IDB Report: Higher Levels of Trust in Others Leads to Stronger Recovery

What does trust have to do with economics? The Inter-American Development Bank says it is everything. The I.D.B.’s latest report focuses on the lack of trust in Latin America and the Caribbean in post pandemic economic recovery. Their conclusion is that strong trust will power a strong rebound. However, weak levels of trust undermine growth and innovation across both the public and private sector. The I.D.B. is calling for key reforms, honing in on the need for equality in the sharing of power and information since Latin America and the Caribbean rank extremely low in the “trust chart” with only twelve percent of the region’s population feeling they can trust others.  The I.D.B. study reveals that high trust countries tend to have higher productivity levels, while low trust countries have larger informal economies as a percentage of G.D.P. Eric Parrado, I.D.B.’s Chief Economist, says the report, offers a way for governments to harness the support they need to tackle not just the pandemic recovery, but structural issues such as lagging productivity and big challenges like climate change, diversity, and inclusion.