Expanding thescope of analysis and assigning culture a significant role helped to explainthe power of development andunderdevelopment.
Culture isa very vast term; we need to describe it as specific as possible in order todetermine its effect on economic development. Relation between culture andeconomic dynamics has been discussed by various authors. MaxWeber, the German social scientist, concluded that religious values are clearexample of cultural differences which has impact on economic output. Culturehas also impact on behavior of people. Culture represents the behavior ofpeoples. Culture relates to economic developmentas capital, institutions and social capability.
Annual growth rate is basicallybased on basic factors of production and also on culture background as otherfactors. It uses a number of variables to express these effects, Culturalbackground variables are divided in two main groups: “Efficiency Orientation”and “Social Orientation” variables. “Efficiency Orientation” variables much affecteconomic growth, while “Social Orientation” changes are unpredicted.
Theresults confirm that cultural background has strong role and it’s positivelyaffects annual growth rates. “Social Orientation” has also positive power forannual growth rates .Whether directly or indirectly, culture influences theoutcome of economic process or activity. Culture may be considered as the sumof the values, and perceptions dominating a group of people. Culture understoodas a dimension of social capital growing literature considers social attitudes,such as trust, as one of the main determinants of current economic development.Economistsconsider trust as the first element of economic culture which might affect theeconomic outcome.
Trust is an essential factor for economic activity.Trust makes investors, policy makers and consumers willing to take part intransactions with each other, which rise the spending, investing whichultimately increase growth. Peoples work harder to achieve their goals Economic successor failure results from people actions. Inthis regard, trust and trustworthiness appear as the keystone for successfuleconomic development. A nation can’tignore culture as a factor of development .TheUnited States of America said to be where they are today as a result ofmanagement and development of their cultural values. So economistbelieve that culture has impact oneconomic development but how much itaffects economic development, is still a debate among the economists. Ifindividuals have higher levels of control, the overall economic developmentlevel raises in the economy.
Respect, also considered as the culturaldimension. The higher respect level encourage outsider to trade which leads tohigher economic development level. Culture plays a role in economicdevelopment. Cultural elements may not fully explain the whole relation, butthey are relevant.
Whether directly orindirectly, culture influences the outcome of economic process and culturalchange effects growth of economy.