DEMOCRATIC STATES, SOCIAL CAPITAL/ TRUST, AND NATIONAL DEVELOPMENT *

Transcription

1 INTERNATIONAL REVIEW OF MODERN SOCIOLOGY VOLUME 41, NUMBER 1, SPRING 2015 DEMOCRATIC STATES, SOCIAL CAPITAL/ TRUST, AND NATIONAL DEVELOPMENT * Max Kashefi EASTERN ILLINOIS UNIVERSITY The theory of social capital or trust has been frequently used by social scientists to explain national development during the last decades. To overcome the limitations of the economic indicators of national development, especially Gross Domestic Product (GDP) per capita, the advocates of social capital/trust have reexamined the social fabric of developed and developing nations and elaborated social capital/trust as a major indicator of national development. According to the experts, societies that foster social capital and robust relations of trust are also the nations that can afford greater freedoms, deal with more contingencies, tap the energy and ingenuity of its citizens, and provide a greater sense of existential security and satisfaction (Warren 1999). Using the World Value Survey and other data, this study explores and explains the role of a democratic state on national development through social capital and/or trust. More specifically, the study proposes and substantiates that the democratic states, by adapting and enforcing the principles of democracy, such as membership and activism in voluntary associations, separations of powers, and transparency, invest in social capital and thereby boost national development. During the last several decades, social scientists have frequently applied the theory of social capital in general and social or generalized/general trust in particular (hereafter social capital/ trust) to explain a variety of subjects, from criminology (e.g. Rose and Clean 1998; Wittrock 2006; May 2008) to national development, which is related to the current study (e.g. Fukuyama 1995 and 2001; Oorschot, Arts, Gelissen 2006; Portes and Landolt 2000). The recent literature notes that the theory is gaining the status of a social * I am grateful to Dr. Gary Foster for his reading of an early draft of this paper and his helpful editorial comments. Any and all problems remain mine. Direct all correspondence to Max Kashefi, emeritus professor of sociology, Department of Sociology, Eastern Illinois University; Charleston IL,

2 30 INTERNATIONAL REVIEW OF MODERN SOCIOLOGY paradigm and evolving to be potentially promising and a highly attractive explanatory concept in the branches of the social sciences. Fulkerson and Thompson (2008), reported that social capital is a theory in transition to becoming a paradigm that has some unique qualities (p. 539). Their study reveals a total of 178,714 social capital articles published only in sociology journals from 1988 to With such an extensive application of the theory and its propositions within various social sciences to explain diverse psychological, political, and economic issues, it is normal to witness a diversity of definitions and forms. For example, one can identify two popular overlapping forms of social capital social capital as an individual resource, which provides opportunities from microlevel institutionalized social relationships for an individual (Bourdieu 1983; Coleman 1990), and social capital as a normative entity or structural resource in macro-level social structure and/ or culture (Putnam 1995 and 2000; Fukuyama 1995). The former, by employing concepts such as bounded rationality and reciprocity transaction, has a close association with symbolic interactionist theory; the latter, social capital as a normative entity or structural resource, stands on Durkheim s and Weber s rational-utilitarian tradition (Portes and Landolt 2000: 553). Analyzing social capital in Africa, Worldemariam identifies two components of social capital as cognitive (values, attitudes, and beliefs) and structural (roles, rules, procedures) in nature, which are not mutually exclusive but dynamically interrelated (2009:87). Another tension or disagreement among the proponents, which is the focus of this study, arises from the role that the state plays in the development of social capital; whether the state institutions play a positive role in the development of social capital/trust or it is the by-product of other actions and/ or cultural characteristic. Fukuyama, for example, putting emphasis on the economic, social, and political functions of social capital on national development, diminishes the role of a state in creating social capital and trust. He says that states do not have obvious levers for creating many forms of social capital Social capital is frequently a product of religion, tradition, shared historical experience, and other factors that lie outside the control of any government (2001:17). However, he still believes that a state can play some positive roles in the development of social capital through encouraging voluntary associations, investing in public education, and/or protecting

3 DEMOCRATIC STATES, SOCIAL CAPITAL/TRUST, AND NATIONAL DEVELOPMENT 31 property rights (1995 and 2001). Others, such as Putnam, generally under-estimate or distrust the role of the state in the development of social capital/trust. Comparing and analyzing social capital in Italy, Putnam argues that the state is one of the primary suspects responsible for the decline of social capital (1993: 281). On the other hand, most recent studies, such as Herreros and Criado (2008) or Robbins (2011), have reported that the state institutions can positively affect the development of social capital/trust through fighting corruption, protecting property rights, having independent judiciary systems, and enhancing government efficiency. Reviewing the studies related to the role of states on social trust, Robbins categorized them as political-instrumental perspectives, contending that institutions of the state play positive and significant impacts on the development of social trust while the crowding out perspective rejects the positive role for the state institutions (2011: 305). To some extent, the disagreements about the role of states on social capital/ trust are rooted in the debates of culture (social norms and values) or structure (socio-political institutions) playing the ultimate role in shaping public attitudes and behaviors. 1 Regardless of the diversity and disagreements on the theories, concepts, and functions of social capital/trust, they have recently made significant theoretical and substantive contributions in various scientific disciplines, such as sociology, political science, and economies, to explain individual or collective attitudes and behaviors, either normative or deviant (Fukuyama 1995; Fulkerson and Thompson 2008; Lin and Erickson 2008; Portes 1998; Warren 1999). This study, like some previous research, explores the role of a state in investing and maintaining social capital and trust. Yet, unlike most previous studies, its focus examines the role of a state on national development via social capital and generalized trust. Using measures mostly used in previous studies, it offers social capital/ trust as a major structural resource through which a democratic state can contribute to various dimensions of national development, including GDP per capita, previously used but challenged by some social scientists. Finally, it challenges a positive or negative role for the state; rather, it argues to substantiate that the role of a state on investing or maintaining social capital/trust depends on the nature of the state. More specifically, the more a state is structured, based on the principles of socio-political democracy, the more likelihood of a positive role for

