The relationship between Trust and Economic Growth

This dissertation examines the relationship between Trust in Government and Economic Development in 41 countries between 2010 and 2020. For this purpose, OLS and Random Effects (RE) models are estimated. The literature explains, together with other factors, that trust is a crucial aspect to define the behaviours of individuals, since in the daily life of each one there are different relationships between agents. When there is a breach of trust (distrust), whether between individuals (Interpersonal Trust), or trust in institutions such as the Government, Banks, Schools, among others (Institutional Trust), it will have repercussions on Economic Development. For this reason, this study analyses the assumption that the robust relationship between Trust in Government and Economic Growth depicts the well- working of institutions. The findings of this study, when examining two regressions (OLS and RE), shown that there is a positive and statistically relationship between Trust in Government and Economic Development, which means that when there is greater Trust in Government it is verifiable Economic Development. Although the notion of Trustworthiness is similar to Trust, since it is the condition of a person/ institution's capacity to be worthy of trust, does not verify the same results as it is observable in the case of Trust in Government. In the case of the relationship between Trustworthiness and Confidence with Economic Growth, there was not found any relationship since there was no statistical significance when both concepts were examined. Just as important, it was found that there are no differences in the results when the incomes of the countries are different, in this way, both the Middle Income countries and the High Income countries have as evidence that the higher levels of Trust in Government is associated with higher levels of Economic Development.