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A Model Explaining the Relationship between Economic Growth and Social Capital


  • Alexandre Rands

    () (Universidade Federal de Pernambuco)


This paper presents a growth model that incorporates the social capital as a growth determinant. Social capital enters the model through its potential reduction in the risk perceived by agents, when making investments decisions. The key feature of the model is that firms pursue an inter-temporal optimisation, so that their current decisions affect their future productivity. Consequently, technological investiments become a rational decision, in which social capital becomes a relevant parameter affecting it. The model shows that the higher the social capital, the higher is the equilibrium growth rate.

Suggested Citation

  • Alexandre Rands, 2011. "A Model Explaining the Relationship between Economic Growth and Social Capital," Working Papers 58, Datamétrica Consultoria Econômica, revised 2011.
  • Handle: RePEc:dtm:wpaper:58

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    File Function: Revised version, 2011.
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    References listed on IDEAS

    1. Gary S. Becker & Kevin M. Murphy & Robert Tamura, 1994. "Human Capital, Fertility, and Economic Growth," NBER Chapters,in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 323-350 National Bureau of Economic Research, Inc.
    2. David de la Croix & Matthias Doepke, 2003. "Inequality and Growth: Why Differential Fertility Matters," American Economic Review, American Economic Association, vol. 93(4), pages 1091-1113, September.
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    More about this item


    Endogenous growth; social capital; endogenous technological change; long term growth; firm’s dynamic optimization.;

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models


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