An Empirical Analysis of Social Capital and Economic Growth in Europe (1980–2000)

It is of paramount concern for economists to uncover the factors that determine economic growth and social development. In recent years a new field of investigation has come to the fore in which social capital is analysed in order to determine its effect on economic growth. Along these lines the work presented here examines the relationships that exist between human and social capital and economic growth. The applied part of the analysis is performed using a panel data model for 14 economically developed countries (OEDC) and by using a series of chronological periods that fall within the 1980–2000 time-frame. A revision of the social capital literature was first carried out and the potential links between social and human capital discussed. The study begins by assessing the way in which the two types of capital interact, how they should be measured and the best way of quantifying their importance within applied models. The econometric model uses panel data, and this enables the analysis to obtain robust results with respect to the role of different types of capital i.e. human physical and social.