Apostu Roxana-Georgiana

Grupa 350, Seria A, An III

Facultatea de Business i
Turism
Academia de Studii Economice din
Bucureti

The
influence
To most of us, culture means something like a society`s traditions, its values, norms and
of
beliefs. Culture also refers to artistic activity, its products and the historical heritage of a society.
culture
In addition,
most of us would agree that culture is linked to the collective identity of
communities
and, asthe
such, refers to differences between societies. Combining all these facts
over
together, a definition can pe concieved: culture represents those behavioural and ideational
economy
structures that are deemed essential to the constructed identity of a community.
Culture affects economic activity through the choices that people make about how to
allocate scarce resources. In other terms, while culture may be a fundamental determinant of
economic activity, it acts through proximate factors like (but not exclusive to) the accumulation
of capital, the adoption of technology, or labor market participation decisions.
Within modern economics, culture has largely been defined as opposite to the economics,
but this fact does not mean that it is impossible to add culture to economics. The opposition
allows culture to be seen as entirely exogenous to the economic area. The economic model of
behaviour is an example of how culture can be an exogenous factor. This model can be
summarized as follows: an individual actor having certain preferences is confronted with a
scarcity of means and decides upon an outcome on the basis of the confrontation of these two. In
the orthodox neoclasical version, such a decision is purely economically rational. Given this
model, culture can enter as an exogenous factor in three ways. First, it can enter as a source of
preferences which means that individuals put together a set of preferences that are followed in
choosing their economical activity. Second, it can enter as a source of scarcity: constraints. As a
culture develops, it forms also different rules and tradition that are ought to be respected by the
individuals. Third, it can enter as deviations from the model, that is, culture explains those
outcomes that have come about in ways other than the economic model suggests.
Max Weber, the German social scientist writing in the early 20th century, offered more
specific insights into how cultural or even religious values could impact on economic output. He

argued that the Protestant work ethic, supported by Reformation teachings that the pursuit of
wealth was a duty, inculcated the virtues needed for maximum economic productivity. For this
reason, Protestants were more productive than Catholics throughout Europe for example
Germany and Great Britain, for instance, compared to Ireland, Spain, Portugal and Italy in his
day.
Some other papers were developed in order to determine if Weber was wrong with his
assumption. For example, in the paper of Becker and Woessmann, Was Weber Wrong?, the
two authors suggest that the Protestants were actually more economically developed than
Catholics because of Martin Luther`s translation of the Bible, individuals were able to increase
their literacy rate in such a way that could be used with economic purposes in their further
development.
Why do some countries do very well, while others fail to develop, even when all the
requisite economic factors seem to be in place? How the repeated failures of African nations can
be explained, even when aid is given in great supply, to develop their economy?
Most development economists might explain these inequalities by appealing to the list of
conditions that must be met for an economy to develop. Good governance is seen as a
prerequisite of development: the political system should be stable; laws must be clearly enforced
so that contractual agreements will be honored; and government officials should not be corrupt
or inefficient. Moreover, land should be available at a fair rate for business opportunities; foreign
investment should be encouraged; and the bureaucratic procedures for applying for a business
permit should not be too onerous.
The first writer to propose a cultural explanation for underdevelopment was the political
scientist Edward Banfield in his 1958 volume The Moral Basis of a Backward Society. He
attributes the slow economic growth in southern Italy to the excessive pursuit of narrow selfinterest by people who have never learned to trust anything outside their family.
In an even more recent book, The Wealth and Poverty of Nations, David Landes
concludes that the success of national economies is driven by cultural factors more than anything
else. Thrift, hard work, tenacity, honesty and tolerance are the cultural factors that make all the

Apostu Roxana-Georgiana
Grupa 350, Seria A, An III
Facultatea de Business i
Turism
Academia de Studii Economice din
Bucureti difference, he suggests. In his view, Max Weber was right after all in suggesting that social

attitudes and values have the decisive say on what economies will succeed and which will fail.