IDEAS home Printed from https://ideas.repec.org/a/bic/journl/v8y2008i1p29-51.html
   My bibliography  Save this article

Social and institutional factors of economic development: evidence from Europe

Author

Listed:
  • Helje Kaldaru

    (Faculty of Economics and Business Administration, University of Tartu)

  • Eve Parts

    (Faculty of Economics and Business Administration, University of Tartu)

Abstract

Social and institutional determinants of economic development are attracting increasing attention among development economists. The present paper analyses the impact of macro-level social capital and related social factors on economic development in 34 European countries. Macro-level social capital comprises different aspects of institutional quality and is closely related to 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 describe 64.4% of the variation in initial variables. The following regression analysis proved that all these components have a positive effect on economic development, measured by the human development index.

Suggested Citation

  • Helje Kaldaru & Eve Parts, 2008. "Social and institutional factors of economic development: evidence from Europe," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 8(1), pages 29-51, October.
    • Handle: RePEc:bic:journl:v:8:y:2008:i:1:p:29-51
    as

    Download full text from publisher

    File URL: https://www.tandfonline.com/doi/epdf/10.1080/1406099X.2008.10840444
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. John F. Helliwell & Robert D. Putnam, 1995. "Economic Growth and Social Capital in Italy," Eastern Economic Journal, Eastern Economic Association, vol. 21(3), pages 295-307, Summer.
    3. Alesina, Alberto & Devleeschauwer, Arnaud & Easterly, William & Kurlat, Sergio & Wacziarg, Romain, 2003. "Fractionalization," Journal of Economic Growth, Springer, vol. 8(2), pages 155-194, June.
    4. John F. Helliwell, 1996. "Economic Growth and Social Capital in Asia," NBER Working Papers 5470, National Bureau of Economic Research, Inc.
    5. World Commission on Environment and Development,, 1987. "Our Common Future," OUP Catalogue, Oxford University Press, number 9780192820808.
    6. Stephen Knack & Philip Keefer, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1251-1288.
    7. Alesina, Alberto & Perotti, Roberto, 1996. "Income distribution, political instability, and investment," European Economic Review, Elsevier, vol. 40(6), pages 1203-1228, June.
    8. Helliwell, John F., 1994. "Empirical Linkages Between Democracy and Economic Growth," British Journal of Political Science, Cambridge University Press, vol. 24(2), pages 225-248, April.
    9. Barro, Robert J, 1996. "Democracy and Growth," Journal of Economic Growth, Springer, vol. 1(1), pages 1-27, March.
    10. William Easterly & Ross Levine, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1203-1250.
    11. Daniel Kaufmann & Aart Kraay, 2002. "Growth without Governance," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2002), pages 169-230, August.
    12. Rodrik, Dani, 1999. "Where Did All the Growth Go? External Shocks, Social Conflict, and Growth Collapses," Journal of Economic Growth, Springer, vol. 4(4), pages 385-412, December.
    13. Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross‐Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
    14. Scully, Gerald W, 1988. "The Institutional Framework and Economic Development," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 652-662, June.
    15. Beugelsdijk, Sjoerd & van Schaik, Ton, 2005. "Social capital and growth in European regions: an empirical test," European Journal of Political Economy, Elsevier, vol. 21(2), pages 301-324, June.
    16. Anil Rupasingha & Stephan J. Goetz & David Freshwater, 2002. "Social and institutional factors as determinants of economic growth: Evidence from the United States counties," Papers in Regional Science, Springer;Regional Science Association International, vol. 81(2), pages 139-155.
    17. A. Chong & C. Calderón, 2000. "Causality and Feedback Between Institutional Measures and Economic Growth," Economics and Politics, Wiley Blackwell, vol. 12(1), pages 69-81, March.
    18. Gerald M. Meier, 2002. "Culture, Social Capital, and Management in a Developing Economy," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 5(1), pages 1-15, May.
    19. Paldam, M. & Svendsen, G.T., 2000. "Missing Social Capital and the Transition in Eastern Europe," Papers 00-5, Aarhus School of Business - Department of Economics.
    20. Dani Rodrik & Tain-Jy Chen, 1998. "TFPG Controversies, Institutions and Economic Performance in East Asia," International Economic Association Series, in: Yujiro Hayami & Masahiko Aoki (ed.), The Institutional Foundations of East Asian Economic Development, chapter 4, pages 79-105, Palgrave Macmillan.
    21. Alberto Alesina & Eliana La Ferrara, 2003. "Ethnic Diversity and Economic Performance," Harvard Institute of Economic Research Working Papers 2028, Harvard - Institute of Economic Research.
    22. Kormendi, Roger C. & Meguire, Philip G., 1985. "Macroeconomic determinants of growth: Cross-country evidence," Journal of Monetary Economics, Elsevier, vol. 16(2), pages 141-163, September.
    23. World Bank, 2004. "Responsible Growth for the New Millennium : Integrating Society, Ecology and the Economy," World Bank Publications - Books, The World Bank Group, number 14853.
    24. Paul Collier, 2000. "Ethnicity, Politics and Economic Performance," Economics and Politics, Wiley Blackwell, vol. 12(3), pages 225-245, November.
    25. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(3), pages 681-712.
    26. Hjerppe, Reino, 1998. "Social Capital and Economic Growth," Discussion Papers 183, VATT Institute for Economic Research.
