Why Does the Northern Light Shine So Brightly? Decentralisation, social capital and the economy

Christian Bjørnskov and Gert Svendsen

No 02-15, Working Papers from University of Aarhus, Aarhus School of Business, Department of Economics

Abstract: Based on institutional economics, the paper develops a new model pointing at two main reasons why Scandinavia is doing so well in economic terms, namely the level of decentralisation and social capital in its broad sense. The idea in the model is that a political system, which decentralises power, means less lobbyism because access to economically harmful rent seeking is more costly. Consequently, social capital and the trust in other people and the political leadership will increase. This model, suggesting one single social capital measure, is applied to countries in both Western and Eastern Europe. The social capital ranking results indeed show that Scandinavia (Denmark, Norway, Sweden and Finland) is among the seven top ranking countries together with Switzerland, the Netherlands and Iceland.

Keywords: Social capital; decentralisation; economy; Scandinavia; Switzerland; Netherlands; rent seeking; transaction costs; economic freedom; corruption (search for similar items in EconPapers)
JEL-codes: D60 H11 P52 Z13 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2002-10-01
New Economics Papers: this item is included in nep-eec
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:aareco:2002_015

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