Culture as an Informal Institution

Culture plays a powerful role in shaping economic development. This idea is backed by research in institutional economics, where culture is seen as a set of values and behavior patterns shared by large social groups and changing only slowly over time. Economists like Luigi Zingales and Alberto Alesina have emphasized that cultural norms strongly influence economic decision-making — and ultimately determine the direction of a country’s development. But how exactly does culture affect the economy? And can cultural change be used to promote growth?

South Korea offers a good example of how cultural traditions can be adapted to support economic success. The country’s industrial giants, like Samsung and other “chaebols,” were built on long-standing social structures, such as clan-based networks and rice-farming traditions. Rather than abandoning these old systems, South Korea managed to modernize by reworking them to fit a new economic model. This shows that successful development doesn’t always require destroying the past — sometimes, building on existing institutions and values can be more effective.

Of course, not all cultural traits are helpful. Some can hold back progress. For instance, studies of economic culture in Russia using Geert Hofstede’s framework have shown a high level of “uncertainty avoidance.” That means people tend to fear change and avoid long-term planning. As a result, innovation suffers, and investment in the future becomes limited. This mindset can be toxic to economic development, especially in times that require bold reforms and risk-taking.

The division and later reunification of Germany offers valuable insights into how culture can evolve over time. Research by Alesina and colleagues — in a study titled “Good-bye Lenin (or Not?)” — shows that values and attitudes between East and West Germans began to converge after about 25 years. Full integration, however, was projected to take closer to 40 years — echoing the biblical journey of the Israelites through the desert, where it took a generation to move beyond the memory of slavery.

Yes, but it takes effort and time. Cultural mindsets can shift through education and broader social influence. One useful approach is to promote a “culture of failure,” where mistakes are treated not as shameful, but as part of learning. This helps reduce fear of the unknown and encourages experimentation — both key ingredients for innovation. Teaching this mindset through schools, media, and public conversation can help societies become more open to change and more resilient in the face of uncertainty.

For Kazakhstan cultural transformation is directly tied to economic competitiveness and resilience. Traditional systems of social organization — especially clan and tribal ties — still play a strong role. Historically, these structures helped communities survive in a harsh and vast land. But today, they sometimes stand in the way of transparency, personal responsibility, and bottom-up initiative. That doesn’t mean they should be discarded. Instead, Kazakhstan’s path to modernization may depend on using these traditional bonds to build trust and stability, while carefully adjusting the cultural norms that slow down growth and innovation.