A Model Explaining the Relationship between Economic Growth and Social Capital

Alexandre Rands ()
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Alexandre Rands: Universidade Federal de Pernambuco
Authors registered in the RePEc Author Service: Alexandre Rands Barros ()

No 58, Working Papers from Datamétrica Consultoria Econômica

Abstract: This paper presents a growth model that incorporates the social capital as a growth determinant. Social capital enters the model through its potential reduction in the risk perceived by agents, when making investments decisions. The key feature of the model is that firms pursue an inter-temporal optimisation, so that their current decisions affect their future productivity. Consequently, technological investiments become a rational decision, in which social capital becomes a relevant parameter affecting it. The model shows that the higher the social capital, the higher is the equilibrium growth rate.

Keywords: Endogenous growth; social capital; endogenous technological change; long term growth; firm’s dynamic optimization. (search for similar items in EconPapers)
JEL-codes: O30 O41 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2011, Revised 2011
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