4 32 INTERNATIONAL REVIEW OF MODERN SOCIOLOGY the state while a higher degree of autocracy, suppressing voluntary associations, lack of transparency and accountability, and so on, the more likely the state undermines the development of social capital/ trust and thereby blocks national development. The next two sections address the theoretical bases disclosing how the nature of a democratic state affects social capital and generalized trust and thereby boosts national development. The Significance of Social Capital/Trust in National Development The scholarly interests in the role of social capital in national development stems from the limitations of an exclusively economic approach toward the achievement of the basic developmental goals: sustained growth, equality, and democracy (Portes and Landolt 2000: 529). To overcome the GDP per capita limitations, social scientists have offered and extensively used social capital or other aggregated measures to explain national development or underdevelopment (Fukuyama 1999; Warren 1999; Portes and Landolt 2000; Lin 2001; Herreros 2004; Oorschot et.al., 2006; Herreros and Criado 2008). Young and Lindstrom (2009), for example, suggesting social capital as an alternative measure of national development, remark countries with high levels of social capital achievement are more economically prosperous and provide a higher quality of life for those who live in them. Countries with low levels of social capital are more prone to poverty; and more severe economic, political, and social inequalities (p.1). 2 They developed an aggregated measure of social capital based on fourteen different socio-economic factors, including GDP Per Capita, which is more reliable than merely an economic measure. Higher levels of GDP per capita in nations, while their social and political structures do not guarantee the civilians social and political rights, is a poor measure of national development. The World Bank Development Report confirms that studies on social capital are already demonstrating its potential impact on local economic development, on the provision of local public goods, and on the performance of public agencies (1997:114). 3 Covering national development and its link to social capital, Portes and Landolt (2000) assert that nations maintain different forms of capital that are fungible, that is, can be traded for each other, and such trades are required for their reinvestment and for their national development.

5 DEMOCRATIC STATES, SOCIAL CAPITAL/TRUST, AND NATIONAL DEVELOPMENT 33 Like other forms of capital, social capital is a major national treasure that facilitates national development and makes the achievement of certain national goals possible; but unlike financial capital, it is not a property, but a national resource accessible to all citizens. Fukuyama (1995) argues that social capital at the national level is the cement of a society, means it facilitates a higher level of civic engagement and cooperation which are perquisite for higher levels of political and economic development. Oorschot et.al (2006) separate objective and subjective dimensions of social capital at the national level and argue that an objective or structural dimension generates a durable social network which is crucial for national development. On the other hand, its subjective dimension, i.e., generalized trust and trustworthiness, reduces the transaction costs and improve economic efficiency. Fedderke, De Kadt, and Luiz (1999) suggest that social capital facilitates cooperated actions for the citizens of a society and enables cooperative ventures that would otherwise be infeasible (p. 209). Szreter (2002) says that in a civil society, the measure of development should go beyond economic indicators and articulate the bridging and linking social capital into the equation in which the citizens have faith in their state and actively participate in social, political, and economic development. Portes and Landolt (2000), criticizing the orthodox measure of national development, note that market liberalization policy for national development leads to a Hobbesian problem of public order, instead of promoting growth with justice. They add, It is in this context that the notion of social capital has made its appearance, holding the promise of a ground-up alternate to the top-down policies promoted by international financial organizations (P. 530). Social trust, as a form or dimension of social capital, also has significant impacts on national development. It motivates and enables the citizens to participate actively in the social, economic, and political life of their nation, through more involvement in decision-making processes and less social isolation and alienation. Putnam (1993) asserts that trust lubricates cooperation which, in turn, promotes social and political participation. For Coleman (1988), social trust facilitates socio-political cooperation which is the major component of democracy and national development. Woldemariam, exploring the impacts of social trust on national development in

