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Social Capital and Economic Development

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  • Torsvik, G.

Abstract

This paper attempts to delineate the mechanisms that link social capital and economic development. I show that social capital can produce two kinds of trust, both of which can reduce transaction costs. It is important to keep these two sources of trust apart, since development policies utilizing social capital have different impacts, depending on the basis of trust.

Suggested Citation

  • Torsvik, G., 2000. "Social Capital and Economic Development," Norway; Department of Economics, University of Bergen 216, Department of Economics, University of Bergen.
    • Handle: RePEc:fth:bereco:216
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    References listed on IDEAS

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    1. 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.
    2. Lyons, Bruce R & Mehta, Judith, 1997. "Contracts, Opportunism and Trust: Self-Interest and Social Orientation," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 21(2), pages 239-257, March.
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    5. Narayan, Deepa & Pritchett, Lant, 1999. "Cents and Sociability: Household Income and Social Capital in Rural Tanzania," Economic Development and Cultural Change, University of Chicago Press, vol. 47(4), pages 871-897, July.
    6. Geertz, Clifford, 1978. "The Bazaar Economy: Information and Search in Peasant Marketing," American Economic Review, American Economic Association, vol. 68(2), pages 28-32, May.
    7. Greif, Avner & Milgrom, Paul & Weingast, Barry R, 1994. "Coordination, Commitment, and Enforcement: The Case of the Merchant Guild," Journal of Political Economy, University of Chicago Press, vol. 102(4), pages 745-776, August.
    8. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    9. Ken Binmore, 1994. "Game Theory and the Social Contract, Volume 1: Playing Fair," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262023636, December.
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    More about this item

    Keywords

    DEVELOPMENT POLICY ; ECONOMIC DEVELOPMENT ; CAPITAL INTENSITY;
    All these keywords.

    JEL classification:

    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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