Social ties and economic development

Fernando Anjos () and Jose Anchorena

MPRA Paper from University Library of Munich, Germany

Abstract: We develop a parsimonious general equilibrium model where agents allocate time across three activities: production, trade, and leisure. Leisure includes time spent socializing, which economizes transaction costs. Our framework yields multiple equilibria in terms of the number of social ties and predicts that the number of social ties is positively associated with development, a relationship we observe in cross-country data. The model captures additional dimensions of data, namely: (i) increasing income inequality, but converging growth rates; (ii) an association between weak social ties and development; and (iii) an association between number of social ties and size of the transaction sector.

Keywords: social capital; development; transaction costs; networks (search for similar items in EconPapers)
JEL-codes: D11 D23 O11 (search for similar items in EconPapers)
Date: 2008-05-08, Revised 2011-12-09
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Journal Article: Social ties and economic development (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:35322

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