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Social Cohesion and Economic Growth: Small States vs Large States

BRITO, JOÃO ANTONIO (2015): Social Cohesion and Economic Growth: Small States vs Large States.

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Abstract

The purpose of this paper is to analyze empirically if the effect of social cohesion on economic growth is conditioned by country size. Two groups of countries, large and small, were set up, and by using the System-GMM estimator and panel data in a 5-year rolling window, from 1970 to 2010, the impact of civil war and ethnic tension on growth rate of GDP per capita of the two groups of states was estimated. Also, the difference between small and large states in terms of the impact of civil war and ethnic tension on β-convergence rate was analyzed. We conclude that the effects of social cohesion (measured by civil war) in economic growth and in β-convergence rate are influenced by country size, and the positive effect is higher in small states.

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