An Investigation of the Effects of Trust on the Economic Growth of Iran's Provinces: A Spatial Econometrics Approach

Social capital has increasingly attracted the interests of the economists and there have been many studies on this subject and its influence on economic performance.The concept of social capital consists of elements such as network, norms and trust. The present study has examined the effect of trust, as one of the most important aspects of social capital, on the economic growth of Iran's provinces.In this paper, we review the definitions and concepts of trust. Then we review channels through which trust affects the economic growth. In the context of generalized neoclassical growth models, we introduce a model of the effect of trust on economic growth. In empirical examination we use the data on surveys of "Iranian’s Values and Judgments"," Iranian’s Cultural Behaviors", the data of Statistic Center of Iran and the Central Bank. On the basis of models of economic growth, we examine the effect of trust on the economic growth of Iran's provinces during the time period 2000-2003 (1379-82).The empirical findings indicate that trust has a positive effect on the economic growth.