6 34 INTERNATIONAL REVIEW OF MODERN SOCIOLOGY African nations, suggested that in the absence of mutual or generalized trust, coupled with widespread perception of the illegitimacy of the state, it would be unrealistic to expect durable peace and effective mobilization of domestic and foreign capitals for the development and democratization (2009: xi). Warren (1999) says social trust is a set of features in social structure that promotes collective actions, reciprocity, and solidarity. We, as citizens of a nation, are inevitably in situations to trust, or find it desirable to trust, officials or people that we have no, or limited information about, since trust where it is warranted would allow us to optimize the ways in which we allocate our scare resources on the issues matter for national development (p. 4). Fukuyama (1999) explains that social trust reduces the transaction costs associated with formal coordination mechanisms like contracts, hierarchies, bureaucratic rules, and the like. He adds that it is possible to achieve coordination among a group of people with limited or no social trust, but this would presumably entail additional costs of monitoring, negotiating, and enforcing formal agreement (Pp. 3-4). Warren s remarks support Fukuyama s explanation: [A] society that fosters robust relations of trust is probably also a society that can afford fewer regulations and greater freedoms, deal with more contingencies, tap the energy and ingenuity of its citizen, limits the efficiencies of rule-based means of cooperation, and provide a greater sense of existential security and satisfaction (1999: 2). Thus, unlike GDP in which the emphasis is on top-down and individual assets, mainly ignoring inequality and ground-up civilian involvement, social capital and trust belong to a community and a nation. Putnam refers to this by using the stock of social capital possessed by a community and the consequent structural effects on national development. In this regard, social capital becomes a context within which not only economic prosperity or GDP per capita emerges, but also the principles of social democracy would be realized. Thus, following the arguments of the experts, a nation with a relatively higher GPD per capita does not necessarily reflect a developed society since it may ignore the socio-political dimensions of development. A simple comparison of the GDPs per capita for some nations clarifies the point. For example, according to the World Bank Report, the GDP per capita in Qatar ($89,736) was higher than the United States ($49,854), France ($42,522), or Germany ($44,315) in

7 DEMOCRATIC STATES, SOCIAL CAPITAL/TRUST, AND NATIONAL DEVELOPMENT , while their citizens, or the citizens of some Arab nations with relatively higher GDP per capita, don t enjoy their basic human and/ or citizenship rights (Amenity International Report 2012; Human Right Watch 2013). 4 Following previous discussions, the following hypothesis, reflecting the effects of social capital/trust on the indicators of national development, is proposed: Ha1: A higher level of social capital and trust in a nation (or bulk of nations) significantly increases the social, political, and economic indicators of national development. This hypothesis would be separately tested for each dimension of social capital/trust, such as degree of activism in voluntary associations, trustworthiness, trust in the state institutions, trust in generalized other, and so on (for further discussion, see the methodology section). The Roles of the Democratic States in Investing Social Capital/ Trust In modern societies, a democratic state and its institutions are consciously designed to plan and implement national development. To achieve the goals, one of their responsibilities is and should be investing, promoting, and maintaining social capital in general and social trust in particular since, as already covered, social capital and trust are the major factors affecting national development. Comparing the policies and especially the performance of the states as developed and under-developed nations clearly reveals that the state can be a major destroyer/barrier or investor/enforcer of social capital in different ways. For example, transparency and fighting corruption in developed nations not only make the state institutions (such as federal or local administration, judicial system, and so on) trustworthy, but also make them role models for private organizations and citizens. The corrupted governments ( elected dictatorship ) in Africa, Woldemariam (2009) reported, are one of the major reasons for the erosion of social capital and trust in those nations. Furthermore, the trustworthiness of a democratically-elected state attracts foreign investors, which are the foundation of development in a globalized economy (Fukuyama 1995 and 2001). Brewster and Center (1998) underline the role of the states on social trust and thereby on socio-economic development; if a state steps in and provides strong sponsorship of the corporations, either by forming and running the corporations or by support through government policy, the society can develop large corporations needed to compete in the world market (p. 4). Woolcock (2001),

8 36 INTERNATIONAL REVIEW OF MODERN SOCIOLOGY using the concept of linking social capital, underlines the role of the state on national development. The concept refers to the relationships among the parties who know they have unequal power to access major resources, but trusting each other and attempting to achieve mutually beneficial goals. Robbins (2011), using the World Value Survey and other data, tested the state-center models of generalized trust and concluded that the state institutions matter for the development of trust. As states become more effective at protecting rights they create more trusting societies. With ineffective and inefficient states trust is more difficult to establish (p. 334). Fukuyama (2001), while putting more emphasis on the role of culture, underlines the indirect role of the state in generating social capital through investing in education, which transfers social norms and values, such as the Hippocratic oath, which are safeguards against corruption; or, the state by efficiently providing necessary public good, particularly property rights and public safety, facilitates and raises social trust spontaneously (p.18). Herreros (2004) lists two major, but indirect, roles for the state in the development of social trust. The state is the guarantor of social agreements, by sanctioning those who do not honor trust placed in them and supporting voluntary associations through a welfare state, such as giving them grants, tax break, or assess to use of public premises. He substantiated the hypotheses by state efficiency measured by the degree of state corruption (Pp ). In another study Herreros and Criado (2008) support the preceding discussion with an important remark that our study shows that institutions clearly matter for social trust. Efficient states promote more trusting societies. However, the impact of institutions on social trust is not mechanical. It crucially depends on the degree of legitimacy of these institutions (p. 66, emphasis added). Thus, most social capital experts stress the role of a legitimate state, either directly and/or indirectly, on investing and maintaining social capital. The focus of this study, without denying the role of culture or indirect effect of a state, is the leading role of the modern democratic state on social capital/trust and thereby on national development. The assumption here is that the modern state institutions are structured to elevate social capital/trust and thereby improve national development. 5 The nature of such states not only enforces, but also invests in accumulation of social capital and trust.

