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Social Capital and Regional Economy: Empirical Analysis Using Individual Data from Questionnaire Survey


  • Saisuke Sakai

    (Former Economist, Policy Research Institute, Ministry of Finance)


With the recent difficult regional economy, the concept called "Social Capital" has been drawing attention as a factor to revitalize regions. "Social Capital", according to Putnam (1993), is defined as the "features of social organization such as networks, norms, and social trust that facilitate coordination and cooperation for mutual benefit". The purpose of this paper is to perform empirical analysis to find out what kind of impact the three factors ("trust", "norm", and "network") have on regional economy. Not many researches have been made to quantify social capital so far, and therefore there is no established method for this purpose. Here in this paper, I have performed a regression analysis by using cross section data based on the result of questionnaire surveys conducted by the Cabinet Office (in 2002 and 2005) (individual data) which were used as and converted into prefectural indices for each of the three factors. As a result of the regression analysis using the instrumental variable approach, according to the data as of 2005, the "norm" had a positive impact on the rate of increase of business offices while the "network" had a negative impact on it. Also, according to the Barro Regression analysis of the impact on mid-term economic growth rate, general "trust" in others in a "wide" area had a positive impact on the economic growth of the said area (however, there is no spill-over effect on other areas), while, the "trust" in a "small" area, i.e. the "trust" in one's neighbors, friends and acquaintances, and relatives had a negative external impact on the surrounding areas. The above-mentioned results indicate both positive and negative aspects of social capital in terms of the regional economy of Japan - I therefore think it is meaningful to focus on these factors when developing a plan for future recovery of regional economy.

Suggested Citation

  • Saisuke Sakai, 2012. "Social Capital and Regional Economy: Empirical Analysis Using Individual Data from Questionnaire Survey," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 8(5), pages 705-736, November.
  • Handle: RePEc:mof:journl:ppr019f

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    References listed on IDEAS

    1. Yoichi Matsubayashi, 2011. "Exchange Rate, Expected Profit And Capital Stock Adjustment: Japanese Experience," The Japanese Economic Review, Japanese Economic Association, vol. 62(2), pages 215-247, June.
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    4. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    5. Campa, Jose & Goldberg, Linda S., 1995. "Investment in manufacturing, exchange rates and external exposure," Journal of International Economics, Elsevier, vol. 38(3-4), pages 297-320, May.
    6. Campa, Jose Manuel & Goldberg, Linda S, 1999. "Investment, Pass-Through, and Exchange Rates: A Cross-Country Comparison," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(2), pages 287-314, May.
    7. Kazuo Ogawa, 2003. "Financial Distress and Corporate Investment: The Japanese Case in the 90s," ISER Discussion Paper 0584, Institute of Social and Economic Research, Osaka University.
    8. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
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    More about this item


    Social Capital; Trust; Norm; and Network;

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General


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