Impact of trust-based networks on economic development

Trust isn’t just a social virtue; it’s an economic engine. My new study with Jonathan Muringani & Rune Dahl Fitjar, just published in in The Annals of Regional Science, explores how political and social trust —alongside government quality— drive economic development across EU regions. The findings show that political trust directly propels regional growth. It fosters smoother policy implementation, reduces transaction costs, and supports productivity. But achieving this requires a foundation of social trust and strong government institutions. We also uncover that government quality has diminishing returns, with the biggest gains seen in regions that start with weaker institutions. The message for policymakers is clear: to stimulate growth, build trust, particularly in less developed and more vulnerable regions. Targeted improvements in government quality and citizen trust can lay the groundwork for a robust, cooperative economy. Read the full study here: https://lnkd.in/dD-i3AgM

During my recent trip to Europe, I observed something that stood out: the role of Trust Capital in shaping functional societies. One experience that struck me was a simple trip to the supermarket. I picked up my items and checked them out myself using the self-checkout system—no one double-checked, no oversight. It made me reflect on why this system works so smoothly in parts of the West but might be difficult to implement in other regions, particularly in Africa. Trust Capital is what makes systems like this possible. It's the collective confidence citizens have in one another and in their governance structures. In Europe, there's a huge amount of trust between people and the institutions they rely on. This, I believe, is one of the reasons their systems are able to function so efficiently. 𝐖𝐡𝐚𝐭 𝐢𝐬 𝐓𝐫𝐮𝐬𝐭 𝐂𝐚𝐩𝐢𝐭𝐚𝐥? Trust Capital refers to the collective trust that citizens and other nations have in a country's systems, governance, and institutions. It plays a critical role in: • Political Stability: People trust their leaders and institutions, which contributes to stable governance. • Economic Growth: Trust in economic policies attracts investment, leading to growth and development. • Social Cohesion: When citizens trust each other, conflicts are minimised, and cooperation thrives. • International Relations: Strong trust capital enhances a nation's reputation globally. • Resilience: In times of crisis, high trust helps nations recover more quickly. 𝐇𝐨𝐰 𝐂𝐚𝐧 𝐍𝐚𝐭𝐢𝐨𝐧𝐬 𝐁𝐮𝐢𝐥𝐝 𝐓𝐫𝐮𝐬𝐭 𝐂𝐚𝐩𝐢𝐭𝐚𝐥? • Transparency in governance. • Ensuring the Rule of Law is fair and applies equally to everyone. • Accountability in leadership. • Promoting Social Equity and reducing inequality. • Encouraging Citizen Participation in decision-making. • Effective Communication from leaders during crises or change. It's a concept worth reflecting on... Imagine a future where systems in Africa can operate on high trust, where the relationship between citizens and governance is built on a foundation of transparency, accountability, and collaboration. It's possible, but it starts with building trust from the ground up. What are your thoughts?

𝗖𝗼𝗺𝗺𝘂𝗻𝗶𝘁𝘆 𝗧𝗿𝘂𝘀𝘁 𝗮𝘀 𝗘𝗻𝗲𝗿𝗴𝘆 𝗖𝗮𝗽𝗶𝘁𝗮𝗹: 𝗥𝗲𝘁𝗵𝗶𝗻𝗸𝗶𝗻𝗴 𝗖𝗦𝗥 𝗶𝗻 𝗛𝗼𝘀𝘁 𝗖𝗼𝗺𝗺𝘂𝗻𝗶𝘁𝗶𝗲𝘀 Since the enactment of the Petroleum Industry Act (PIA), conversations around corporate social responsibility (CSR) in Nigeria’s host communities have taken a necessary turn. What was once an act of goodwill is now a legal and strategic imperative, placing host communities at the center of energy project planning. Some years ago, a multinational oil operator implemented a multi-million-dollar CSR project in a coastal Niger Delta community. Educational facilities were built, potable water systems installed, and vocational training centers launched. On paper, the project was a success. Months later, the boreholes dried up, the centers were abandoned, and community tensions resurfaced. The most valuable resource “𝘁𝗿𝘂𝘀𝘁"was never extracted. In Akwa Ibom State, Oriental Energy Resources Limited (OERL) is charting a different path. Through its Host Community Development Trust (HCDT), the company is fostering a culture of dialogue, transparency, and inclusion. During a stakeholder session in Uyo, representatives from Mbo and Effiat communities, alongside NUPRC officials, participated as co-creators. Trustee selection, transparency measures, and conflict of interest policies were openly discussed, creating a structure rooted in accountability and mutual respect. Meanwhile, HOSTCOM continues to advocate for an upward review of the 3% PIA allocation, describing it as inadequate for today’s economic reality. They rightly emphasize that without compliance and commitment, even well-meaning policies lose impact. 𝗜𝘁 𝗶𝘀 𝗶𝗺𝗽𝗼𝗿𝘁𝗮𝗻𝘁 𝘁𝗼 𝗻𝗼𝘁𝗲 𝘁𝗵𝗲 𝗳𝗼𝗹𝗹𝗼𝘄𝗶𝗻𝗴: ✅ When communities are seen and represented, pipelines move more than crude, they also carry goodwill. And goodwill outlasts oil prices. ✅Trust is a key performance indicator, influencing whether operations thrive or face resistance ✅CSR must evolve into community ownership, driven by sustainable frameworks like the HCDT ✅Communities no longer want handouts—they seek 𝗽𝗮𝗿𝘁𝗻𝗲𝗿𝘀𝗵𝗶𝗽𝘀. 𝗜𝗻 𝘁𝗼𝗱𝗮𝘆’𝘀 𝗲𝗻𝗲𝗿𝗴𝘆 𝘀𝗲𝗰𝘁𝗼𝗿, 𝘁𝗿𝘂𝘀𝘁 𝗶𝘀 𝘁𝗵𝗲 𝗿𝗲𝗮𝗹 𝗰𝗮𝗽𝗶𝘁𝗮𝗹. 𝗜𝘁 𝗱𝗲𝗹𝗶𝘃𝗲𝗿𝘀 𝗿𝗲𝘁𝘂𝗿𝗻𝘀 𝘁𝗵𝗮𝘁 𝗼𝘂𝘁𝗹𝗮𝘀𝘁 𝗼𝗶𝗹 𝗽𝗿𝗶𝗰𝗲𝘀 𝗮𝗻𝗱 𝘀𝘁𝗿𝗲𝗻𝗴𝘁𝗵𝗲𝗻𝘀 𝘁𝗵𝗲 𝘀𝗼𝗰𝗶𝗮𝗹 𝗹𝗶𝗰𝗲𝗻𝘀𝗲 𝘁𝗼 𝗼𝗽𝗲𝗿𝗮𝘁𝗲. As energy professionals, we must shift from “𝗱𝗼𝗶𝗻𝗴 𝘁𝗵𝗶𝗻𝗴𝘀 𝗳𝗼𝗿 𝗰𝗼𝗺𝗺𝘂𝗻𝗶𝘁𝗶𝗲𝘀” to “𝗯𝘂𝗶𝗹𝗱𝗶𝗻𝗴 𝘄𝗶𝘁𝗵 𝗰𝗼𝗺𝗺𝘂𝗻𝗶𝘁𝗶𝗲𝘀. #LocalContentNG #EnergyForNigeria #HostCommunities #CSR #PIA #OilAndGasNigeria #CommunityEngagement #ESG