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Social capital, product imitation and growth with learning externalities

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  • Agénor, Pierre-Richard
  • Dinh, Hinh T.

Abstract

Links between social capital, human capital, and product imitation are studied in an overlapping generations model of economic growth with endogenous time allocation. Social capital promotes imitation and there is a two-way interaction between imitation and human capital. Building social capital (which brings direct utility) requires time and access to infrastructure. Because life expectancy is endogenously related to human capital, time allocation between market work and social capital accumulation is also endogenously determined. The analysis highlights a fundamental trade-off between learning externalities and the life cycle–time allocation effect. The model is calibrated for a low-income country. Numerical experiments show that a policy that helps to promote social capital accumulation may be highly effective to foster economic growth, even if it involves offsetting cuts in government spending on education. Offsetting cuts in infrastructure investment, however, may entail significant dynamic trade-offs.

Suggested Citation

  • Agénor, Pierre-Richard & Dinh, Hinh T., 2015. "Social capital, product imitation and growth with learning externalities," Journal of Development Economics, Elsevier, vol. 114(C), pages 41-54.
  • Handle: RePEc:eee:deveco:v:114:y:2015:i:c:p:41-54
    DOI: 10.1016/j.jdeveco.2014.11.008
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    References listed on IDEAS

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    1. Dinopoulos, Elias & Thompson, Peter, 2000. "Endogenous growth in a cross-section of countries," Journal of International Economics, Elsevier, vol. 51(2), pages 335-362, August.
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    Cited by:

    1. Agénor, Pierre-Richard & Neanidis, Kyriakos C., 2015. "Innovation, public capital, and growth," Journal of Macroeconomics, Elsevier, vol. 44(C), pages 252-275.
    2. Raffaella Coppier & Fabio Sabatini & Mauro Sodini, 2018. "Social capital, human capital and fertility," EERI Research Paper Series EERI RP 2018/04, Economics and Econometrics Research Institute (EERI), Brussels.
    3. Pierre-Richard Agénor, 2016. "Aid Volatility, Human Capital, and Growth," Centre for Growth and Business Cycle Research Discussion Paper Series 219, Economics, The Univeristy of Manchester.

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