Trust as an institutional factor of economic success

Abstract

Trust, as an important traditional informal institution of a society, has in recent decades come into focus of many social sciences and the economic science as well. Namely, trust is one of the key factors that determine the character of both human and social relations. There is a growing realization that, among other key factors of the market system effectiveness and efficiency, economic impacts are also determined by the appropriate level of trust that exists between economic actors. This paper analyzes the role of trust as a facilitating factor that enables a more successful development of economic activities in such an environment where economic actors deal with the problems of information asymmetry, incomplete contracts, an underdeveloped institutional framework, uncertainty etc. It is suggested that trust, both personal and institutional one, is a significant factor in economic success and development. At the same time, trust plays an important role in the successful implementation of a socio-economic transformation, which is especially relevant in transition countries.