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(Source: Department of Economics of School of Economics) The paper “Government, Social Trust and Economic Growth”, co-authored by Professor Li Junqing and doctoral student Kou Haijie from our school, was published in Economic Research Journal, 6th issue of 2022.

The research shows that formal and informal rules are two important institutional arrangements to maintain economic and social trust and business cooperation, but these two rules are often endogenous to a country's economic development level and national strategy. The research shows that in the process of a country's economic development, the decreasing interest rate has expanded the scale of capital lending, making informal rules constantly approach the boundary of its trust radius, and informal rules gradually give way to formal rules. But more importantly, it found that in the early period of a country's economic development, informal rules made an important contribution to economic growth, and this contribution was inversely proportional to the stock of hardware infrastructure, the efficiency of the legal system, and the degree of incomplete information. It also found that when a government invests in infrastructure in the early stage of economic development, it will endogenously give priority to hardware infrastructure rather than software infrastructure. Until the late stage of economic development, when the expansion of market size and scope restricts the expansion of informal rules, software infrastructure investment is the focus of a government's infrastructure investment. Cross border micro and macro data confirm its main research conclusions at the empirical level.

Founded in 1955, Economic Research Journal is a national comprehensive economic theory journal, sponsored by the Economic Research Institute of the Chinese Academy of Social Sciences and in charge of the Chinese Academy of Social Sciences. It is recognized as one of the top economic journals by domestic universities and research institutions.