IDEAS home Printed from https://ideas.repec.org/a/sgh/gosnar/y2023i2p11-27.html
   My bibliography  Save this article

Social Capital and Economic Development: PLS-SEM Model

Author

Listed:
  • Mateusz Borkowski

Abstract

The aim of this paper is to measure social capital and determine its effect on economic development across thirty five European economies from 2017 to 2020. Partial least squares structural equation modelling (PLS-SEM) was applied to measure and identify the relationship between latent (directly unobservable) variables. Social trust was found to be more strongly determined by interpersonal trust than by trust in organisations. Furthermore, social trust was also found to be the most important component of the overall measure of social capital. The latent variable representing social interaction and attitudes was found to be less important in the formation of social capital. Finally, a strong positive and statistically significant relationship was found between social capital and economic development.

Suggested Citation

  • Mateusz Borkowski, 2023. "Social Capital and Economic Development: PLS-SEM Model," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 2, pages 11-27.
    • Handle: RePEc:sgh:gosnar:y:2023:i:2:p:11-27
    as

    Download full text from publisher

    File URL: https://gnpje.sgh.waw.pl/pdf-163005-91947
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Nasir Saukani & Noor Azina Ismail, 2019. "Identifying the Components of Social Capital by Categorical Principal Component Analysis (CATPCA)," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 141(2), pages 631-655, January.
    2. 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.
    3. Bart Nooteboom, 2007. "Social capital, institutions and trust," Review of Social Economy, Taylor & Francis Journals, vol. 65(1), pages 29-53.
    4. Irene van Staveren, 2003. "Beyond Social Capital in Poverty Research," Journal of Economic Issues, Taylor & Francis Journals, vol. 37(2), pages 415-423, June.
    5. Patrick Francois & Jan Zabojnik, 2005. "Trust, Social Capital, and Economic Development," Journal of the European Economic Association, MIT Press, vol. 3(1), pages 51-94, March.
    6. G. Hodgson, 2007. "What Are Institutions?," Voprosy Ekonomiki, NP Voprosy Ekonomiki, issue 8.
    7. Guido Tabellini, 2010. "Culture and Institutions: Economic Development in the Regions of Europe," Journal of the European Economic Association, European Economic Association, vol. 8(4), pages 677-716, June.
    8. Trent A. Engbers & Michael F. Thompson & Timothy F. Slaper, 2017. "Theory and Measurement in Social Capital Research," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 132(2), pages 537-558, June.
    9. Weng Chang Lee & Siong Hook Law, 2017. "Roles of Formal Institutions and Social Capital in Innovation Activities: A Cross-Country Analysis," Global Economic Review, Taylor & Francis Journals, vol. 46(3), pages 203-231, July.
    10. Robert W. Ciborowski & Iwona Skrodzka, 2019. "International Technology Transfer, Innovation and Economic Development of European Union Countries in 2008-2017," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 384-404.
    11. Voigt, Stefan, 2013. "How (not) to measure institutions: a reply to Robinson and Shirley," Journal of Institutional Economics, Cambridge University Press, vol. 9(1), pages 35-37, March.
    12. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, June.
    13. Francesco Sarracino & Małgorzata Mikucka, 2017. "Social Capital in Europe from 1990 to 2012: Trends and Convergence," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 131(1), pages 407-432, March.
