The "Culture" Question

One of the most longstanding and polemical debates among development specialists involves a very delicate topic: the impact of culture on a society’s economic performance. Many people look at the wealth of countries such as the U.S., Germany, Japan and Israel and conclude that their success is based on shared values of hard work and respect for rules and order. They compare these attitudes to the apparent chaos and laid-back attitudes of the populations in Greece, Italy, India and Brazil and argue that culture is the deterministic factor of these countries’ economic woes. Others dismiss such analysis off the bat, believing such attitudes to be ignorant and prejudiced and arguing instead that historical factors such as colonialism and past economic exploitation offer better explanations of modern discrepancies. I have spent much time carefully reflecting on this question during my stay here in Brazil, and would like to finally address the issue in this post.

The truth is that both of these extremes are somewhat incorrect. Both are overly simplistic ways to reach a quick conclusion without doing the difficult intellectual work of analyzing societies in depth to understand why different communities react to certain circumstances in different ways. Yet both perspectives do have important points to make, so I will analyze each in turn.

Culture absolutely matters. Anyone from a more developed country who spends time in a less developed one will quickly notice how clear cultural differences impact a society’s functioning on a daily basis. Whether it is respecting the rules of the road in traffic, arriving at meetings on time, reliably executing long-term planning, or organizing procedures in simple and efficient ways, there is a wide spectrum of behaviors and outcomes that vary across countries. This collection of norms and procedures is an important element of a society’s human capital (see previous post) and plays a large role in determining productivity. Those who reject outright the importance of culture are ignoring a key piece of the puzzle and thus fail to see a holistic picture of the development process.

Yet, although culture is clearly important, those who emphasize its impact while failing to elaborate (think Mitt Romney’s comments in Israel) also show a limited understanding of development. To really understand the impact of culture, it is necessary to dig deeper to understand the incentives in place in a certain society and how these incentives can evolve over time. While an outsider can look at a certain culture and dismiss it as inefficient or primitive, they will not truly be able to understand without spending extended time within that culture and witnessing the constant incentives reinforcing those same behaviors.

Let’s take two simple, easy-to-understand examples: driving in traffic and arriving to meetings on time. Out-of-control driving and habitual tardiness are common hallmarks of the developing world. In countries as diverse as Mexico, Nigeria, Egypt, India and Indonesia, Western visitors habitually complain about these two common behaviors. Yet spend some time in any of these countries and you will quickly learn to adjust. Rigidly following the “rules of the road” and extreme punctuality quickly prove futile in a society where no one else abides by such behaviors. People in these societies are not “uncivilized” and do not suffer from cultural failings: they are simply responding as rational actors within a given system, just as any human being would.

Furthermore, many in the West take our current culture for granted as “normal” without understanding its historical origins and evolution. When automobiles first became popular in the U.S., we did not all drive around in a calm and orderly fashion, stopping for pedestrians and politely taking turns at intersections. Historically in the U.S., driving was just as chaotic as it now is in much of the developing world. Similarly, we were not always as punctual as we are today. As we moved from rural, agrarian societies—where the lifestyle is less rushed and time is often measured by the position of the sun in the sky—to more fast-paced, dynamic urban communities, we over time became more strict regarding time management.

What, then, made us change? The answer is straightforward: incentives. Traffic laws and increasing enforcement changed behavior on the road, as people began to drive more cautiously to avoid punishment and such conduct became rooted over time as a cultural norm. Stricter expectations of punctuality and results-oriented work changed the dynamic in many business environments. Societies’ rules and governance, directed through public policy and business practices, can change over time and help culture to evolve. After all, culture is hardly static; the growing participation of women and minorities in the public arena and workforce in the U.S. serves as a useful testament to this fact. As former senator Daniel Patrick Moynihan famously quipped, “The central conservative truth is that it is culture, not politics, that determines the success of a society. The central liberal truth is that politics can change culture and save it from itself.”

A casual Western visitor to Brazil may complain that the local culture seems too laid-back or inefficient. Brazilians themselves are quick to voice this criticism of their society to outsiders: a former central bank chief recently said that the country could not develop more without first “changing the Brazilian people.” I do not subscribe to such a pessimistic outlook. I look at Brazil and see a country in the midst of a profound and rapid cultural transition. Just a generation ago, the majority of the country’s population consisted of subsistence farmers detached from much of industrial society. Now, the country is highly urban, with a rapidly growing middle class full of educated professionals far more integrated into the global economy. Norms and behaviors, as well as public policies, are changing quickly. As for driving culture, the growing use of speed cameras, traffic police, and sobriety checkpoints is beginning to change the rules of the road. I believe that this serves as an apt metaphor for the changing incentive structure of Brazilian society, and its ultimate impact on the country’s culture and productivity. While Brazilians may not share the traditional intensity associated with the German or Chinese public, there is little doubt in my mind that, by strengthening institutions and introducing sensible public policies and enforcement measures, they will continue to develop their society over the decades to come, and finally put to rest the idea of culture as the deterministic factor for success.