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A Model Explaining the Relationship between Economic Growth and Social Capital

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  • Alexandre Rands

    ()
    (Universidade Federal de Pernambuco)

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.

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File Function: Revised version, 2011.
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Bibliographic Info

Paper provided by Datamétrica Consultoria Econômica in its series Working Papers with number 58.

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Length: 17 pages
Date of creation: 2011
Date of revision: 2011
Handle: RePEc:dtm:wpaper:58

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Related research

Keywords: Endogenous growth; social capital; endogenous technological change; long term growth; firm’s dynamic optimization.;

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  1. David de la Croix & Matthias Doepke, 2003. "Inequality and Growth: Why Differential Fertility Matters," American Economic Review, American Economic Association, vol. 93(4), pages 1091-1113, September.
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