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Growth and social capital: an evolutionary model

Author

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  • Luca Correani

  • Fabio Di Dio

  • Giuseppe Garofalo

Abstract

In this paper, we analyze the role of cooperation between firms through a model of growth and social capital. In a growth model à la Solow we incorporate the set of resources that a relational network has at its disposals, as a distinct production factor, and thus examine its dissemination through evolutionary type processes in firm interactions. Dynamic analysis of the model demonstrates that cooperation is able to increase the productivity of factors, fostering a higher rate of growth in the long term. The most significant result is that scarcity of social capital can produce a general collapse of the economic system in areas in which long term growth is usually sustained by the learning by doing and spillover of knowledge phenomena. This conclusion leads to reconsider the role of local development economic policies that should concentrate on activities that promote repeated interaction between firms proven to be cooperative or that encourage the formation of technological consortia.
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Suggested Citation

  • Luca Correani & Fabio Di Dio & Giuseppe Garofalo, 2011. "Growth and social capital: an evolutionary model," Quality & Quantity: International Journal of Methodology, Springer, vol. 45(1), pages 173-186, January.
    • Handle: RePEc:spr:qualqt:v:45:y:2011:i:1:p:173-186
    DOI: 10.1007/s11135-010-9363-3
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    1. Martin, Philippe & Rogers, Carol Ann, 1997. "Stabilization Policy, Learning-by-Doing, and Economic Growth," Oxford Economic Papers, Oxford University Press, vol. 49(2), pages 152-166, April.
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    5. Abigail Barr, 1995. "The missing factor: entrepreneurial networks, enterprises and economic growth in Ghana," CSAE Working Paper Series 1995-11, Centre for the Study of African Economies, University of Oxford.
    6. Fabio Sabatini, 2008. "Social Capital and the Quality of Economic Development," Kyklos, Wiley Blackwell, vol. 61(3), pages 466-499, August.
    7. Vega-Redondo, Fernando, 2006. "Building up social capital in a changing world," Journal of Economic Dynamics and Control, Elsevier, vol. 30(11), pages 2305-2338, November.
    8. Chou, Yuan K., 2006. "Three simple models of social capital and economic growth," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 35(5), pages 889-912, October.
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    2. Justyna Supińska, 2013. "Does human factor matter for economic growth? Determinants of economic growth process in CEE countries in light of spatial theory," Bank i Kredyt, Narodowy Bank Polski, vol. 44(5), pages 505-532.

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    Keywords

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    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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