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Endogenous Social Progress as a Source of Economic Growth

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  • VALERIY HEYETS

Abstract

In this essay, the author argues that social capital and social progress should be treated as a separate endogenous source of economic growth and, consequently, it should be included in endogenous growth models, along with physical and human capital and technological progress. Social capital is a public good, which not only raises the individuals’ intellectual capacity but also increases labor productivity, thus driving economic growth. The socialization process, along with learning by doing, helps to overcome the declining returns, which helps to maintain continuous and sustainable growth. Socialization, meant as a process of mastering knowledge and skills, shapes people’s perception and affects their attitudes, as it is explained in the behavioral economics. However, we need to find a way to measure the value of social capital and its impact on economic growth. The author illustrates its reasoning by the example of Chinese society and the transformation of China’s economic system, resulting in the rapid economic growth.

Suggested Citation

  • Valeriy Heyets, 2021. "Endogenous Social Progress as a Source of Economic Growth," Ekonomista, Polskie Towarzystwo Ekonomiczne, issue 1, pages 167-181.
    • Handle: RePEc:aoq:ekonom:y:2021:i:1:p:167-181
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    References listed on IDEAS

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    1. Paldam, Martin, 2000. "Social Capital: One or Many? Definition and Measurement," Journal of Economic Surveys, Wiley Blackwell, vol. 14(5), pages 629-653, December.
    2. K. J. Arrow, 1971. "The Economic Implications of Learning by Doing," Palgrave Macmillan Books, in: F. H. Hahn (ed.), Readings in the Theory of Growth, chapter 11, pages 131-149, Palgrave Macmillan.
    3. Martin Paldam, 2000. "Social Capital: One or Many? Definition and Measurement," Journal of Economic Surveys, Wiley Blackwell, vol. 14(5), pages 629-653, December.
    4. Romer, Paul M, 1987. "Growth Based on Increasing Returns Due to Specialization," American Economic Review, American Economic Association, vol. 77(2), pages 56-62, May.
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    More about this item

    Keywords

    social capital; endogenous growth models;

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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