Cultural values and economic resilience : an empirical analysis

Abstract

This research seeks to explore further the determinants of a nation’s economic resilience. The study sets out to go beyond the analysis of already recognised determinants by exploring possible cultural dimensions of economic resilience. The latest economic crisis in Europe is used as a context for testing the hypothesis that those nations with stronger work ethic values were more economically resilient. For this purpose, a Cultural Values Index incorporating four work ethic dimensions was constructed, and scores for this index were obtained for 43 European countries using data from the 2008 European Values Study (EVS). To test the study’s hypothesis, the average annual ‘recovery growth’ manifested by the 43 European countries over the period 2008-2013 was regressed using the Ordinary Least Squares (OLS) method on the Cultural Values Index and other required control variables. The results suggest that cultural values did indeed have a significant effect on countries’ economic resilience to the last crisis. A major implication associated with this finding is that policymakers seeking to enhance their nation’s economic resilience need to look at both economic and cultural aspects of economic resilience. The findings support the theory that there is a dynamic two-way interactive relationship between cultural values and economic performance – a relationship that has, and can be expected to continue shaping economic and social conditions.