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Social Capital in the creation of Human Capital and Economic Growth: A Productive Consumption Approach

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  • Dinda, Soumyananda

Abstract

Social capital is a broad term containing the social networks and norms that generate shared understandings, trust and reciprocity, which underpin cooperation and collective action for mutual benefits, and creates the base for economic prosperity. This study deals with the formation of social capital through development of human capital that is created from productive consumption. This paper attempts to formalize incorporation of social capital (SK). This paper sets up a one-sector growth model, where the engine of growth is capital accumulation. The production function for final output is of the AK – type, which uses aggregate capital as single input. Aggregate capital is represented by a Cobb-Douglas index comprising three types capital. Human capital accumulation results from productive consumption and an increase in social capital is driven by the existence of human capital. The optimal growth rate of consumption is derived and it is shown that both human capital and social capital accumulation affect the equilibrium growth rate. Finally, paper presents some empirical evidence on social capital and economic growth.

Suggested Citation

  • Dinda, Soumyananda, 2006. "Social Capital in the creation of Human Capital and Economic Growth: A Productive Consumption Approach," MPRA Paper 50586, University Library of Munich, Germany, revised 28 May 2007.
    • Handle: RePEc:pra:mprapa:50586
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    More about this item

    Keywords

    Social capital; human capital; economic growth; network; cooperation; collective action; trust and reciprocity.;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • Z1 - Other Special Topics - - Cultural Economics
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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