INTRODUCTION

In Chapter 4, I argued that there are important differences between economies (such as the industrial districts of central and northeastern Italy) where informal institutions play an important role, and economies (such as the machine producing industry of Baden-Württemberg) where formal institutions dominate. I suggested that we may expect trust relationships to play a much more important role in societies where informal institutions predominate, while more specific expectations over institutional compliance will anchor important cooperative relations in societies with strong formal institutions.

This argument, if left unqualified, might by omission suggest a kind of functionalism that is quite as specious and unfaithful to empirical reality as the economistic forms of functionalism discussed in Chapter 2. To say that trusting relations are highly important in societies dominated by informal institutions is not to say that societies dominated by informal institutions will necessarily support rich and wide-reaching forms of trust. Indeed, the available empirical evidence makes it emphatically clear that informal institutions need not be associated with trust. Informal institutions play a dominant role in many societies in the global South that would appear to have low levels of interpersonal trust and cooperation, whether measured through the imperfect gauge of survey evidence (Nannestad 2008) or direct observation of actors' behavior.

Thus, the claim that informal institutions can support forms of trust that formal institutions cannot is no more than a possibility claim. One may still plausibly argue that trust will play a highly important role in societies where informal institutions rather than formal institutions structure economic exchange.