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DOI :10.26650/JECS421152   IUP :10.26650/JECS421152    Full Text (PDF)

The Effect of Social Capital and Innovation on Economic Growth

Tuba Akar, Ahmet Ay

The reasons for the differences between countries’ economic growths and the sources of sustainable economic growth are the basis of interest of economic growth models. Traditional economic growth models often explain the differences between countries based on traditional production factors. However, with modern growth theories, it has been discovered that the differences in growth cannot be explained by economic indicators only: Social, cultural, institutional, political and technological factors should also be considered. One of the social factors is the social capital. The modern growth models have considered the concept of social capital, which emphasizes the importance of social relations including elements such as trust, social networks and social norms. The role of social capital in economic growth based on innovation is prominent. The aim of this study is to show how social capital and innovation play a role in economic growth based on the relationship between social capital and innovation. For this purpose, data from 52 countries, between 1990 and 2014 were analyzed using fixed-effect panel. In the second phase, an analysis was conducted for developed and developing countries. A positive effect of social capital and innovation on economic growth was observed in 52 countries. In addition, a positive relationship was found between social capital and innovation in the analysis of country groups. 
Keywords: Social capital, innovation, economic growth, panel data analysis
DOI :10.26650/JECS421152   IUP :10.26650/JECS421152    Full Text (PDF)

Sosyal Sermaye ve İnovasyonun Ekonomik Büyüme Üzerindeki Etkisi

Tuba Akar, Ahmet Ay

Ülkelerin ekonomik büyümeleri arasında görülen farklılıkların nedenleri ve sürdürülebilir ekonomik büyümenin kaynakları ekonomik büyüme modellerinin temel ilgi alanıdır. Geleneksel büyüme modelleri ülkeler arasındaki büyüme farklılıklarını genellikle geleneksel üretim faktörleri ile açıklamaktadır. Ancak modern büyüme teorileriyle birlikte büyüme farklılıklarının sadece ekonomik göstergeler ile açıklanamayacağı keşfedilmiş, bunlarla birlikte sosyal, kültürel, kurumsal, politik, teknolojik faktörlerinde önemli olduğu görüşü ortaya çıkmıştır. Bu faktörlerden biri de sosyal sermayedir. Sosyal ilişkilerin önemine vurgu yapan ve güven, sosyal ağlar, sosyal normlar gibi unsurları barındıran bu kavram son dönem büyüme modellerinde yer edinmeye başlamıştır. Özellikle inovasyon temelli ekonomik büyümede sosyal sermayenin rolü öne çıkmaktadır. Bu çalışmanın amacı sosyal sermaye ve inovasyon ilişkisinden yola çıkarak sosyal sermayenin ve inovasyonun ekonomik büyüme üzerine nasıl bir role sahip olduğunu ortaya koymaktır. Bu amaç doğrultusunda seçilmiş 52 ülke için 1990-2014 yılları arasında sosyal sermaye ve inovasyonun ekonomik büyüme üzerindeki etkisi sabit etkiler panel veri analizi ile araştırılmıştır. İkinci aşamada gelişmiş ve gelişmekte olan ülkeler ayrımı yapılarak, değişkenler arası ilişkiler test edilmiştir. 52 ülke açısından sosyal sermayenin ve inovasyonun ekonomik büyüme üzerinde pozitif bir etkisi tespit edilmiştir. Analiz sonuçları sosyal sermaye ve inovasyon ilişkisinin pozitif olduğunu da göstermektedir. 
Keywords: Sosyal sermaye, inovasyon, ekonomik büyüme, panel veri analizi

EXTENDED ABSTRACT


Inter-country income disparities and the duration of achievement of long-term growth are the main concerns of economic growth theories. In economic literature, the rationality assumption, “homo economicus” assumption positions individuals by isolating them from the society, given that actors, who are independent from time and space, think rationally and make decisions in accordance with their own perspectives, and try to increase the benefits. However, this assumption has led to the separation of social elements from the discipline of economics for a good while. Based on this dominant paradigm, social and institutional factors have not been discussed for a long time in growth literature; traditional factors of production such as land, labor force and capital are the basic elements that determine growth. However, with recent studies in the growth literature, it has been stated that traditional factors of production are inadequate to explain growth and the concept of capital has been expanded to include human capital and social capital. While the role of human capital in economic growth was being dealt with in the 1960s; especially after the work of Putnam, Leonardi, and Nanetti (1993) named “Making Democracy Work,” the concept of social capital started to take place in economic development studies in the 1990s. Except from Putnam, Leonardi, and Nanetti (1993) and Putnam (1995), the notion of social capital has become popular thanks to important scientists such as Coleman (1988), Bourdieu (1986) and Fukuyama (1995). After the studies of these scientists, social capital has begun to be addressed within the frameworks of economic development, regional development and economic growth. The concept of social capital emphasizes the quality of social relations. Social capital can be defined as trust, norms and social networks that provide interactions between individuals and institutions, allowing the establishment and maintenance of relationships among individuals in a society. The importance of social capital from an economic point of view results from its contribution to economic efficiency through confidential relations among economic actors. Market disruptions can be solved by the high level of general trust and corporate trust in society, the diversification and strengthening of social networks, and the emergence of social norms as social interests rather than individual interests; transaction costs are reduced; positive externalities are created; information access is facilitated; entrepreneurship and innovation are encouraged (Akçomak & Weel, 2009; Boulila, Bousrih, & Trabelsi, 2008; Whiteley, 2000).