9 DEMOCRATIC STATES, SOCIAL CAPITAL/TRUST, AND NATIONAL DEVELOPMENT 37 It demands and permeates public cooperation and collective responsibilities which are the foundation of social capital as an important instrument of national development. Portes and Landolt, analyzing the experience of social capital in Latin America, make a similar remark: When in a system, authorities and the population are imbued with a sense of collective responsibility and altruism; [as a democratic system], social capital and public trust emerge and the system will be better governed and its policy will be more effective (emphases are original, 2000: 536). Following the corresponding studies, some features of a democratic state that are significant on the development of social capital/trust are separation of powers, rule of law, transparency, government efficiency, and so on. Frist, the separation of powers, including independence of the judicial system and the media, enforces a check-and-balance system and establishes an institutionalized trust and accountability. In such systems, trust among the agents and between the agents and public increases while reducing the transaction costs, since the structure of the system encodes information that is, in principle, equally accessible to all parties in the society (Fedderke et al. 1999; Herreros 2004; Warren 1999). Under the rule of law, all the state agents, while having authority, are accountable for using their authority which, in turn, compels the office-holders to maintain a reputation of trustworthiness. The establishment of a democratic state entailed the establishment of laws characterized by neutrality and thereby public trust. The application of laws, at least formally if not always substantively, come to apply to everyone, which ends in public trust for the state institutions (Fedderke et al., 1999). Furthermore, transparency is grounded in the state rules for deliberations of information among the government agents from one hand, and between the agents and pubic from the other. According to Fedderke et al. (1999), such deliberations not only improve the certainty of outcomes for agents, but increase the likelihood of cooperation and trust among the agents and public. Finally, the efficiency which reflects the government rationality is embodied in formally codified rules and norms and values. It is mainly associated with the degree of and fighting against corruptions (p. 719).The government efficiency not only increases trustworthiness and makes the office-holders trusted, but also makes them the role model for

10 38 INTERNATIONAL REVIEW OF MODERN SOCIOLOGY the other organizations and institutions. The features of a democratic state, in turn, elevate the public trust and consequently reduce the transaction costs. The features not only are interrelated to each other, but also are the sources of social capital, generalized trust, and trustworthiness. Thus, it is expected that the measures of the major socio-political features of a democratic state significantly affect the degree of social capital and trust. The hypothesis Ha2 reflects the expected coefficients between measures of a democratic state and social capital/trust. Figure 1 also summarizes the preceding discussions and displays the direct and indirect (through social capital/trust) effects of a democratic state on national development. Ha2: The higher degrees of the measures of democratic state in a nation (or bulk of nations) significantly increases the social capital and trust, including trustworthiness, trust in the state institutions, trust in general others, and trust in mass media. Data and Methodology While the core concepts of the study are social capital and trust, two other concepts, democratic state and national development assemble the structure of the research. Limited consensus, however,

11 DEMOCRATIC STATES, SOCIAL CAPITAL/TRUST, AND NATIONAL DEVELOPMENT 39 exists among the experts on the definitions of social capital and trust, thereby affecting their measurements, and consequently data collection. This study intends to follow the definitions and measurements which best fit with the theoretical view adopted in the paper; that is, the democratic states play significant roles on investing and maintaining social capital/trust, which, in turn, affect national development. Therefore, in addition to social capital, four facets of trust, mostly used in previous studies, have been adopted trust between the citizens and the state institutions (the judicial system, parliament, and/or government), trustworthiness, trust in mass media, and trust in general others. Given the chosen concepts, no appropriate set of data, as a single source, was found to include all the variables needed for the study. Therefore, to substantiate the theoretical propositions, different sets of data have been used, combined, and analyzed. Two major sets of data are the 2005 World Value Survey (WVS) and the 2009 World Legatum Prosperity Index (WLPI).The former includes 82,992 cases from more than fifty nations, and the unit of analysis is an individual citizen. The data include appropriate questions measuring social capital, membership and activism in voluntary associations, generalized trust, trustworthiness, and trust in some socio-political institutions. The data also include some questions to operationalize the characteristics of a democratic state. The data, however, lacks all the appropriate questions required to operationalize different aspects of the three major concepts. The WLPI data, on the other hand, include most of the measures for 110 different nations. Therefore, the unit of analyses here is a nation rather than an individual. The data, however, do not include all appropriate questions needed to measures social trust, especially the measure(s) of trustworthiness, or membership/activism in voluntary associations. Thus, both sets of data, with overlapping, but not the same measures of the concepts, have been used to test the hypotheses. Analyzing both data sets provide opportunities to compare and confirm the findings obtained from two data sources with two different units of analysis. Other sources of data have been also used/combined and analyzed to measure some of the other concepts, such as the degree of transparency collected from International Transparency data, or Gross Domestic Product (GDP) per capita collected from International Monitory Fund. Finally, some variables, especially in 2009 World Legatum

