Social capital and economic development: A cross-national study of social capital, trust, civic engagement, and economic growth of 38 countries, 1990--1998

This research presents evidence that social capital matters for the economic development of countries. My analysis arrived at five major findings. First, trust and civic norms are positively associated with stronger economic growth. Second, memberships in voluntary associations in general are not correlated with better economic performance of countries---contrary to Robert Putnam's finding across the Italian regions, which was reported in Making Democracy Work (Princeton University Press, 1993). However, associational memberships are conducive to the formation of trust but not to growth or investment directly. Third, trust is positively related to strong formal institutions and is greater in countries that are economically and socially less polarized. Fourth, the hypotheses Putnam presented in Bowling Alone (Simon & Schuster, 2000) concerning social capital and civic disengagement are empirically proven to be true for a cross-country sample of 36 developed and developing countries. Fifth, my Social Capital Index (SKI) is positively and significantly correlated with higher growth. Countries with high SKI rankings tend to have higher per capita income, better education, more civic-minded populations, lower income inequality, and stronger formal institutions than low SKI countries.