Trust and economic growth: a robustness analysis

This paper analyses the robustness of results on the relationshipbetween growth and trust previously derived by Knack and Keefer(1997) and Zak and Knack (2001) along several dimensions, acknowledgingthe complexity of the concept of robustness. Our results showthat the Knack and Keefer results are only limitedly robust,whereas the results found by Zak and Knack are highly robustin terms of significance of the estimated coefficients and reasonablyrobust in terms of the estimated effect size. The improvementin robustness is caused by the inclusion of countries with relativelylow scores on trust (most notably, the Philippines and Peru).Overall, our results point at a relatively important role fortrust. However, the answer to the question how large this payoffactually is depends on the set of conditioning variables controlledfor in the regression analysis and—to an even larger extent—onthe underlying sample.