I will start with a story, borrowed from Tim Harford (The Undercover Economist).

Imagine going to the corner store to buy a carton of milk, only to find that the refrigerator is locked. When you’ve persuaded the shopkeeper to retrieve the milk, you then end up arguing over whether you’re going to hand the money over first, or whether he is going to hand over the milk. Finally you manage to arrange an elaborate simultaneous exchange. A little taste of life in a world without trust–now imagine trying to arrange a mortgage. (Source)

So can you imagine that? Let’s analyze what trust brings into the economy on this simple example. First you can take the carton of milk out of the refrigerator without having to call the store clerk because the store trusts that you will not just walk out of the store with your milk. The owner of the store trusts that you will stop by the cashier and hand out the required amount of money for your purchase.

Interesting enough this can be applied to almost anything that goes on in our lives; from drinking your morning coffee to multi million businesses.

Trust is about more than whether you can leave your house unlocked; it is responsible for the difference between the richest countries and the poorest. (Source)

So trust is an important factor in an economy. I can easily understand why. If the level of trust is high in a entrepreneurial ecosystem the business can flourish without too much bureaucracy and friction red tape might cause. Some times shaking hands means more than tons of signed papers.

Inspired by: The Economics Of Trust