Exploring the Crucial Role of Trust in European Economic Policy
Trust is the most important currency we have. In Dutch, there is this saying, ‘vertrouwen komt te voet en gaat te paard’ – trust arrives on foot and leaves on horseback. As an avid horseback rider myself this saying has always spoken to me: it takes decades to develop trust, between individuals, institutions and entities. Trust is an investment, a process ánd a result. However, one wrong step too many and it dissipates.
How trust is established varies. From close-knit communities to structures where competition prevents collaboration, each context asks for its own strategies in establishing the relations, the goodwill and the structures that are needed for trust to emerge. There are, however, certain models and tendencies that can be adapted, if not replicated, in different contexts.
Providing the right incentives can be key for trust development, even in the most conflict-ridden contexts. This piece explores models of trust development in European economic policies through two examplary cases from Finland and the Netherlands. It examines how trust is built especially when it comes to small/medium enterprise (SME) ecosystem development and public-private partnerships (PPPs), and how these two models serve as an inspiration, to be further developed in developing economies.
The Psychology of Trust
Trust in economics is a deeply psychological concept. Economic growth and stability are built on popular trust in the array of agreements, both explicit and implicit, formal and informal, that we call ‘the economy’. This array includes physical institutions, but also formal and informal networks, confidence in markets, and confidence in governance actors. This interplay creates the conditions in which participants in an economic system trust their counterparts to such an extent that deals can be made. 
As a principle, trust reduces uncertainty. When individuals or organisations believe that others will act in good faith, transactions become smoother, contracts less rigid, and innovation more attainable. Economists have long observed that economies with high interpersonal and institutional trust tend to exhibit lower transaction costs, stronger social capital, and greater long-term resilience. Trust underpins credit systems, labour relations, and investment flows; without it, even the most advanced regulatory frameworks struggle to function effectively.
Yet, trust is not equally distributed across contexts. In some environments, economic trust is embedded in long-standing cultural norms or shared histories of cooperation, while in others it relies more heavily on formal rules and enforcement mechanisms. Where governance is perceived as transparent and reliable, businesses and citizens are generally more likely to engage productively with public institutions and with one another. When, instead, corruption, inequality, or opaque decision-making take primacy, confidence erodes, often leading to economic stagnation and political disengagement.
Trust as an Institution
The European economic project itself was, and continues to be, an experiment in building transnational trust. By creating structures that encourage cooperation across borders (shared markets, joint regulations, and collective investment in research and innovation) the European Union has sought to embed mutual confidence as both a value and a practical instrument. In this context, trust is both a by-product of economic performance, and a policy objective in and of itself. This understanding of trust as both a psychological and structural necessity provides the basis for examining specific models of collaboration, where trust is the invisible infrastructure supporting innovation, competitiveness, and social cohesion.
In the EU’s history of post-war economic development, there have been several forms of institutionalisation of trust mechanisms. Sets of formal and informal rules and agreements between actors in an ecosystem. These institutions have been developed through repeated interaction and shared problem solving between public and private sector actors, civil society and academia. Over time, these collaborations build confidence not only in outcomes, but also in processes and people, allowing partners to develop and institutionalise long term agreements, overcoming previous barriers and formalising their trust. The cumulative effect of these institutions is especially visible through the development of a culture where partners share information, align goals and take calculated risks together, allowing for further innovation and economic growth.
A Fragile Confidence
For small and medium-sized enterprises, these conditions are especially valuable. SMEs often lack the security and resources to engage in ambitious partnerships unless they can rely on the fairness and transparency of larger actors. An ecosystem of institutionalised trust provides them with stability through guaranteeing this fairness and transparency, supported by informal agreements and formal policies. With governments acting as facilitators of these trust-building processes, mutual confidence is allowed to grow. European policy instruments such as Horizon Europe echo these principles, signalling that trust is now seen as a strategic asset for economic growth, not an incidental by-product.
Yet, trust remains fragile. With sudden shifts in political priorities, or with unwarranted failure to meet expectations, trust ecosystems can erode or dissipate. Formal agreements and formal institutions, complementing informal confidence, remain necessary even in a highly developed trust society. Maintaining this balance between the formal and the informal requires institutional vigilance, transparency, and regular assessments of goals, risks and benefits.
Two European Models
Examples of such systems can be found all across Europe. Probably the most well-established initiative is the Dutch triple helix model, exemplified in the city of Eindhoven’s Brainport ecosystem. In this long-established collaboration between university, (local) government and local industries (predominantly Philips and ASML), trust has been both a foundation and a cumulative result of consistency in partnerships, allowing for Eindhoven to grow out into one of the most competitive areas in Europe. Instead of relying on top-down coordination, partners developed shared governance structures and co-invested in research facilities, infrastructure and talent. Decision-making processes are made deliberately transparent, and outcomes jointly owned. This clarity of purpose and openness of process significantly strengthens confidence between stakeholders.
A similar balance between formal institutions and informal cultural dispositions can be found in Finland’s Innovaatiojärjestelmä and Innovaatiopolitiikka. This Finnish model is built on performance-based trust, reducing the need for detailed control mechanisms through joint venture programmes between universities, technology firms and the public sector. These ventures, supported by formal institutions such as Business Finland, allow for faster, more adaptive collaboration through institutional risk mitigation. Underpinning this formal model of collaboration is a societal expectation of reliability, honesty and mutual accountability across sectors. An informal disposition towards trust, supported by a formal institutional model.
The Finnish and Dutch growth rates show how established formal and informal models of trust can allow for more innovative and equitable economies, with sufficient failsafes for SME development. While establishing these trust ecosystems has taken decades in both examples, the results are there. This shows that when looking at economic development in low-trust societies, trust-building is a key factor in achieving sustainable growth and resilience. Developing transparent formal institutional capacity and reliable governance and allowing informal confidence to evolve through layers of repeated collaboration allow for trust to emerge organically and over time.
Conclusion
And time it takes. Trust arrives on foot: building trust ecosystems requires continuity, accountability and effort, as well as shared spaces, centres where public, private and academic actors can work towards tangible common goals. Through aligned incentives, open communication, and fairness in risk and reward distribution, even societies with limited initial trust can begin to cultivate the confidence necessary for innovation and inclusive economic participation. In that sense, building trust is much like keeping a steady seat in the saddle: it takes balance, patience and attention
