The Effect of Macro-Level Social Capital on Sustainable Economic Development

University of Tartu Faculty of Economics and Business Administration Working Paper No. 42

50 Pages Posted: 15 Jan 2006

See all articles by Helje Kaldaru

Helje Kaldaru

University of Tartu - Faculty of Economics and Business Administration

Eve Parts

University of Tartu - Faculty of Economics and Business Administration

Date Written: December 27, 2005

Abstract

The concept of social capital as an important determinant of economic development is attracting increasing attention among development economists. The present paper analyses the impact of macro-level social capital on economic development in 34 European countries. Macro-level social capital comprises different aspects of institutional quality and is closely related to the income distribution and social cohesion. We used principal component analysis to group initially selected social determinants of economic development into three components (human and social capital, income equality, and redistribution), which altogether described 64.4% of the variation of the initial variables. Following regression analysis proved that all these components have a positive effect on economic development, measured by human development index.

Keywords: social capital, economic development, sustainability, European economies

JEL Classification: O11

Suggested Citation

Kaldaru, Helje and Parts, Eve, The Effect of Macro-Level Social Capital on Sustainable Economic Development (December 27, 2005). University of Tartu Faculty of Economics and Business Administration Working Paper No. 42, Available at SSRN: https://ssrn.com/abstract=875435 or http://dx.doi.org/10.2139/ssrn.875435

Helje Kaldaru (Contact Author)

University of Tartu - Faculty of Economics and Business Administration ( email )

Narva Road 4 - A210
Tartu
Estonia
+ 372 7 375 841 (Phone)

Eve Parts

University of Tartu - Faculty of Economics and Business Administration ( email )

Narva Rd. 4-A214
Tartu 51009, 51009
Estonia

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