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The Relationship Between Economic Growth and Culture: A Model Based on Japan and the United StatesLuria, Alia 01 January 2006 (has links)
This research examines the relationship between culture and economics, with an emphasis on the relationship between Japan and the United States. Previous attempts to link culture with economics have been unable to determine measurably which cultural characteristics correlate with economic growth. Culture is extremely hard to measure, and thus has not be frequently studied by economists. This research uses three different methods to try to determine the correlation between economic growth and culture. The first method applies specific data to a pre-existing cultural index model. There have been past attempts to create an index based on culture, but this index has many limitations. This paper will graph data illustrating differences between Japan and the United States based on this index. The practicality of a cultural index and its applications to specific nations is questioned and shown to be of little value in correlating the cultural differences between Japan and the United States to economic growth. The second method attempts to determine whether the relative difference in economic openness between Japan and the United States has any correlation with per capita GDP. Different levels of openness can be linked to cultural reasons. It can be preliminarily shown that a higher level of economic openness, such as that of the United States, is significantly, positively correlated with GDP per capita. While, in countries of lower economic openness, such as Japan, there is no correlation between variables chosen to approximate economic openness and per capita GDP. The final method employed considers a game theory model for bargaining that can be applied in a situation where a country with a low amount of economic openness bargains with a country that has a higher level of economic openness. The model shows that countries that are relatively open have a better bargaining position than closed economies, because such countries have payout alternatives. These outside options place economically open countries into a position of increased bargaining power. These three methods take different approaches to the problem, but none of them provide specific, measurable effects of culture on economic growth, although the regression analysis testing economic openness against per capita GDP provides useful results that can be expanded with further research.
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