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Endogenous growth, decline in social capital and expansion of market activities

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  • Bartolini, Stefano
  • Bonatti, Luigi

Abstract

We model in an endogenous growth set-up the hypotheses that the expansion of market activities weakens social capital formation, and that firms can invest in formal mechanisms of control and enforcement to substitute for social capital (trust, work ethics, honesty). The model shows that the economy tends to grow faster when it is relatively poorer in social capital and that perpetual growth can be consistent with the progressive erosion of social capital. These results may help reconciling Putnam’s claim that social capital has declined in the U.S. with the satisfactory growth performance of the U.S. economy over the same period.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 3341.

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Date of creation: May 2007
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Handle: RePEc:pra:mprapa:3341

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Keywords: Generalized trust; externalities; marketization; social assets;

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