    27. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mohammad Salam Ibrahim AlShiab & Husam-Aldin N. Al-Malkawi & Abdelmounaim Lahrech, 2020. "Revisiting the Relationship between Governance Quality and Economic Growth," International Journal of Economics and Financial Issues, Econjournals, vol. 10(4), pages 54-63.
    2. S. S. Abere & T. O. Akinbobola, 2020. "External Shocks, Institutional Quality, and Macroeconomic Performance in Nigeria," SAGE Open, , vol. 10(2), pages 21582440209, May.
    3. Cui, Yanfang & Li, Li & Lei, Yalin & Wu, Sanmang, 2024. "The performance and influencing factors of high-quality development of resource-based cities in the Yellow River basin under reducing pollution and carbon emissions constraints," Resources Policy, Elsevier, vol. 88(C).
    4. Maack, Maria & Davidsdottir, Brynhildur, 2015. "Five capital impact assessment: Appraisal framework based on theory of sustainable well-being," Renewable and Sustainable Energy Reviews, Elsevier, vol. 50(C), pages 1338-1351.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Helje Kaldaru & Eve Parts, 2005. "The Effect Of Macro-Level Social Capital On Sustainable Economic Development," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 42, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    2. Arvanitidis, Paschalis & Petrakos, George & Pavleas, Sotiris, 2007. "Determinants of economic growth: the experts’ view," Papers DYNREG20, Economic and Social Research Institute (ESRI).
    3. Ignacio Amate-Fortes & Almudena Guarnido-Rueda & Agustin Molina-Morales, 2017. "Economic and Social Determinants of Human Development: A New Perspective," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 133(2), pages 561-577, September.
    4. Siddiqui, Danish Ahmed & Ahmed, Qazi Masood, 2013. "The effect of institutions on economic growth: A global analysis based on GMM dynamic panel estimation," Structural Change and Economic Dynamics, Elsevier, vol. 24(C), pages 18-33.
    5. Johannes Fedderke, 2001. "Growth and institutions," Journal of International Development, John Wiley & Sons, Ltd., vol. 13(6), pages 645-670.
    6. Johannes Fedderke & John Luiz & Raphael Kadt, 2008. "Using fractionalization indexes: deriving methodological principles for growth studies from time series evidence," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 85(2), pages 257-278, January.
    7. Oktay KIZILKAYA & Murat ÇETÝNKAYA & Emrah SOFUOÐLU, 2017. "Does Social Capital Have an Effect on Industry Production in G7 Countries? Causality Analysis," Journal of Economics Library, KSP Journals, vol. 4(1), pages 54-63, March.
    8. Polimeni, John M. & Iorgulescu Polimeni, Raluca & Trees, W. Scott, 2007. "Extending The Augmented Solow Growth Model To Explain Transitional Economies," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 4(1), pages 65-76, March.
    9. Artelaris, Panagiotis & Arvanitidis, Paschalis & Petrakos, George, 2007. "Explaining Knowledge-Based Economic Dynamism in a Global Scale," Papers DYNREG05, Economic and Social Research Institute (ESRI).
    10. Simplice A. Asongu & Oasis Kodila-Tedika, 2018. "Determinants of Property Rights Protection in Sub-Saharan Africa," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 9(4), pages 1291-1308, December.
    11. José Aixalá & Gema Fabro, 2007. "A Model Of Growth Augmented With Institutions," Economic Affairs, Wiley Blackwell, vol. 27(3), pages 71-74, September.
    12. Gimenez, G. & Sanau, J., 2009. "Investment, Human Capital and Institutions: A Multi-equational Approach for the Study of Economic Growth, 1985-2000," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 9(1).
    13. Marco Ferroni & Mercedes Mateo Díaz & J. Mark Payne, 2007. "Development under Conditions of Inequality and Distrust: An Exploration of the Role of Social Capital and Social Cohesion in Latin America," IDB Publications (Working Papers) 53818, Inter-American Development Bank.
    14. Janine Aron, 2003. "Building institutions in post-conflict African economies," Journal of International Development, John Wiley & Sons, Ltd., vol. 15(4), pages 471-485.
    15. Mohtadi, Hamid & Roe, Terry L., 1997. "Democracy, rent seeking, and growth: Is there a U curve?," Bulletins 7485, University of Minnesota, Economic Development Center.
    16. Eris, Mehmet, 2010. "Population heterogeneity and growth," Economic Modelling, Elsevier, vol. 27(5), pages 1211-1222, September.
    17. Knack, Stephen, 2002. "Social capital, growth and poverty: a survey of cross-country evidence," MPRA Paper 24893, University Library of Munich, Germany, revised 0200.
    18. Allen, Michael W. & Ng, Sik Hung & Leiser, David, 2005. "Adult economic model and values survey: Cross-national differences in economic beliefs," Journal of Economic Psychology, Elsevier, vol. 26(2), pages 159-185, April.
    19. Gregorio Jiménez & Jaime Sanaú, 2007. "The Desirability of Multi-equational Approaches for the Study of Economic Growth. An Empirical Evidence," Working Papers 02/07, Instituto Universitario de Análisis Económico y Social.
    20. Marion Payen & Patrick Rondé, 2020. "Culture, Institutions and Economic Growth," Working Papers of BETA 2020-18, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.

    More about this item

    Keywords

    Social capital; institutional quality; economic development; European economies;
    All these keywords.

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bic:journl:v:8:y:2008:i:1:p:29-51. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Anna Zasova (email available below). General contact details of provider: https://edirc.repec.org/data/biceplv.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.