Economic Development And Cultural Values Shift

In the recent three decades, some emerging economic are undergoing rapid economic growth and quick globalization process; it is also challenging political stability and the transformation of industrial structure for states. In the present, some questions arise:why some nations can’t fulfill modern economic development, and what engender large gaps in the outcome respond to modern economic development among the countries of the world? In this quest to explain the big difference across countries is not only from economic determinants, but also come from non-economic determinants. Among the non-economic determinants, culture have been found to matter for economic development, yet the research found that it is not important role for inherited social norms as an aspect of culture to play in the interpretation of notable gaps across countries, it is deeply rooted from the selection of thinking mode, namely, cultural values orientation. Therefore, it has important theoretical and practical significance to do the research regarding on the linkage between economic development and cultural values shift.This research has done a review of literature in terms of theories of economic development and cultural values shift, and explore the linkage between them with reference to earlier studies. Based on this point, I did empirical research about the relationship between them for short run and long run, and will examine four main hypotheses concerning the link between economic development and cultural values shift. This study approaches the questions using investigating data from World Values Servey (WVS) and European Vlaues Survey (EVS) for40selected countries over5time waves of1989-2012. It extracts14representative variables among hundreds of proxies to shape3key quantitative dimensions of cultural values (acceptance and trust values, democracy and fairness values, identity and respect values) applying principal component analysis and factor analysis after merging volume of WVS and EVS. Furthermore, the result of cultural values shows that the40sample countries can be divided into four groups refer to the result of cluster analysis, namely emerging economies, long-established capitalist countries, transition economies from socialism to capitalism, the group of countries hit by crisis. However, it demonstrates the convergences of cultural values by groups don’t follow a consistent pattern at any of5distinct stages.This study examines the causal linkage between basic four factors of economic development (economic growth index, globalization index, political stability index, industrial structure upgrading index) and three defined dimensions of cross-cultural values shift using Granger causality test of VAR model for short term. The empirical highlights there exists4kinds of causality patterns between economic development and cultural values shift. In the first case, it is bi-directional causal effects between the two variables in each system, higher economic growth, more identify and respect on the others; Likewise, more recongnization and respect to new residents, immigrants or foreigners and so forth, the country will absorb more business and investment from outsides to foster economic growth; at the same time, if higher a national acceptance and trust to others, and higher the degree of democracy and fairness in a nation, foreign direct investment, overseas students and foreign employees would be gotten more equal opportunities in host countries, which would boost force of globalization, vice versa. In the second case, economic development casue their cultural values shift, economic growth and industrial structure upgrading engender democracy and fairness values shift faster, and help improve more acceptance and trust to others; political stability and globalization also facilitate the better identity and respect between states; in contrast, the result also indicates how cultural values shift promotes economic development. The extent of a national democracy and fairness get higher, the state would tend to political stability; and improvement of overall cultural values helps to enhance the trend of globalization; additionally, more identity and respect between people will benefit industrial structure upgrading. Nevertheless, the causal effect between political stability and acceptance/trust values is insignificant.This study further test whether cultural values change under economic development by adding controlled variables of education and urbanization for country-level by employing panel data model for long term, based on the robustness checks, the regression result indicate that, as a whole, most variables (economic growth indicator, globalization index, and political stability indicator) of economic development are positively significant corrlated with overall cultural values shift, whereas, the effect of industrial structure upgrading on cultural values shift is negative and significant. However, the detailed sub-dimensions of cultural values are considered in the model, the result altered on some variables, the significant correlation are vanishing between economic development and democracy/fairness values for long run, and the effect of economic growth and globalization process on values shift of acceptance and trust are insignificant in a long term. These findings suggest that effectively improving education of acceptance and trust, democracy and fairness to reduce the cost of frictions is crucial in the context of modern economic development.Synergetic development between economic development and cultural values shift will be the ultimate goal of social peace and stability. This thesis analyzes the evolution process between cultural values shift and economic development through setting up coupling model, coupling coordination model and synergetic development equation, and to test the synergetic effect between cultural values shift and economic development. Overall, the outcome presents that the synergetic development hasn’t happened between them for most selected countries in the short term, since their speed of cultural values shift and that of economic development haven’t achieved synergism span the five time periods, yet they reach dynamic equilibrium in some high-welfare states and big governments during certain time stage. Thus it may be necessary to derive different policy recommendations for different groups rather than formulating a policy to apply all countries, and proposed policy should take into account different stages of development for sample nations to approach synergetic effect in both sides for long run.This study also reveals main findings as follows:(1) it initially discusses the linkage between economic development and cultural values shift from theoretical and empirical aspects;(2) it is the first time to examine the causal effect between economic development and cultural values shift using the panel Granger causality test for short term;(3) it is first mentioned to employ panel data model to do regression analysis between economic development and cultural values shift for long term;(4) this study finds that the communication cost is higher between people in service sector than that in first and second industry sectors between human and materials, which will restrain the speed of cultural values shift;(5) synergetic development theory is the first time to apply in the research of linkage between economic development and cultural values shift for groups of countries through setting up coupling model,coupling coordination model and synergetic development equation, and to estimate the dynamic coordination extent between two compound systems from1989to2012. In future, more variables of economic development will be introduced to the model for accelerating effective dynamic synergism between them.