The effect of social capital, ESG, and globalization on economic growth

This study examines the relationship between social capital and economic growth and investigates whether this relationship varies across institutional and external environments, as proxied by sovereign ESG and globalization. The results indicate that social capital is positively associated with economic growth, while governance exhibits the most consistent positive association with growth among the ESG dimensions. We further find that the interaction between social capital and governance is generally negative, suggesting that the marginal benefits of governance-related improvements may be weaker in countries with higher levels of social capital. Similarly, the interaction between social capital and globalization is negative, indicating that the association between globalization and economic growth may diminish as social capital increases. These interaction patterns are more pronounced in civil law countries, particularly for the governance dimension, indicating that the relationship between social capital and economic growth may depend on institutional conditions.