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November 7, 2012

Trust Boosts GDP

Trust Boosts GDP

How building trust is a crucial element of growth in your country.

The other thing that is worth mentioning, (see our first article, How Trust in the Global Workplace needs a Third-Cultural Space) with the imminent arrival of Stephen Covey for Leading at the Speed of Trust on November 8th in Dubai is that trust has proven to be a significant factor in predicting the growth of GDP from an economic research point of view.

If societies have a high level of trust, then information starts flowing automatically, ideas flow, knowledge is shared, and cash moves from lenders to borrows.

Trust is at the root of the current global situation: the banks don't trust the public, the public doesn't trust the banks. Author and financial advisor John Mauldin says, “Things like LIBOR are structured with a very real potential for manipulation. When the facts come out, there is just one more reason not to trust the system. And if there is no trust, there is no system.”

There is a direct correlation along the lines that a 15% increase in trust means a yearly increase of 1% in bottom line. If you take that into an organizational, national, or regional level, those numbers can have a major impact.

Look at trust in the Arab spring: there isn't a lack of money in places like Libya, but money is not flowing because people don't trust each other. If trust goes up in a country, cash automatically starts flowing more smoothly. If trust is low in a region, trade between neighbors is directly influenced by that. If the trade at your doorstep is inhibited, it is harder to build trade bridges with countries further afield.

Trust is a significant item that needs to be addressed, and the more intercultural the environment is, the more challenging that becomes. That is why creating deep intercultural intelligence is so important.

Ed.: KnowledgeWorkx is aware of studies that do not find a significant correlation between growth and trust, like this 2007 example. However, there are still later studies like this one from 2009 that continue to find a positive relationship between trust and growth. These papers raise intercultural topics of their own that may be informed by KnowledgeWorkx’s Three Colors of Worldview model.

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Last modified on Tuesday, 12 May 2015 19:19

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