Introduction to Modern Economic Growth their North American neighbors are more prosperous thanks to their Anglo-Saxon culture A related argument, originating in anthropology, argues that societies may become “dysfunctional” because their cultural values and their system of beliefs not encourage cooperation An original and insightful version of this argument is developed in Banfield’s (1958) analysis of poverty in Southern Italy His ideas were later picked up and developed by Putnam (1993), who suggested the notion of “social capital,” as a stand-in for cultural attitudes that lead to cooperation and other “good outcomes” Many versions of these ideas are presented in one form or another in the economics literature as well Two challenges confront theories of economic growth based on culture The first is the difficulty of measuring culture While both Putnam himself and some economists have made some progress in measuring certain cultural characteristics with self-reported beliefs and attitudes in social surveys, simply stating that the North of Italy is rich because it has good social capital while the South is poor because it has poor social capital runs the risk of circularity The second difficulty confronting cultural explanations is for accounting for growth miracles, such as those of South Korea and Singapore As mentioned above, if some Asian cultural values are responsible for the successful growth experiences of these countries, it becomes difficult to explain why these Asian values did not lead to growth before Why these values not spur economic growth in North Korea? If Asian values are important for Chinese growth today, why did they not lead to a better economic performance under Mao’s dictatorship? Both of these challenges are, in principle, surmountable One may be able to develop models of culture, with better mapping to data, and also with an associated theory of when and how culture may change rapidly under certain circumstances, to allow stagnation to be followed by a growth miracle While possible in principle, such theories have not been developed yet Moreover, the evidence presented in the next section suggests that cultural effects are not the major force behind the large differences in economic growth experienced by many countries over the past few centuries 177