The Market-Promoting and Market-Preserving Role of Social Trust in Reforms of Policies and Institutions

Reprint No. 2017:37

Author(s): Niclas Berggren and Christian BjørnskovYear: 2017 Title: Southern Economic Journal Volume (No.): 84 (1) Pages: 3–25
Online article (restrictions may apply)
Preliminary version

Social trust has been identified as a catalyst for reforms. We take the literature further in two ways. First, we analyze mechanisms through which social trust enables liberalizing reforms—by overcoming obstacles in the political process (stemming from ideology, ideological fractionalization, coalition government, minority government, and legislature-seat instability). Second, we define reforms as distinct changes in the quality of the legal institutions and in the scope of regulation and separate reforms that increase economic freedom in these two areas from reforms that decrease it. We study separately how social trust, interacted with the different types of political hindrances, affects the probability of reforms. We find a dual role of social trust in the political process—facilitating liberalizing reforms and making deliberalizing ones more difficult. This suggests that trust does not make agreement on any reform more probable—the content of the reform is crucial.

Berggren, Niclas and Christian Bjørnskov (2017), "The Market-Promoting and Market-Preserving Role of Social Trust in Reforms of Policies and Institutions". Southern Economic Journal 84(1), 3–25.

Niclas Berggren


Ph: +46 8 665 4520

Christian Bjørnskov


Ph: +45 87 16 48 19
Mob: +45 20 12 03 84

Interdisciplinary European Studies

The European Union and the Return of the Nation State


This book explores the complex and ever-changing relationship between the European Union and its member states. The recent surge in tension in this relationship has been prompted by the actions of some member state governments as they question fundamental EU values and principles and refuse to implement common decisions seemingly on the basis of narrowly defined national interests.

About the book


Seminars organized by IFN


To present ongoing research informal brown-bag seminars are held on Mondays at 11:30 am. This is an opportunity for IFN researchers to test ideas and results.

Academically oriented seminars are most of the time held on Wednesdays at 10 am. At these events researchers from IFN and other institutions present their research.

In addition, IFN organizes seminars open to the public. Topics for these are derived from the IFN research.

Research Institute of Industrial Economics, Grevgatan 34 - 2 fl, Box 55665, SE-102 15 Stockholm, Sweden | Phone: +46-(0)8-665 45 00 | info@ifn.se