12 40 INTERNATIONAL REVIEW OF MODERN SOCIOLOGY Prosperity Index data, have negative values. They are recoded or recomputed to make the interpretation easier. For example, the measures of Rule of Law, State efficiency or Entrepreneurship opportunity have been recalculated to make the lowest values zero and eliminate their negative values. Measurement and Methodology: The World Value Survey (WVS) is the first data source used to operationalize the major concepts, including social capital and trust, democratic state, and national development. Social capital is operationalized by the sum of active membership in ten different voluntary associations. The answers for each one of ten questions related to membership was coded as: 2=active member, 1=passive member and 0=not a member (Appendix 1 shows the names of voluntary associations). To select appropriate questions measuring democratic state or national development, several factor analyses have been conducted with oblique rotations, assumes the set of questions used for measuring a concept are correlated. Three questions were selected to measure a democratic state, degree of democracy, respect on human rights, and transparency with the highest loading (á e 0.603); four questions have been chosen to operationalize the level of development, degrees of freedom, feeling of happiness, feeling healthy, and life satisfaction with the highest loading (á e 0.605). Furthermore, several questions measuring different aspects of social trust were selected, including confidence on three state institutions, trust in mass media, general or social trust, and the degree of trustworthiness. Finally, following the previous studies, the respondents education, income, and gender are included in the regression analyses as the control variables; additionally, to control the direct effect of a democratic state on the measures of national development, a cumulative state measure was calculated and included in the regression analyses. Using the World Legatum Prosperity Index (WLPI) data to test the hypotheses, several appropriate questions, some similar to and some different from the WVS data, were selected to operationalize the three major concepts. Here again several new factor analyses have been conducted. For example, ten questions measuring the dimensions of a democratic state were selected and subjected to an exploratory factor analysis with oblique rotation. Four variables, separation of powers, rule of law,

13 DEMOCRATIC STATES, SOCIAL CAPITAL/TRUST, AND NATIONAL DEVELOPMENT 41 transparency, and government efficiency, showing the highest loadings (α 0.781), were selected and recoded in a way that the highest value reflects the highest degrees of a democratic state (See Appendix 2 for more information). To measure the degree of social capital and trust, eleven variables were selected and subjected to a few other factor analyses, and four components were extracted with the highest loadings social capital (α 0.777), generalized trust (α 0.727), trust in two branches of the government (α 0.816), 6 and trust in general election. To measure the degree of national development, a few more factor analyses were conducted among several corresponding variables and the following four variables which have the highest loading (α 0.814) were selected -the entrepreneurship environment, safety and security index, health sub-index, and economic sub-index (Appendix 2; for more discussions see: Szreter and Woolclock 2004). Furthermore, a statistical discriminate analysis has been conducted to categorize the countries as developed, developing, and underdeveloped, based on the GDP per capita. As discussed, GDP per capita is not a strong measure of national development; however, the classification is simply used to compare the average measures of social capital, trustworthiness, generalized trust, and trust on social institutions, for each group of nations and compare them with the corresponding GDP averages for further illustration. Finally, structural analyses (the standardized regression coefficients) are chosen to calculate the coefficients; most of the tolerance statistics are relatively high, showing no multicollinearity (Allison 1999; Mertler and Vannatta 2005). 7 Findings Table 1 displays the descriptive statistics for the measures of three concepts of the study democratic state, social capital/ trust, and national development. Table 2 presents the standard regression coefficients (βs) between the measures of the democratic state and social capital/trust; and Table 3 shows the coefficients (βs) for the effects of social capital/trust on the measures of national development. The findings in Table 2 show that all three measures of the democratic state display positive and significant coefficients with the measure of social capital and with the four measures of social trust. The findings substantiate the hypotheses that the higher

14 42 INTERNATIONAL REVIEW OF MODERN SOCIOLOGY Table 1 Descriptive Statistics for the Measures of a Democratic State, Social Capital/ Trust, and National Development Using (WVS Data) Low High Standard- Values Means Deviation Democratic State Democracy Human-rights Transparency National Development General Freedom Life Satisfaction General Happiness General Health Social Capital/Trust Social Capital General Trust Trust 3 Institutions Trust in Mass Media Trustworthiness N= 28,933 Table 2 Standard Regression Coefficients (βs) Between the Measures of a Democratic State with the Measures of Social Capital and Generalized Trust (WVS Data) Y1 Y2 Y3 Y4 Y5 Measures of the state Democracy 0.037*** 0.039*** 0.047*** 0.238*** 0.127*** Human Right 0.149*** 0.130*** 0.031** 0.275*** 0.189*** Transparency 0.062*** 0.174*** 0.032*** 0.074*** 0.199*** Control Variables Income 0.056*** 0.066*** 0.029** 0.043*** 0.040** Education 0.093*** 0.066*** 0.021*** 0.083*** 0.066*** Gender 0.040*** ** R-squared 0.053*** 0.086*** 0.088*** 0.197*** 0.097*** N 26,825 45,243 41,103 44,225 45,241 Y1: Social Capital (activism in voluntary associations) Y2: General Trust Y3: Trustworthiness Y4: Trust in three branches of the state Y5: Trust in mass media

