Inclusive Growth Through Creation of Human and Social Capital

Dinda, Soumyananda (2011): Inclusive Growth Through Creation of Human and Social Capital. Published in: International Journal of Social Economics , Vol. 41, No. 10 (October 2014): pp. 878-895.

Abstract

This paper analyses inclusive growth that focuses on the creation of opportunities for all. Inclusive growth allows people to contribute to and benefit from economic growth, while pro-poor growth approaches focusing on welfare of the poor only to reduce inequality. Recently, economics literature incorporates social capital for explaining regional disparities. Economic development of country depends on the impact of social capital which includes social culture, norms and regulations that promote economic reforms and development activities. Social capital forms with the development of human capital through schooling. Educated individuals are interested in dialogue and conversation. Interaction enables people to build trust, confidence and cooperation, to commit themselves to each other (i.e. reciprocity), and thereby to knit the social fabric. This study deals with the formation of social capital through development of human capital that is created through improvement of schooling and/or social inclusion. Creation of human and social capital is the basis for inclusive growth. The predictions of the model are examined empirically for a cross-section of countries and findings support the model.

• Item Type: MPRA Paper
• Language: English
• Keywords: Human Capital, Inclusive Growth, Pro-poor Growth, Social Capital, Social network, Productive Consumption, Schooling, Social Inclusion, Co-operation, Reciprocity, Economic growth, Economic Development.
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C21 - Cross-Sectional Models ; Spatial Models ; Treatment Effect Models ; Quantile Regressions; H - Public Economics > H5 - National Government Expenditures and Related Policies > H52 - Government Expenditures and Education; I - Health, Education, and Welfare > I2 - Education and Research Institutions > I25 - Education and Economic Development; I - Health, Education, and Welfare > I2 - Education and Research Institutions > I28 - Government Policy; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O41 - One, Two, and Multisector Growth Models; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence; Z - Other Special Topics > Z1 - Cultural Economics ; Economic Sociology ; Economic Anthropology > Z13 - Economic Sociology ; Economic Anthropology ; Social and Economic Stratification; Z - Other Special Topics > Z1 - Cultural Economics ; Economic Sociology ; Economic Anthropology > Z18 - Public Policy

References

Alesina, A. and Ferrara, E. La. (2002), Who trusts others?, Journal of Public Economics, vol.-85, 207-234.

Ali, Ifzal (2007), Inequality and the imperative for Inclusive Growth in Asia, Asian Development Review, Vol.-24(2), 1-16.

Ali, I. And Yao, X. (2004), Pro-Poor Inclusive Growth for sustainable poverty reduction in developing Asia:: the enabling role of infrastructure development, ERD Policy Brief Series No. 27, ADB, Manila.

Ali, I. and Son, H. (2007), Defining and measuring inclusive growth: Asian prescriptions, ERD Policy Brief Series No. 48, ADB, Manila.

Ali, I. and Zhuang, J. (2007), Inclusive Growth towards a Prosperous Asia: Policy Implications, ERD Policy Brief Series No. 97, ADB, Manila.

Ballamoune-Lutz, M. (2005), Institutions, Social Capital, and Economic Development in Africa: An empirical study, ICER working Paper No. 18/2005.

Bengtsson, M., Berggren, N. and Jordahl, H. (2005), Trust and Growth in the 1990s: A Robustness Analysis, Department of Economics, Uppsala University, Sweden, Working paper No. 2005:1.

Berggren, N. and Jordahl, H. (2006), Free to Trust: Economic Freedom and Social Capital, Kyklos, vol.-59(2), 141-169.

Bertrand M.; Luttmer E. F. P.; Mullainathan S. (2000), Network Effects and Welfare Cultures, Quarterly Journal of Economics, vol.-115(3), 1019-1055.

Beugelsdijk, S. and Smulders, S. (2004), Social Capital and Economic growth, Working paper.

Bird, K. (2008), The Political Economy of Pro-Poor Growth: The challenge of making growth pro-poor, Briefing Paper No. 35, Overseas Development Institute, London.

Bjornskov, C. (2006), The multiple facets of social capital, European Journal of Political Economy, vol.-22, 22-40.

Bourdieu, P. (1980), The production of belief: contribution to an economy of symbolic goods; Media, Culture and Society, vol-2(3), 261-293.

Bourdieu, P. (1986), The forms of capital, In John G. Richardson (ed.) Handbook of Theory and Research for the Sociology of Education, Westport, CT, Greenwood Press, 242 – 258.

Coleman, J.S. (1988), Social capital in the creation of human capital, American Journal of Sociology, vol-94, 95-121.

Coleman, J.S. (1990), Foundations of Social Theory, Cambridge, MA, Harvard University Press.

Dasgupta, D. and Marjit, S. (2002), Consumption, quality of Life and Growth, Economic Research Unit, Indian Statistical Institute, Kolkata, Working Paper-ERU/2002-12.

Diamantaras, D. and Swanson, C. E. (2004), Culture as Organizational capital in Economic Growth, Competition among culture, April 22, 1-30.

