ABSTRACT
Recent interdisciplinary work suggests that social capital, or the extent to which citizens are willing to cooperate with each other on the basis of interpersonal trust, plays an important role in explaining both the efficiency of political institutions, and the economic performance of contemporary societies (Putnam 1993, 1995a; Fukuyama 1995; Coleman 1988, 1990). The mechanisms by which civic values influence socio-economic performance are several: if widespread levels of citizen trust exist in society, this serves to reduce transaction costs in the market economy, helps to minimize the deadweight burdens of enforcing and policing agreements, and holds down the diseconomies of fraud and theft. Thus, it can be argued that trust greatly facilitates economic and social relationships.