15 DEMOCRATIC STATES, SOCIAL CAPITAL/TRUST, AND NATIONAL DEVELOPMENT 43 Table 3 Standard Regression Coefficients (βs) Between the Measures of Social Capital/Trust with the measures of National Development (WVS Data) Y1 Y2 Y3 Y4 Social Capital and Trust Social Capital 0.073*** 0.130*** 0.068*** 0.089*** General Trust 0.071*** 0.049*** 0.091*** 0.077*** Trust the State 0.054*** 0.073*** 0.080*** 0.086*** Trust in Mass Media 0.021* * 0.016* Trustworthiness 0.034*** *** Control Variables State (Direct effect) 0.142*** 0.130*** 0.083*** 0.103*** Income 0.072*** 0.166*** 0.028** 0.164*** Education 0.055*** 0.056** 0.202*** 0.037*** Gender *** 0.028** ** R-squared 0.169*** 0.103*** 0.111*** 0.094*** N 10,875 10,907 10,942 10,861 * 0.05 ** 0.01 *** Y1: General Freedom of respondents in their nation. Y2: General happiness of the respondents. Y3: Feeling of healthy. Y4: Life satisfaction of the respondents. level of democracy, respect of human rights, and the state transparency, as the measures of the democratic state in a nation (or bulk of nations), significantly increase the average social capital, generalized trust, trust in mass media, trust in three state institutions, and trustworthiness. Gender s negative coefficient with trustworthiness indicates that females are relatively more trustworthy than males. Finally, the findings in Table 3 support that active memberships in voluntary associations (social capital), generalized trust, trust in the institutions, trust in mass media, and trustworthiness have significant and positive effects on the four measures of national development, that is, general freedom, general happiness, feeling healthy, and life satisfaction. All the coefficients remain statistically significant when the direct effect of state on national development, the respondent income, education, and gender are controlled. The coefficients mostly substantiate the subset of the first hypothesis

16 44 INTERNATIONAL REVIEW OF MODERN SOCIOLOGY that a higher level of social capita/trust in a nation (or bulk of nations) significantly increases the social, political, and economic indicators of national development. The only exceptions are the role of trustworthiness on the feeling of happiness and the feeling healthy, which are not significant. The coefficient of trust in mass media with the feeling of happiness is not significant too, which can be the subject of further study. 8 Among the control variables, the direct effect of a democratic state on national development is strong and significant at the 99.9% level of confidence, suggesting that the states by adopting the principles of democracy, in fact, invest in national development. The respondent education and income display significant and positive coefficients with all the measures of national development. More education and income elevate public feeling of health, happiness, freedom, and life satisfaction. Finally, gender displays significant coefficients with all three measures of national development. However, its coefficients with life satisfaction and feeling of happiness are negative, suggesting that women display relatively more happiness and life satisfaction compared to males. Overall, the findings from World Value Survey are consistent with the hypotheses derived from the theoretical discussion that a state with higher degrees of democracy, respect of human rights, and transparency significantly improve socio-economic dimensions of national development not only directly, but also through investing and maintaining social capital/trust. Findings (WLPI Data): Table 4 presents some descriptive statistics for the four measures of the democratic state; three measures of social capital/trust, and the measures of national development including GDP per capita. Table 5, on the other hand, presents the average measures of the three concepts for the underdeveloped, developing, and developed nations, based on GDP per capita. The table clearly indicates that the average measures of the democratic state for the developed nations (25.09, 3.28, 6.82, 7.50) are significantly higher than the corresponding averages for the developing (16.76, 1.87, 4.13, 4.14) and for the underdeveloped (9.42, 1.20, 2.82, 2.86) ones. The same measures for the developing nations are significantly higher than the corresponding averages for the underdeveloped ones. On the other hand, as expected, the average general trust and trust of institutions for the developed

17 DEMOCRATIC STATES, SOCIAL CAPITAL/TRUST, AND NATIONAL DEVELOPMENT 45 nations ( and ) are significantly higher than the corresponding averages for the developing ( and ) and underdeveloped ( and ) ones. However and unexpectedly, the average general trust and trust of institutions for the underdeveloped nations ( and ) are significantly higher than the same averages for the developing ones ( and ). Further analysis of data reveals that this is mainly caused by classification of some southern Asian countries as underdeveloped nations, based on their GDP per capita, while they indicate relatively higher levels of social trust. For example, China, with $4,990 GDP per capita in 2009, was categorized as an underdeveloped nation, while it displays much higher averages on general trust and trust of institutions (523.0 and ), which are within the developed and the developing nations. As already discussed, such a higher degree of trust in China and some other South Asian countries are mainly attributed to their cultural background (Fukuyama 2009 and Fedderke et al. 1999). Finally, the average measures for national Table 4 Descriptive Statistics for the Measures of Government, Social Capital/Trust and Development (WLPI Data) Mini. Maxi. Mean Std. D. Government Separation of powers Rule of law Government Sub-Index Transparency Social Capital & Trust Social Capital Generalized trust Trust in Institutions Trust in Elections National Development Economic Sub-Index Health and Safety Personal Freedom Entrepreneurship Other Variables GDP Education State (Cumulative)

