By: Staff Writer
January 21, 2022
The Inter-American Development Bank (IDB) said that trust is lacking in the region and that is hampering productivity and driving inequality.
The bank, in their latest report, “Trust: The Key to Social Cohesion and Growth in Latin America and the Caribbean,” said that trust is lacking in the Caribbean and Latin American region and that lack of trust is hampering productivity and stalling investment.
The report said: “The low levels of interpersonal trust and the low capacity to hold governments accountable is reflected in high mistrust in government. According to the Integrated Values Survey, over the period 2010–2020, an average of fewer than 3 in 10 Latin American and Caribbean citizens trusted their government. Mistrust of government is a worldwide problem, but it is greatest in Latin America and the Caribbean, even if the differences are not as dramatic as with interpersonal trust.
“Trust and citizenship significantly impact all the key drivers of growth and inequality. Economic growth depends on public policies and institutions to accommodate and encourage it. The most important decisions that drive economic growth—to invest, employ, produce, buy, or sell—all depend on trust. The most productive, skilled, and innovative individuals have greater economic opportunities in high-trust societies; in societies without trust, these opportunities are limited
“In societies where individuals believe that others will not pay a cost for opportunistic behaviour, they are more likely to believe that others are untrustworthy. Hence, in societies where the price of opportunistic behaviour is low, individuals are less likely to believe that others are trustworthy.
“Mistrust and weak bonds of citizenship among public employees and beyond heighten the region’s chronic, urgent challenges of low growth and high inequality. Between 1980 and 2020, the average per capita growth rate of real GDP in Latin America and the Caribbean was below the world average. Other regions have narrowed the gap with the United States. Latin America and the Caribbean has not: on average, countries in the region closed only 4 percentage points of the per capita income gap with the United States, far less than the 47 percentage points achieved by East Asian countries.”
The report also said: “Institutions play a key role in helping citizens hold governments accountable. When they do, institutions help build trust in government. Judiciaries and legislatures can place checks on government behaviour that limit government capacity to act opportunistically. Political parties can be effective vehicles to promote the collective action of citizens to hold governments accountable. Unfortunately, the opposite is also true; distrust of institutions renders them part of the problem rather than the solution. In Latin America and the Caribbean these institutions often do not perform their intended roles. Rather than increasing trust in government, they become part of the crisis of trust.”
This lack of trust also spills over into the private sector because as the bank suggests, “if people do not trust each other, government, courts, or political parties, not surprisingly they do not trust the private sector either. In Latin America and the Caribbean, low trust in the private sector and business mirrors low trust in public institutions. If people believe that, in general, others cannot be trusted, they are even more likely to believe that firms will try to take advantage of workers, consumers, and each other. Their suspicion is reinforced when they also distrust the institutions that are supposed to rein in untrustworthy behaviour of businesses, such as courts and government regulators.”
The report added: “Individuals who trust each other band together to build thriving societies. People with a belief that others will not act opportunistically experience a sense of cohesion that enables them to work towards a common goal. Low-trust societies do not exhibit such cohesion. Social cohesion is an amorphous concept, involving notions of commitment or attachment to society or country and to its members. This book approaches the issue of cohesion from a perspective that emphasizes the roles of trust and citizenship.”
Essentially, communities need to come together to solve its problems. No one government or group can solve all of society’s ills, so people must learn to come together.
The report also said: “The impact of mistrust on citizenship and social cohesion is no less damaging at the firm level. Where trust and citizenship are low, businesses and individuals in those businesses are more willing to operate informally, either as a response to onerous and unnecessary regulation or as a signal of their willingness to seek private advantage at the community’s expense.
It continued, “The harmful effects of mistrust among citizens have another dimension that extends into the government agencies tasked with administering and implementing public policies. The behaviour and attitudes of public employees working in those agencies are fundamental determinants of the performance of government agencies and, ultimately, the ability of governments to perform their functions. Successful policy implementation requires that public employees collaborate, are sensitive and responsive to citizen needs, and apply their discretion over public policy to maximize citizen welfare.
“Trust enables collaboration on complex tasks within government agencies. Officials must work together with their colleagues, citizens, and public officials in other government agencies to implement government programs. To document the relationship between trust and cooperation in public sector agencies in Latin America and the Caribbean, the IDB Public Sector Survey in 2020 collected information from public employees on their trust and policy preferences. They responded to questions about trust in their coworkers, public employees in general, and citizens.