State Failure linked to Gov. Domination of Culture

When the free market in employed, and government is not allowed to interfere, the outcome is always positive. This study shows just how informal institutions like churches, fraternal organizations and the like will have a positive impact on the success of state governments.

The Role of Culture in State Failure
Source: Claudio D. Shikida, Ari Francisco de Araujo Jr., and Pedro H. C. Sant'Anna, "Why Some States Fail: The Role of Culture," Cato Journal, Winter 2011.

There are many studies on the relationship between economic development and institutions. This research emphasizes the importance of the relationship between culture (informal institutions) and the quality of public goods supplied by the government, using a measure of state failure: the Failed States Index.

The results suggest that culture is more important than formal institutions in explaining differences in the degree to which states fail, according to Claudio D. Shikida and Ari Francisco de Araujo Jr., of Ibmec Minas Gerais, Brazil, and Pedro H. C. Sant'Anna, of Universidad Carlos III, Madrid.

In other words, a more promarket culture is one of the determinants of better governance.
That fact can be regarded as evidence that more open societies tend to produce governments that are more efficient in the provision of public goods.

There are many aspects to be explored in the analysis of the role of institutions in human actions, as well as in how such actions are reflected in economic outcomes. In this sense, the evidence presented shows that policymakers should pay attention to the impact of different institutions (mostly to those of informal ones) on state quality.