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ENG101 Section: 60
Valerie Moira Sherwood
08 November 2016

Influence of Collectivism on Economic Growth

Culture and economy always affect each other. Culture can be defined as general thoughts
and behavior of a society. There are two type of cultural attitudes; collectivism and individualism.
In this paper the effects of collectivism on economic growth will be examined. In recent work
(Gorodnichenko and Roland, 2011) collectivism was defined as embedness of individuals in a
larger group Also collectivism can be defined as collective action and thinking. Another term is
economic growth which describes development of economy. One may see collectivism as just a
bad effect or just good effect. The main idea of this essay is consider both sides. It is generally
accepted that collectivism or individualism has a great influence on economy. There are bad
effects of collectivism such as decreasing on consumption, the lack of innovation as well as good
effect such as increasing productivity. It will be shown that bad effects of collectivism are more
than good effects on economy.
Consumption is the main power of the economy. Consumption describes the consumer
attitudes of a society. All economic institutions such as manufactures, distribution firms even
banks depend on consumption. In a region, if there is no consumption or people tend not to buy
products, it is impossible to sell products and make profit. Furthermore economy can not be
discussed without shopping. It can be observed that collectivist countries are not prone to have
huge consumption rate.

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According to research (Hofstede 2001) the most collectivist countries are Pakistan,
Nigeria, Peru. The main similarity between these countries is that they have low level of
consumption. There are several reasons for that. First of all these countries people help each
other continuously. If one person needs food or clothes others give their goods (which they do not
use.) to her/him. Moreover, they share their goods because of the strict family bonds. Another
reason for this attitude is that people are not prone to buy expensive brand products. The reason
for that is very basic and reasonable. People can not afford expensive products because of the bad
economy.
Innovation is one of the main characteristic attitudes of individualist societies. Innovation
can be defined as thinking differently, achieve something new. Innovators work for better society
by developing products such as Elon Musk, the CEO of the Tesla Company and SpaceX, one of
the best known innovators. In collectivist societies there are not many innovators. Bill Gates,
Steve Jobs, Elon Musk, Steve Wozniak, one of these innovators is from a collectivist society.
Some research like Gorodnichenko and Roland(2011) claims that social behaviors is not related
with blood type but it is related with genes. Observations shows the opposite claim. It is
interesting fact that Steve Jobs actually was born in Syrian family but he was raised in American
culture. It can be observed from that example, innovation is about culture not race or genes like
the research studied by Gorodnichenko and Roland (2011) says. The main reason why collectivist
countries do not have innovators is collectivist cultures tend to not think critically, as they obey
the leaders, and do not show individual opinions. In collectivist societies, different ideas are
considered as disrespectful behavior towards the community. Another behavior which is shown
by collectivist societies, tribes or clans is that they can not tolerate differences. They are prone to
exclude a different person. This tendency affects innovators in collectivist countries directly.

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The pressure and fear of being excluded cause an innovative person to transform into a
usual citizen. They start to work a job in which they do not have ability or skill. The lack of
innovation affects whole economy system. The basic issue which undeveloped countries suffer is
this problem; lack of innovation and innovators.
Stability and productivity are very important for economic growth. Stability can be
defined producing something continuously. To describe productivity is very complex but
basically one can say the number of products to describe this term. Collectivist countries have a
very high level of cooperation and production. Richard Ball in his research Individualism,
Collectivism and Economic Development shows that collectivism facilitates economic growth
because in collectivist societies peoples priority is communitys benefit not their own interests.
This tendency provides great advantage for cooperation. This behavior avoids any kind of
rebellion and chaos.
This is the main reason why collectivist countries do not lose stability. Collective actions
are needed by companies. Since they have a lot of departments cooperation is very important.
The main key for that is obeying the leader. Individualist societies tend to care self-interest. Big
companies choose collectivist countries for production such as China or Taiwan. In these
societies productivity is very high and companies make great profits. Furthermore as labor wage
are very low, companys profit increases. The best known example of collectivist country with
good economy is China. Although the population is very high, they can make collective actions
easily. Big companies come China for these reasons.
Moreover these companies boost Chinas economy. This situation has good and bad
effects on China economy. Because of the these firms a lot of people can find job and earn

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money. As a result the rate of unemployment is decreasing. On the other side, these people work
for very low wages because of the population. As China is most crowded country in the world,
firms can find easily new worker. As a result worker can be convinced for less money than they
deserve because of the competition. Nevertheless, in capitalist world working class is very
important for economy. Workers contribute economy because they buy products they produce a
product or provide service. Therefore the disadvantages of foreign firms in collectivism can be
tolerated by employment.
In conclusion, no one can say collectivism has just good effect or just bad effects.
Research and observations show that collectivism has bad effect on economic growth such as
decreasing on consumption and lack of innovation. These disadvantages hit the collectivist
economies badly. Also these reasons are the main issue for a lot of problems of societies.
Although these disadvantage can be noticed quickly, there are the good effects of collectivism
which provide some benefits. Nevertheless it is clear that number of bad effects of collectivism
on economic growth more than good effects. In capitalist world individualist communities will
always win. Because of that collectivist countries should consider to rebuild their social norms.
To sum up it can be said collectivism can impede economy. One thing is can not be denied social
norms have great influence on economy.

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Work Citied
Ball Richard. The Annals of the American Academy of Political and Social Science
Vol. 573, Culture and Development: International Perspectives, (2001) pp. 57-84 .

Gorodnichenko,Yuri., Roland Gerard. Understanding the Individualism-Collectivisim

Cleave and its Effects: Lessons from Cultural Psychology (2011)
Hofstede, Geert, Cultures Consequences: Comparing Values, Behaviors, and
Organizations Across Nations. 2nd edition. Sage Publications. Iyengar, S. S., &
Lepper, M. R. (1999). Rethinking the value of choice: A cultural perspective on
intrinsic motivation. Journal of Personality and Social Psychology(2001), 76, 349-366
.