Culture and economic development

The link between culture and socioeconomic development has been confirmed by numerous studies in which the “individualism/collectivism” dimension is identified as the factor most closely associated with economic outcomes.

Auzan et al. draw heavily on the work of Geert Hofstede, who was among the first to study national culture from a comparative perspective. In research covering more than 50 countries, he identified “individualism/collectivism” as one of four core dimensions of cultural differences. It captures the extent to which people see themselves primarily as autonomous individuals or as members of tightly bound communities.

The approach adopted by Auzan et al. follows this tradition. Collectivist societies, in which individual interests are inseparable from those of the group, benefit from lower coordination costs and a greater willingness to comply with shared rules. Individualist societies, by contrast, separate the interests of the individual and the family from those of the group, fostering innovation and incentives for personal achievement.

As noted in the “I- and K-Russia” paper, causality remains ambiguous, as individualism promotes economic growth, while economic development and urbanization, in turn, lead to rising individualist values.

Individualism and collectivism in Russia

In Russia, debates over the balance between these two principles have persisted for centuries, most vividly between Westernizers and Slavophiles. Early measurements using Hofstede’s methodology placed Russia close to the global average. However, intra-Russian data reveals substantial regional variation, allowing Auzan et al. to draw a distinction between I-Russia and K-Russia.

Earlier Russian research examined individualism and collectivism through family structures, reproductive attitudes, gender norms and demographic statistics. It confirmed that individualism is correlated with higher wages and greater entrepreneurial activity, while collectivism is associated with higher fertility and a stronger capacity for social mobilization, as seen during the pandemic. Auzan et al. argue that despite the differences in methods of measurement, the results tend to be strongly correlated, supporting the hypothesis of an underlying “superfactor” – individualism or collectivism.

The paper confirms previously identified geographic patterns: individualism increases as you go from west to east in Russia, reaching its highest levels in the Far East, and also from south to north. The most “individualist” regions include Magadan, Primorsky and Kamchatka, along with the “capitals” of Moscow and St Petersburg. Collectivism is most pronounced in Russia’s ethnic republics such as Tuva, Kalmykia and North Caucasus regions, together with swathes of central Russia and the Volga region. In addition, the level of individualism increases statistically with the size of the locality.

The authors attribute these cultural differences to a combination of historical, geographic and sociodemographic factors. Climate conditions in the Russian North encouraged more individualist traits amid private economic activity such as trade and fishing, while in the North Caucasus and Tuva the persistence of clan and kinship structures reinforces collectivist values. Urbanization also plays a key role: the data shows that large metropolitan areas exhibit higher levels of individualism due to social atomization and the weakening of traditional group ties.

Auzan et al. examined this “superfactor” in the context of workplace behavior. They used a survey of Sberbank employees across Russia’s regions, the sample including almost 47,000 respondents from 81 regions. The authors constructed an index based on seven characteristics of workplace practices: flexible versus strict regulation; weak versus comprehensive control; delegated versus centralized decision-making; a more detached versus a more involved management style; individual versus team-based work; an orientation toward criticism versus consensus; and a formal versus informal work environment.

How individualism and collectivism shape regional differences

A common finding in the research on the link between economic outcomes and cultural attitudes is that individualist societies tend to be wealthier than collectivist ones. Auzan et al. tested this hypothesis by comparing various economic indicators across Russia’s regions with their position on the individualism/collectivism spectrum.

The most straightforward indicator for such an analysis is gross regional product per capita. However, as Auzan et al. found, this indicator shows only a weak correlation with the level of individualism across the country.

Contrary to their expectations, there was no direct link between individualism and innovative activity, which may reflect the lack of sufficiently reliable data. At the same time, Auzan et al. identify a strong and positive relationship between individualism and entrepreneurial activity, pointing to significant potential for small business development in more individualist regions.

A high level of collectivism in a region is associated with higher overall fertility rates for third and subsequent children, as well as with generalized trust – a factor that reduces transaction costs and supports investment.

As the authors note, these findings align with well-established properties of individualism and collectivism: the norms of collectivist culture, such as stronger support for older generations, create incentives for larger families, while individualist culture facilitates more intensive interaction with strangers.

How can these findings inform economic policy?

Individualist and collectivist attitudes shape levels of avoidance of uncertainty and give rise to different types of trust in society. These differences ought to be taken into account in the design of formal economic institutions, the authors argue.

Auzan et al. note that Russia’s current legislation already includes formal economic institutions aligned with both individualist and collectivist values. Examples of the former include government programs to improve financial literacy and foster a financial culture based on personal responsibility; an example of the latter is the promotion of and fiscal support for higher birth rates.

The authors conclude that the effective development of Russia’s regions requires harmonizing legislation with local cultural norms, arguing that a mismatch between formal and informal rules – largely determined by a community’s position on the individualism/collectivism spectrum – leads to significant economic losses. Auzan et al. propose increasing the scope of regional legislation and regional authority and developing region-specific institutions. A compromise option put forward by the authors is creating a “menu of institutions,” allowing residents of different regions and localities to select institutional arrangements according to their needs.