The Effect of Social Capital and Innovation on Economic Growth

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