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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.

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  • 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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    5. Boubakri, Narjess & Mirzaei, Ali & Samet, Anis, 2017. "National culture and bank performance: Evidence from the recent financial crisis," Journal of Financial Stability, Elsevier, vol. 29(C), pages 36-56.
    6. 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.
    7. 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.
    8. Benjamin Enke, 2019. "Kinship, Cooperation, and the Evolution of Moral Systems," The Quarterly Journal of Economics, Oxford University Press, vol. 134(2), pages 953-1019.
    9. Guichuan Deng & Jing Shi & Yanli Li & Yin Liao, 2021. "The COVID‐19 pandemic: shocks to human capital and policy responses," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(4), pages 5613-5630, December.
    10. Maria Rosaria Carillo & Vincenzo Lombardo & Alberto Zazzaro, 2015. "Family Firms and Entrepreneurial Human Capital in the Process of Development," CSEF Working Papers 400, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    11. Saad, Mohsen & Samet, Anis, 2020. "Collectivism and commonality in liquidity," Journal of Business Research, Elsevier, vol. 116(C), pages 137-162.
    12. 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.
    13. Paolo Zeppini & Koen Frenken, 2018. "Networks, Percolation, and Consumer Demand," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 21(3), pages 1-1.
    14. 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.
    15. Dutz, Mark A., 2013. "Resource reallocation and innovation : converting enterprise risks into opportunities," Policy Research Working Paper Series 6534, The World Bank.
    16. 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.
    17. Paolo Zeppini & Koen Frenken & Roland Kupers, 2013. "The complexity of transitions," Working Papers 13-04, Eindhoven Center for Innovation Studies, revised Mar 2013.
    18. Jesse Perla & Christopher Tonetti, 2014. "Equilibrium Imitation and Growth," Journal of Political Economy, University of Chicago Press, vol. 122(1), pages 52-76.
    19. Jayasekara, Dinithi N., 2021. "Can traditional farming practices explain attitudes towards scientific progress?," Economic Modelling, Elsevier, vol. 94(C), pages 320-339.
    20. Mounir Amdaoud & Giuseppe Arcuri & Nadine Levratto, 2021. "Are regions equal in adversity? A spatial analysis of spread and dynamics of COVID-19 in Europe," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 22(4), pages 629-642, June.
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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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