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Social Capital, Creative Destruction and Economic Growth

Author

Listed:
  • Dirk J Bezemer

    (University of London)

  • Uwe Dulleck
  • Paul Frijters

Abstract

This paper provides an analytical framework to capture the economic importance of social capital for growth and innovation. Relational Capital (RC) consists of contacts between economic necessary to acquire inputs and to sell outputs units. These contacts form the individual aspect of social capital that is directly productive. Replacement of old contacts by new ones is part of Schumpeterian creative destruction leading to technological progress. Because informal social networks facilitate the search for contacts, many empirical studies find that social networks supports income generation and innovation. Market institutions enjoy increasing returns to scale in aiding contact formation compared to informal social capital networks. For growth rates in developing countries to increase, a 'fundamental transformation' from informal to formal search institutions is therefore required. But since RC replacement carries a negative externality, creative destruction and technological progress may be punished if it threatens political elite interests. Growth experiences in transition and developing countries are interpreted in this framework.

Suggested Citation

  • Dirk J Bezemer & Uwe Dulleck & Paul Frijters, 2004. "Social Capital, Creative Destruction and Economic Growth," School of Economics and Finance Discussion Papers and Working Papers Series 186a, School of Economics and Finance, Queensland University of Technology.
  • Handle: RePEc:qut:dpaper:186a
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    File URL: http://external-apps.qut.edu.au/business/documents/discussionPapers/2004/WP186a.pdf
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    References listed on IDEAS

    as
    1. Xiaowen Tian, 1999. "Market Orientation and Regional Economic Disparities in China," Post-Communist Economies, Taylor & Francis Journals, vol. 11(2), pages 161-172.
    2. Paul Mosley & Marina Della Giusta, 1999. "A model of social capital and access to productive resources," Journal of International Development, John Wiley & Sons, Ltd., vol. 11(7), pages 921-934.
    3. Dirk Bezemer & Uwe Dulleck & Paul Frijters, 2003. "Contacts, Social Capital and Market Institutions - A Theory of Development," Vienna Economics Papers 0311, University of Vienna, Department of Economics.
    4. Samuel Bowles & Herbert Gintis, 2002. "Social Capital and Community Governance," Economic Journal, Royal Economic Society, vol. 112(483), pages 419-436, November.
    5. Larry H. P. Lang & Mara Faccio & Leslie Young, 2001. "Dividends and Expropriation," American Economic Review, American Economic Association, vol. 91(1), pages 54-78, March.
    6. Steven N. Durlauf, 2002. "On the Empirics of Social Capital," Economic Journal, Royal Economic Society, vol. 112(483), pages 459-479, November.
    7. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, Oxford University Press, vol. 84(3), pages 488-500.
    8. Edward L. Glaeser & David Laibson & Bruce Sacerdote, 2002. "An Economic Approach to Social Capital," Economic Journal, Royal Economic Society, vol. 112(483), pages 437-458, November.
    9. Temple, Jonathan, 1998. "Initial Conditions, Social Capital and Growth in Africa," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 7(3), pages 309-347, October.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Bezemer, Dirk & Dulleck, Uwe & Frijters, Paul, 2005. "Social Capital, Creative Destruction and Economic Development," Research Report 05C09, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    2. Thomas Farole & Andres Rodriguez-Pose & Michael Storper, 2007. "Social capital, rules, and institutions: A cross-country investigation," Sciences Po publications 2007-12, Sciences Po.
    3. Knowles, Stephen, 2006. "Is Social Capital Part of the Institutions Continuum and is it a Deep Determinant of Development?," WIDER Working Paper Series 025, World Institute for Development Economic Research (UNU-WIDER).
    4. repec:dgr:rugsom:05c09 is not listed on IDEAS
    5. Silvia London & Wiston Adrian Risso & Juan Gabriel Brida, 2008. "Human capital and innovation: a model of endogenous growth with a “skill-loss effect”," Economics Bulletin, AccessEcon, vol. 15(7), pages 1-10.

    More about this item

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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