competition.

Competition is viewed positively in progress-prone nations as leading to excellence. In progress-resistant nations, however, competition is often perceived as a threat to equality.

Frugality.

In developed and developing nations, frugality is the mother of investment, promoting prosperity and security. In less developed nations, again, it is perceived as a threat to equality.

Education.

In progress-prone nations education is indispensable for every citizen, whereas in progress-resistant countries education is reserved for the elite.

Advancement.

Merit plays a very important role in advancement in progress-prone countries, while family name and connections are more important in progress-resistant nations.

Community.

In less developed nations, community is circumscribed by the family, whereas community in more developed nations extends beyond the family into the broader society.

Justice.

The ethical code in progress-prone nations is quite rigorous, while the code in progress-resistant nations is often elastic.

Authority.

Authority in developed countries is dispersed horizontally and is checked and balanced, while it is much more centralized in less developed nations.

The relationship between church and state.

Religion plays a significant role in the government of progress-resistant nations, while progress-prone governments are more secularized (although the nations are not nonreligious).

By these criteria, culture explains the success of the West and much of East Asia (Japan, South Korea, Hong Kong, Taiwan, and Singapore). It also explains the success of some ethnic and religious groups, including East Asians and Jews in the United States. These criteria can also explain the failure of progress and prosperity in Africa and Latin America and the underachievement of some ethnic groups, including African Americans and Hispanics in the United States.

Some contributors to the book, however, do not agree that culture is the key factor affecting development. Jeffrey Sachs, for example, sees geography as the fundamental determinant of progress. Indeed, poor countries are often in the tropics while rich countries are in more temperate areas. Several countries defy this theory, however. Argentina and Australia, Russia and Canada, and Costa Rica and Nicaragua each have similar geographies and starkly different levels of development. Richard Shweder believes that progress is a Western imposition and that countries should be more concerned with institutions of their own choice rather than their level of progress by Western standards. Another dissent comes from Nathan Glazer, who sees the issue of culture as too sensitive to pursue because certain cultures might be considered undesirable.

Nicholas Eberstadt
American Enterprise Institute

A general assumption in culture and development study is that rule of law is a precondition of economic growth. Rule of law decreases transaction costs and reduces uncertainty, thus promoting economic development. Much of East Asia, for example, is lawless. The few areas that are ruled by law generally enjoy greater development than the other lawless countries. China, however, is largely lawless but has had considerable economic progress over the last forty years. How?

The answer may have to do with the Chinese value guanxi, akin to special personal relationships and social networks. Guanxi implies reciprocal obligation; a moral stigma is attached to those who fail to reciprocate. It is the cultural approximation of contract law and has been culturally favorable for economic development. Unfortunately, guanxi is personalistic and particular, and unless the Chinese can embrace universal guanxi, progress in the global economy may be limited.

Frank Vogl
Vogl Communications and Transparency International

The way that countries ought to progress is belied by what actually happens. Although many people believe that corruption varies along cultural lines and that Western, developed nations are the least corrupt, this is an overgeneralization. Most measures of corruption are based on the number of bribe-takers. Bribe-payers, however, should be considered as well. Many "developed" countries, including Sweden, Australia, Canada, and Austria, are likely to pay bribes in order to increase their exports.

Do elites, presumably those responsible for corruption, act because of a cultural imperative? Why is it acceptable to pay bribes but not to accept bribes? What aspect of culture leads to reform that curbs corruption? With respect to corruption, does culture matter?

Michael Novak
American Enterprise Institute

Several factors must be studied further in order to get a complete picture of the relationship between culture and development.

Each culture has habits that have been internalized by the members. We must think through the underlying habits that we take for granted to determine how they fit in to our morals and culture.

Many principles, insights, axioms, and ideas are necessary to understand how freedom works, including truth, liberty, private property, and creativity. These principles must be fully understood in our culture and others.

The role of "cult" in culture deserves some study. Religion is not peculiarly fixed but is very adaptable. The Catholic Church, for example, has been incarnated in a number of different cultures in the world, in many different ways.

The conclusion that culture does affect development may discourage young Latin Americans and Africans-why bother attempting development in a progress-resistant culture? Instead, we must examine sources of cultural renewal.

Cultural entropy causes nations to hit high moments and then decline. It is difficult to pass culture on for three or four generations. How will development be affected when a culture takes a new direction? How will culture matter in the future?

Research Assistant Lisa Howie prepared this summary.

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