In terms of long-term economic growth, another concept that has increased in importance in the last thirty years is innovation. Under changing global competition conditions, it has become compulsory for companies, even countries, to have knowledge, to step up with the change, to follow innovations, to discover innovations and to be the pioneer of innovations. The concept of innovation is viewed as a fundamental element in economic growth, competition and increasing life standards. Schumpeter’s work has a major role in the increasing importance in this topic. After Schumpeter’s emphasis on innovation in terms of economic growth, economists such as Romer (1986), Grossman ve Helpman (1991), and Aghion and Howitt (1992) developed the theory of internal growth and considered technological development as an internal element in growth models. According to this approach, the technology develops depending on the interaction and the relationship between the company and its environment. For this reason, the need to address the innovation process within a system reveals the approach to the innovation system. Thanks to this approach, the importance of interactions between companies, organizations, universities, research institutions, and individuals, involved in the process from the creation of an idea to the commercialization of it, becomes apparent. However, for these systems and applied policies to be effective, a confidential cooperation must be established among all the actors.

 According to Acemoğlu and Robinson (2015, p. 266), the reason for the existence of inequality in the world today is that some countries can benefit from technology and organizational methods brought by the Industrial Revolution of the 19th and 20th centuries, while others don’t have such an opportunity. As described in Fıkırkoca (2007), examining the dynamic relationship between old and new industries and the conditions behind the transformations they bring within a historical, institutional, and social view is an important step for an innovation-based development model. The value of the knowledge that gives rise to innovations can only be measured at the level of social relations (cited in Bedirhanoglu & Balaban, 2015, p. 141).

The aim of this study within this scope is to combine these two important concepts into a single framework based on economic growth literature from recent times. The main purpose of the study therefore, is to examine the effect of social capital and innovation on economic growth. Another aim of the study is to determine the relationship between social capital and innovation. To accomplish this purpose, panel data relations for the period of 1990 to 1994 were analyzed for 52 developed and developing countries. Empirical literature was given first, and recent studies on this subject were discussed. Then the purpose and model of the study were explained and the findings evaluated. General evaluations and policy recommendations are included in the conclusion part.


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Akar, T., & Ay, A. (2018). The Effect of Social Capital and Innovation on Economic Growth. Journal of Economy Culture and Society, 0(58), 105-126. https://doi.org/10.26650/JECS421152


AMA

Akar T, Ay A. The Effect of Social Capital and Innovation on Economic Growth. Journal of Economy Culture and Society. 2018;0(58):105-126. https://doi.org/10.26650/JECS421152


ABNT

Akar, T.; Ay, A. The Effect of Social Capital and Innovation on Economic Growth. Journal of Economy Culture and Society, [Publisher Location], v. 0, n. 58, p. 105-126, 2018.


Chicago: Author-Date Style

Akar, Tuba, and Ahmet Ay. 2018. “The Effect of Social Capital and Innovation on Economic Growth.” Journal of Economy Culture and Society 0, no. 58: 105-126. https://doi.org/10.26650/JECS421152


Chicago: Humanities Style

Akar, Tuba, and Ahmet Ay. “The Effect of Social Capital and Innovation on Economic Growth.” Journal of Economy Culture and Society 0, no. 58 (Apr. 2025): 105-126. https://doi.org/10.26650/JECS421152


Harvard: Australian Style

Akar, T & Ay, A 2018, 'The Effect of Social Capital and Innovation on Economic Growth', Journal of Economy Culture and Society, vol. 0, no. 58, pp. 105-126, viewed 28 Apr. 2025, https://doi.org/10.26650/JECS421152


Harvard: Author-Date Style

Akar, T. and Ay, A. (2018) ‘The Effect of Social Capital and Innovation on Economic Growth’, Journal of Economy Culture and Society, 0(58), pp. 105-126. https://doi.org/10.26650/JECS421152 (28 Apr. 2025).


MLA

Akar, Tuba, and Ahmet Ay. “The Effect of Social Capital and Innovation on Economic Growth.” Journal of Economy Culture and Society, vol. 0, no. 58, 2018, pp. 105-126. [Database Container], https://doi.org/10.26650/JECS421152


Vancouver

Akar T, Ay A. The Effect of Social Capital and Innovation on Economic Growth. Journal of Economy Culture and Society [Internet]. 28 Apr. 2025 [cited 28 Apr. 2025];0(58):105-126. Available from: https://doi.org/10.26650/JECS421152 doi: 10.26650/JECS421152


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Akar, Tuba - Ay, Ahmet. “The Effect of Social Capital and Innovation on Economic Growth”. Journal of Economy Culture and Society 0/58 (Apr. 2025): 105-126. https://doi.org/10.26650/JECS421152



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Submitted04.05.2018
Accepted25.10.2018

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