Does Social Capital Matter for European Regional Growth

This working paper analyzes the role of different elements of social capital in economic growth for a sample of 85 European regions during the period 1995-2008. Despite the remarkable progress that social capital and European regional economic growth literatures have experienced over the last two decades, initiatives combining the two are few, and entirely yet to come for the post-1990s period. Recent improvements in data availability allow this gap in the literature to be closed, since they enable the researcher to consider the traditionally disregarded Central and Eastern European regions. This is particularly interesting, since they are all transition economies that recently joined the European Union, with relatively low levels of social capital. On the methodological side, we follow the Bayesian paradigm, which enables us to make direct inferences on the parameters to be estimated and deal with parameter uncertainty, leading to a deeper understanding of the relationships being investigated. Contrary to other contributions for the European context, results suggest, among other findings, that trust and social norms might have some implications for regional growth, whereas the role of active participation in groups remains unclear.