    14. Dinda, Soumyananda, 2008. "Social capital in the creation of human capital and economic growth: A productive consumption approach," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(5), pages 2020-2033, October.
    15. Bernard Chavance, 2008. "Formal and Informal Institutional Change : the Experience of Postsocialist Transformation," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 5(1), pages 57-71, June.
    16. Dash, Ganesh & Paul, Justin, 2021. "CB-SEM vs PLS-SEM methods for research in social sciences and technology forecasting," Technological Forecasting and Social Change, Elsevier, vol. 173(C).
    17. Elzbieta Janton-Drozdowska & Maria Majewska, 2015. "Social capital as a key driver of productivity growth of the economy: across-countries comparison," Working Papers 132/2015, Institute of Economic Research, revised May 2015.
    18. Monecke, Armin & Leisch, Friedrich, 2012. "semPLS: Structural Equation Modeling Using Partial Least Squares," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 48(i03).
    19. Dani Rodrik, 2007. "Introductiion to One Economics, Many Recipes: Globalization, Institutions, and Economic Growth," Introductory Chapters, in: One Economics, Many Recipes: Globalization, Institutions, and Economic Growth, Princeton University Press.
    20. Sarstedt, Marko & Hair, Joseph F. & Cheah, Jun-Hwa & Becker, Jan-Michael & Ringle, Christian M., 2019. "How to specify, estimate, and validate higher-order constructs in PLS-SEM," Australasian marketing journal, Elsevier, vol. 27(3), pages 197-211.
    21. Diana Escandon-Barbosa & David Urbano-Pulido & Andrea Hurtado-Ayala, 2019. "Exploring the Relationship between Formal and Informal Institutions, Social Capital, and Entrepreneurial Activity in Developing and Developed Countries," Sustainability, MDPI, vol. 11(2), pages 1-20, January.
    22. Nour Mohammad Yaghoubi & Masoumeh Zare Kaseb & Sayed Moslem Sayedalhosseini & Jamshid Moloudi & Homayoon Nori, 2016. "Planning and Development: Social Capital and Promoting Mental Health," Modern Applied Science, Canadian Center of Science and Education, vol. 10(12), pages 146-146, December.
    23. Fabio Sabatini, 2008. "Social Capital and the Quality of Economic Development," Kyklos, Wiley Blackwell, vol. 61(3), pages 466-499, August.
    24. Voigt, Stefan, 2018. "How to measure informal institutions," Journal of Institutional Economics, Cambridge University Press, vol. 14(1), pages 1-22, February.
    25. Rupasingha, Anil & Goetz, Stephan J. & Freshwater, David, 2000. "Social Capital and Economic Growth: A County-Level Analysis," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 32(3), pages 565-572, December.
    26. R. Quentin Grafton & Stephen Knowles & P. Dorian Owen, 2004. "Total Factor Productivity, Per Capita Income and Social Divergence," The Economic Record, The Economic Society of Australia, vol. 80(250), pages 302-313, September.
    27. Robert W. Ciborowski & Iwona Skrodzka, 2020. "International technology transfer and innovative changes adjustment in EU," Empirical Economics, Springer, vol. 59(3), pages 1351-1371, September.
    28. Elzbieta Janton-Drozdowska & Maria Majewska, 2015. "Social Capital As A Key Driver Of Productivity Growth Of The Economy: Across-Countries Comparison," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 10(4), pages 61-83, December.
    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. Mateusz Borkowski, 2024. "Trust and economic development on the example of European economies in 2017–2020: PLS-SEM modeling," Quality & Quantity: International Journal of Methodology, Springer, vol. 58(5), pages 4257-4280, October.