Dinda, S. (2008), Social capital in the creation of human capital and economic growth: a productive consumption approach, Journal of Socio- Economics, vol. 37(4), 2020-2033.

Dowla, Asif (2006), In Credit we trust: Building Social capital by Grammeen Bank in Bangladesh, The Journal of Socio-Economics, vol.-35, 102 – 122.

Eastwood, R. and Lipton, M. (2002), Pro-poor Growth and Pro-growth Poverty Reduction: Meaning, Evidence, and Policy Implications, Asian Development Review, vol.-18(2), 22-58.

Fernando, N. (2008), Rural Development outcomes and drivers: an overview and some lessons, EARD Special studies, ADB, Manila.

Glaeser E. L.; Laibson D. I.; Scheinkman J. A.; Soutter C. L. (2000), Measuring Trust, Quarterly Journal of Economics, vol.-115(3), 811-846.

Glewwe, P. and Kremer, M. (2005), Schools, Teachers, and Education Outcomes in Developing Countries, Harvard University, CID Working Paper No. 122.

Imbs, J. and Wacziarg, R. (2003), Stages of Diversification, American Economic Review, Vol.-93(1), 63-86.

Kakwani, N. and Pernia, E. (2000), What is Pro-Poor Growth?, Asian Development Review, vol.-18, 1-16.

Knack, Stephen., and Keefer, Philip. (1997), Does Social Capital Have an Economic Payoff? A Cross-Country Investigation, Quarterly Journal of Economics, vol.-112(4), 1251-1288.

Kraay, A. (2004), When is Growth Pro-Poor? Evidence from a Panel of Countries, The World Bank, Policy Research Working Paper No. 3225.

Lin, N. (2001), Social Capital, Cambridge, Cambridge University Press.

Lin, Y. Justin (2004), Development Strategies for Inclusive Growth in Developing Asia, Asian Development Review, Vol.-21(3), 1-27.

Lopez, J. Humberto (2010), Pro-growth, pro-poor: Is there a trade-off? The World Bank, Policy Research Working Paper 3378.

Lopez, J. Humberto (2011), Pro-growth, pro-poor: a review of what we know (and of what we don’t), The World Bank, Policy Research Working Paper 15163 (draft).

Miguel, E. (2003), Comment on Social Capital and growth, Journal of Monetary Economics, vol.-50, 195-198.

McKinley, T. (2010), Inclusive Growth Criteria and Indicators: An Inclusive Growth Index for Diagnosis of Country Progress, ADB Sustainable Development Working Paper No. 14.

Park, A. and Hannum, E. (2001), Do Teachers Affect Learning in Developing Countries?: Evidence from Matcched Student-Teacher Data from China, Fairbank Center, Harvard University. Paper prepared for the conference on Rethinking Social Science Research on the Developing World in the 21st Century, Social Science Research Council, Park City Utah, June 7-11, 2001.

Putnam, Robert (2000), Bowling Alone: The Collapse and Revival of American Community, Simon and Schuster, New York.

Putnam, Robert (1995), Bowling Alone: America’s Declining Social Capital, Journal of Democracy, Vol-6, 65-78.

Putnam, Robert, Leonardi, Robert. and Nametti, Raffaella (1993), Making Democracy Work, Princeton, Princeton University Press.

Ravallion, M. (2004), Pro-Poor Growth: A Primer, The World Bank, Policy Research Working Paper No. 3242.

Ravallion, M. and Chen, S. (2003), Measuring Pro-poor Growth, Economics Letters 78, 93-99.

Rupasingha, A., Goetz, S. J. and Freshwater, D. (2006), The Production of social capital in U.S. countries, The Journal of Socio-Economics, vol.-35, 83 – 101.

Sabatini, F. (2006), Does Social capital Improve Labour productivity in small and medium enterprises?, University of Rome, Working paper n.92

Sobel, Joel (2002), Can We Trust Social Capital?, Journal of Economic Literature, Vol.-XL, 139-154.

Steger, T. M. (2000), Economic growth with subsistence consumption, Journal of Development Economics, vol.-62, 343-361.

Steger, T. M. (2002), Productive consumption, the intertemporal consumption trade-off and growth, Journal of Economic Dynamics & Control, vol.-26, 1053-1068.

Tau, L. M. (2003), Investing Social Capital to stimulate economic growth and trade in Africa, Paper presented at the Biennial conference of the economic society of S. Africa.

Temple J.; Johnson P. A. (1998), Social Capability and Economic Growth, Quarterly Journal of Economics, vol.-113(3), 965-990.

UNESCO (2011), Building Human Capacities in Least Developed Countries to Promote Poverty Eradication and Sustainable Development, Paris.

World Bank (2005), Pro-poor Growth in the 1990s: Lessons and insights from 14 countries, World Bank, Washington DC.

Zak, P. J. and Knack, S. (2001), Trust and Growth, Economic Journal, vol.111, 295-321.

Zhuang, J. (2008), Inclusive Growth toward a Harmonious Society in the People’s Republic of China: Policy Implication, Asian Development Review, Vol.25(2), 22-33.