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The Influence of Cultural Values on Economic Growth: An Expanded Empirical Investigation

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Granato, Inglehart, and Leblang (1996a) conducted an analysis which showed that cultural values have a strong influence on long-term rates of economic growth and that a growth model without cultural values is underspecified. We conduct extensions 'to their work and find that culture appears to affect economic growth only in selected samples at different periods of time. Moreover, we find no evidence that cultural factors should be included as independent variables in growth regressions since cultural models do not encompass economic ones. We test the relationship between culture and growth more robustly by using a 3SLS model which addresses the problem of endogeneity. This model supports the finding that economic variables encompass those representing culture, and the reason for this is that the values that define the aggregate cultural variables changed over time. This indicates that such cultural variables captured phenomena that were related to long-term rates of economic growth in the original analysis but not in the expanded empirical analysis we conduct in this paper.

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