    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. Mateusz Borkowski, 2024. "Trust and economic development on the example of European economies in 2017–2020: PLS-SEM modeling," Quality & Quantity: International Journal of Methodology, Springer, vol. 58(5), pages 4257-4280, October.
    2. repec:spo:wpecon:info:hdl:2441/8813 is not listed on IDEAS
    3. Yann Algan & Pierre Cahuc, 2007. "Social Attitudes and Economic Development : an Epidemiological Approach," Working Papers hal-01066088, HAL.
    4. Lindner, Ines & Strulik, Holger, 2014. "From tradition to modernity: Economic growth in a small world," Journal of Development Economics, Elsevier, vol. 109(C), pages 17-29.
    5. Christopher J. Coyne & Claudia R. Williamson, 2012. "Purpose – This paper seeks to analyze empirically the net effect of trade openness on “economic culture”, measured by indicators of trust, respect, level of self-determination, and obedience. Openness," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing, vol. 1(4), pages 22-49, April.
    6. Harvey S. James Jr., 2015. "Generalized Morality, Institutions and Economic Growth, and the Intermediating Role of Generalized Trust," Kyklos, Wiley Blackwell, vol. 68(2), pages 165-196, May.
    7. Argentiero, Amedeo & Cerqueti, Roy & Sabatini, Fabio, 2021. "Does social capital explain the Solow residual? A DSGE approach," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 35-53.
    8. Peter Lloyd & Cassey Lee, 2018. "A Review Of The Recent Literature On The Institutional Economics Analysis Of The Long†Run Performance Of Nations," Journal of Economic Surveys, Wiley Blackwell, vol. 32(1), pages 1-22, February.
    9. Yann Algan & Pierre Cahuc, 2007. "Social Attitudes and Economic Development : an Epidemiological Approach," Working Papers hal-01066088, HAL.
    10. Amjad Naveed & Ghulam Shabbir, 2022. "Effect of Formal and Informal Institutional Indicators on Innovation Activities: An Empirical Analysis for a Global Sample," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 164(2), pages 665-691, November.
    11. Nabamita Dutta & Lisa Giddings & Russell S. Sobel, 2022. "Does Trust Always Help Gender Role Attitudes? The Role of Individualism and Collectivism," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 159(1), pages 379-408, January.
    12. Papageorgiadis, Nikolaos & McDonald, Frank & Wang, Chengang & Konara, Palitha, 2020. "The characteristics of intellectual property rights regimes: How formal and informal institutions affect outward FDI location," International Business Review, Elsevier, vol. 29(1).
    13. Nabamita Dutta & Sanjukta Roy, 2013. "The changing face of culture: gauging the impact of a free media," European Journal of Law and Economics, Springer, vol. 36(1), pages 95-115, August.
    14. Stephen Knowles, 2006. "Is Social Capital Part of the Institutions Continuum and is it a Deep Determinant of Development?," WIDER Working Paper Series RP2006-25, World Institute for Development Economic Research (UNU-WIDER).
    15. repec:hal:wpspec:info:hdl:2441/8813 is not listed on IDEAS
    16. Judit Kozenkow, 2013. "New institutional economics: Foundations and latest trends," Society and Economy, Akadémiai Kiadó, Hungary, vol. 35(1), pages 87-101, April.
    17. Urszula Markowska-Przybyła, 2020. "Does Social Capital Matter for Total Factor Productivity? Exploratory Evidence from Poland," Sustainability, MDPI, vol. 12(23), pages 1-25, November.
    18. repec:hal:wpspec:info:hdl:2441/8814 is not listed on IDEAS
    19. Amendolagine, Vito & von Jacobi, Nadia, 2023. "Symbiotic relationships among formal and informal institutions: Comparing five Brazilian cultural ecosystems," Economic Systems, Elsevier, vol. 47(3).
    20. Pierre Cahuc & Yann Algan, 2007. "Social Attitudes and Macroeconomic Performance:," 2007 Meeting Papers 414, Society for Economic Dynamics.
    21. repec:spo:wpecon:info:hdl:2441/8814 is not listed on IDEAS
    22. Xindong Xue & W. Robert Reed & Robbie C.M. van Aert, 2022. "Social Capital and Economic Growth: A Meta-Analysis," Working Papers in Economics 22/20, University of Canterbury, Department of Economics and Finance.
    23. Roberto Antonietti & Ron Boschma, 2021. "Social capital, resilience, and regional diversification in Italy [Social capital, innovation and growth: evidence from Europe]," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 30(3), pages 762-777.
    24. Despina Gavresi & Anastasia Litina & George Tsiachtsiras, 2022. "Railways and Roadways to Trust," Discussion Paper Series 2022_08, Department of Economics, University of Macedonia, revised Sep 2022.

    More about this item

    Keywords

    social capital; PLS-SEM; institutions; economic development;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • 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:sgh:gosnar:y:2023:i:2:p:11-27. 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: Grzegorz Konat (email available below). General contact details of provider: https://edirc.repec.org/data/sgwawpl.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.