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Germs, Social Networks and Growth

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  • Fogli, Alessandra
  • Veldkamp, Laura

Abstract

Does the pattern of social connections between individuals matter for macroeconomic outcomes? If so, where do these differences come from and how large are their effects? Using network analysis tools, we explore how different social network structures affect technology diffusion and thereby a country's rate of growth. The correlation between high-diffusion networks and income is strongly positive. But when we use a model to isolate the effect of a change in social networks, the effect can be positive, negative, or zero. The reason is that networks diffuse ideas and disease. Low-diffusion networks have evolved in countries where disease is prevalent because limited connectivity protects residents from epidemics. But a low-diffusion network in a low-disease environment needlessly compromises the diffusion of good ideas. In general, social networks have evolved to fit their economic and epidemiological environment. Trying to change networks in one country to mimic those in a higher-income country may well be counterproductive.

Suggested Citation

  • Fogli, Alessandra & Veldkamp, Laura, 2018. "Germs, Social Networks and Growth," CEPR Discussion Papers 13312, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:13312
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    Cited by:

    1. Javier Mejia, 2018. "Social Interactions and Modern Economic Growth," Working Papers 20180021, New York University Abu Dhabi, Department of Social Science, revised Sep 2018.
    2. Lindner, Ines & Strulik, Holger, 2014. "From tradition to modernity: Economic growth in a small world," Journal of Development Economics, Elsevier, vol. 109(C), pages 17-29.
    3. Maria Rosaria Carillo & Vincenzo Lombardo & Alberto Zazzaro, 2019. "The rise and fall of family firms in the process of development," Journal of Economic Growth, Springer, vol. 24(1), pages 43-78, March.
    4. Saad, Mohsen & Samet, Anis, 2020. "Collectivism and commonality in liquidity," Journal of Business Research, Elsevier, vol. 116(C), pages 137-162.
    5. Paolo Zeppini & Koen Frenken & Luis R. Izquierdo, 2013. "Innovation diffusion in networks: the microeconomics of percolation," Working Papers 13-02, Eindhoven Center for Innovation Studies, revised Feb 2013.
    6. Tiago V. V. Cavalcanti & Chryssi Giannitsarou, 2017. "Growth and Human Capital: A Network Approach," Economic Journal, Royal Economic Society, vol. 127(603), pages 1279-1317, August.
    7. Dutz, Mark A., 2013. "Resource reallocation and innovation : converting enterprise risks into opportunities," Policy Research Working Paper Series 6534, The World Bank.
    8. Zhu, J., 2018. "The agricultural root of innovation in China," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277219, International Association of Agricultural Economists.
    9. Jayasekara, Dinithi N., 2021. "Can traditional farming practices explain attitudes towards scientific progress?," Economic Modelling, Elsevier, vol. 94(C), pages 320-339.
    10. Viktor Stojkoski & Zoran Utkovski & Petar Jolakoski & Dragan Tevdovski & Ljupco Kocarev, 2020. "The socio-economic determinants of the coronavirus disease (COVID-19) pandemic," Papers 2004.07947, arXiv.org, revised Nov 2020.
    11. Elsner, Benjamin & Narciso, Gaia & Thijssen, Jacco J. J., 2013. "Migrant Networks and the Spread of Misinformation," IZA Discussion Papers 7863, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Development; disease; economic networks; growth; pathogens; Social Networks; technology diffusion;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • I1 - Health, Education, and Welfare - - Health
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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