This inquiry seeks to provide a comprehensive conceptual framework for understanding the role of culture in economic growth. Economic growth theory has recognised labour and physical capital as primary economic inputs; plugging in additional variables related to human capital and entrepreneurship gives rise to the further developed endogenous growth models. Based on multidisciplinary theory and evidence, the present inquiry argues that these basic components of the growth models, together with the institutional context of each case, depend on local culture. However, the relationship with culture in growth modelling is still omitted. The current paper lays down the foundations of the culture based development (CBD) concept, identifying culture as a proto-institution which through the mechanisms of latent influence of cultural capital on the reallocation of the main production factors affects growth. Preliminary empirical operationalisations, alternatively with OECD and DE data, illustrate the potential of the CBD model for applied research.
Keywords: cultural capital, living culture, cultural heritage, regional development, institutions, Europe, society systems