18 46 INTERNATIONAL REVIEW OF MODERN SOCIOLOGY development (economic sub-index, health and safety, personal freedom, and entrepreneurship) for the developed nations (10.45, 13.78, 7.36, and 6.33) are significantly higher than the developing (8.69, 9.82, 5.32, and 4.05) and underdeveloped nations (7.17, 6.43, 4.03, and 2.20). Overall, the findings in Table 5 are consistent with the notion that the socio-political measures of national development, along with GDP per capita, provide a more robust indicator for national development. Finally, Table 6 displays the coefficients (βs) for the measure of a democratic state with the four measures of social capital/trust (top panel) and the coefficients of social capital/trust with the measures of national development, including GDP per capita (the second panel). The findings in the top panel reveal significant coefficients between the four measures of a democratic state with the measures of social capital/trust. The states with higher levels of rule of law, transparency and the government sub-index (efficiency) reveal significant and positive coefficients with all measures of social capital and trust. Among the four measures of a democratic state, the separation of power is the weakest explanatory factor. While it displays a significant coefficient with the measure of social capital (0.277**), its coefficients with the three measures of trust are not statistically significant. On the other hand, the government subindex, reflecting government efficiency and accountability, and transparency are the strongest explanatory factors, showing significant coefficients with all the measures of social capital and trust. 9 The second panel in Table 6 displays the coefficients between the four measures of social capital/trust with the measures of national development, including GDP per capita while the direct effects of the state on the measures of national development are controlled. Unlike the findings of WVS data, some of the coefficients here are not statistically significant, but the significant ones are consistent with the WVS findings. The measures of social capital/ trust display significant coefficients with most of the socio-economic measures of national development, including GDP per capita; suggesting that social capital and trust significantly improve the GPD per capita level, supporting Portes and Landolt s (2000) assertion that different forms of capital are fungible, that is, can be traded for each other, which are required for national development. Like

19 DEMOCRATIC STATES, SOCIAL CAPITAL/TRUST, AND NATIONAL DEVELOPMENT 47 Table 5 The Means for the Measures of Developed, Developing & Underdeveloped Nations (WLPI Data) Under- Developing Developed F-score Sig.* developed Measures of the State Separation of powers Rule of law Government Sub-Index Transparency Measures: Social Capital & Trust Social Capital Generalized Trust Trust in Institutions Trust in Election Measures of National Development Economic Sub-Index Health and Safety Personal Freedom Entrepreneurship Education GDP * Sig. = : Significance at 99.9% of confidence. Table 6 Standard Regression Coefficients (βs) among the Measures of a State, Social Capital, and Development (WLPI Data) State with Social Capital/Trust Y1 Y2 Y3 Y4 Separation of powers 0.277** Rule of laws 0.483*** 0.422*** 0.211* 0.128* Gov. Sub-Index 0.559*** 0.585*** 0.449*** 0.690*** Transparency 0.542*** 0.431*** 0.462*** 0.539*** Social Capital/Trust with Development Y5 Y6 Y7 Y8 Y9 Social Capital 0.282*** 0.543*** ** 0.131*** Trust Institutions 0.116*** 0.197*** General trust 0.263*** 0.191* * Trust in Election ** 0.075* State (Cum.) 0.667*** 0.404*** 0.366*** 0.702*** 0.493*** Education 0.207*** 0.422*** 0.575*** *** * 0.05 ** 0.01 *** Y1: Social capital Y2. Trust in institutions Y3. General trust Y4. Trust in Election Y5. GDP per Capita Y6: Economic Sub-Index Y7: Health and Safety Y8: Personal Freedom Y9: Entrepreneurship

20 48 INTERNATIONAL REVIEW OF MODERN SOCIOLOGY the findings of the WVS data, the direct effect of the state is strong and highly significant, meaning that the democratic states not only makes indirect investment in national development, through social capital/trust, but also its characteristics directly and significantly affect the social, political, and economic dimensions of national development. Finally, the positive and significant coefficients of the state measures with the measure of entrepreneurship support the proposition that a democratic state both directly and indirectly, through social capital and trust, expand the opportunities for entrepreneurship and attract foreign investors which are the foundation of national development in this globalized economy (Fukuyama 2001). Summary and Conclusion This study has been conducted to substantiate one major proposition related to the role of a state in national development; that is, the performance of the state results in social capital and trust, which are major national resources, thereby breeding national development. Three key concepts, the democratic state, social capital/trust, and national development have been measured by various indicators using World Value Survey and the World Legatum Prosperity Index data. The study rested on several assumptions; despite the reactionary struggles in authoritarian nations, the trend of sociopolitical changes in the international community is toward establishing more democratic states since they invest, directly or indirectly, in national development. Second, social capital and/or trust are not merely cultural or religious products ( altruistic or moralistic social capital); rather they are consciously and rationally designed by a democratic state since they are national resources. Finally, it is not enough to measure national development merely by GDP per capita since it excludes social and political dimensions of national development. The findings have substantiated the propositions that modern states, by following the principles of democracy such as rule of law, separation of powers, transparency, and so on, invest and promote social capital/trust, thereby contribute national development. The findings are significant, not only theoretically but substantively for policy makers who are committed to their national development. However, some limitations of the study need to be

