Attempts of Econometric Determination of Social Capital Impact on Economic Growth
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Publish date: 2003-11-25
Gospodarka Narodowa 2003;188(11-12):1–18
Our purpose is to carry out an econometric analysis of the social capital impact on economic growth. Social capital is expressed, inter alia, by means of trust, income differentiation and crime rate. We quote results of a survey of a group of several dozen countries which confirm that growth is determined by income differentiation and trust. We present ouroriginal analyses of the crime rate impact on the slowdown of economic growth in Poland. Zak and Knack measured distribution of trust (the percentage of affirmative answers to the question of whether most people can be trusted) in 32 countries. Their finding was that a rise in trust by10 percentage points would raise the annual growth rate of per capita income from 1.9% (on the average) to 2.4%. Hence, this would mean speeding up the average rate of economic growth in the analysed countries by about a quarter. Our econometric analysis confirms the adverse effect of the growing crime rate in Polanu o economic growth. In 1992-2001, the average annual growth rate of labour productivity was 4.7%. At the same time, the rising crime rate reduced that figure by about 0.7 percentage point. There are differing views expressed in literature on the income differentiation impact on economic growth. Some authors claim that this impact is positive, while others argue it is negative. To examine this impact we propose a non-linear model which allows to set an optimum differentiation of incomes and, at the same time, makes it possible to reconcile the arguing parties. We shall try to verify this proposal in our subsequent analyses. Econometric estimates presented in numerous articles as well as findings from our own research allow to confirm Putnam’s thesis that social capital is as important as physical capital and human capital.