This article investigates how the prevalence of collectivism or individualism in a society relates to the economic development of the society. The central premise of the article is that causality runs in two directions: the collectivist or individualist character of a society will influence the course of economic development, and simultaneously economic growth and changes in economic structure will alter the orientation of the society toward individualism or collectivism. The recognition of this two-way causality suggests four broad hypotheses concerning the interaction between economic and cultural factors: (1) economic development is impeded by collectivism and facilitated by individualism; (2) economic development is facilitated by collectivism and impeded by individualism; (3) economic development promotes collectivism and erodes individualism; and (4) economic development erodes collectivism and promotes individualism. The arguments and evidence that have been marshaled in support of each of these hypotheses are examined, and the general themes and implications that emerge are discussed.
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