21 DEMOCRATIC STATES, SOCIAL CAPITAL/TRUST, AND NATIONAL DEVELOPMENT 49 clarified. The available sources of data have limited the selection of the measures of the main concepts, that is, democratic state, social capital/trust, and national development. The concepts could be operationalized by other variables not included in this study, such as the state policy on reducing inequality (social democracy) as a major state characteristic that significantly develops social capital and trust (Cox 2002; Robbins 2011). Or, the measures of national development could be variables not included in these data, such as reducing the crime rate which is significantly affected by the levels of social capital and general trust (Rose and Clear 1998; May 2008). Second, the data and thereby the statistical analyses are crosssectional which are suitable only for statistical correlations, not causeeffect mechanisms. Further studies with longitudinal data, along with statistical time-series analyses, can provide more appropriate results regarding the causal relationship among the measures of the three concepts. Furthermore, case studies in which the socio-political structure of a society has been transformed from authoritarian to a democratic state, or vice versa, would be a more appropriate context to explore the direction of causality. Finally, the findings do not mean that social capital and trust are solely responsible for national development or, conversely, underdevelopment merely results from the absence of social capital and trust. Rather, the main purpose of the study was to underline the points that social capital and trust are gaining the status of a major explanatory factor in national development, not because of culture or religion, but because of expanding democracy in international community. The democratic states are growing since they reflect, and attempt to satisfy, the major human and civilian rights, which, in turn, generate social capital and general trust as major national resources. Endnotes 1. The proposition that the nature of modern states evokes social capital and trust undermines the role of culture and bring up the broader context of culture versus structure. Wilson (2010), analyzing racial inequality in the United States, argues that conservatives tend to emphasize cultural factors, while liberals pay more attention to structural conditions structural conditions provide the context within which the cultural responses are developed (p. 23 and 61). Kashefi (2010), emphasizing the dynamic nature of cultures in modern societies due to globalized new technologies, expresses that the time unit of cultural change is getting shorter, structural change of one generation can become the culture of a newer generation in the globalized dynamic societies. Thus, the

22 50 INTERNATIONAL REVIEW OF MODERN SOCIOLOGY development of social capital/trust in modern societies is moving toward more structural rather than cultural explanations. Furthermore, the nature of the democratic states, such as separation of powers, rule of law, transparency, accountability, and so on, itself depends on and, in turn, produces social capital and public trust. Finally, the efficiency of modern states, as previous studies reveal (e.g., Fedderke et al. 1999; Herreros 2004), depends on generalized trust and trustworthiness of the people and state officials. 2. Young and Lindstrom (2009) ranked 199 countries based on an aggregated measure of 14 social, political, and economic issues, including GDP per capita. See: file:///c:/users/mkashefi/downloads/2009%20social%20capital%20 Achievement.pdf 3. The World Bank Development Report 1997 (P. 114). For further information on the concepts, measurements, and critiques of social capital, see: go.worldbank.org/x17rx35l00 4. This, however, does not mean that social capital is the optimal measure of national development. In some South Asian countries, while socio-political rights are suppressed social capital is relatively high because of their culture. For example, social capital in China (5.83 out of 10) is higher than France (5.12). Such a higher level of social capital in China or a few other South Asian countries is mainly related to their culture, not to their socio-political structure (Fukuyama 1995). 5. In this context, social capital and trust are national resources and, like the other forms of capital, belong to a nation. Portes and Landolt call it instrumental social capital, distinguished from altruistic social capital (2009: 534). Furthermore, this type of social capital is a structural rather than cultural feature of a society; that is, it is the function of a consciously designed structure of the democratic states. 6. WLPI data does not include a question measuring the degree of confidence on the parliament; thus the measure is only sum of the trust on the judicial system and the executive branch. 7. According to Mertler and Vannatta (2005), the Tolerance level of more than 0.1 reflects no multicollinearity; all the Tolerance level using the WVS data were 0.40 or higher. However, the Tolerance levels using the WLPI data revealed multicollinerarity between two measures of the state ( rule of law and the separation of powers ). To solve the problem and calculate the corresponding coefficients, the variables were not included in the same regression equation; rather two separate multiple regression equations, each one included one of the variables, conducted separately to calculate the coefficients (Allison, 1999). 8. Trustworthiness is logically correlated with national development (Portes and Landolt 2000). Its statistically significant coefficient can be an indirect one, which is a subject for a further study. 9. Some of the non-significant coefficients, including the separation of powers in the WLPI data, can be the result of small cases (only 110 nations). Further studies including more nations may change the non-significant coefficients to significant ones.