SOCIAL CAPABILITY AND ECONOMIC DEVELOPMENT

 

Jonathan Temple

Nuffield College

and

Paul Johnson

Dept of Economics, Vassar College, USA

 

July 1, 1996

 

Abstract

This paper explores the role of 'social capability' in growth and development. We present a wide variety of evidence to show that rates of growth, in per capita income and TFP, are strongly related to the extent of a country's initial social development. We also show that differences in social development can explain polarization taking place in the world income distribution. Not only are these results interesting in themselves, they lead us to reject the influential augmented Solow model in favour of the alternative view, in which technology is allowed to differ across countries and social factors play a role in the speed of catching up.