How are cultural dimensions and governance quality related to socioeconomic development?

Abstract

This study presents evidence about relations between national cultural dimensions, socioeconomic development and governance quality. Relations between Hofstede's dimensions, Schwartz cultural values, Worldwide Governance Indicators (WGI) and UNPD Human Development Index (HDI) were analysed by using correlations, multiple regression analysis, moderator and mediator analyses as well as path analyses. Correlation results showed that WGI, indulgence, harmony, affective and intellectual autonomy and egalitarianism were positively and power distance, embeddedness, and hierarchy negatively related to HDI. Regression analyses and moderation analyses showed that WGI moderated the relations between HDI and indulgence, embeddedness, intellectual autonomy and affective autonomy. In path models using structural equation modelling techniques, the effects of power distance and individualism on HDI were fully mediated by WGI whereas indulgence vs. restraint and long-term orientation had significant paths only to WGI. The effect of Schwarz's embeddedness dimension on HDI was partly mediated by WGI. In both models, WGI was strongly related to HDI. These results emphasize the importance of the quality of governance in socioeconomic development.