The Effect of Social Capital on Industrial Growth through the Innovation and Technology Improvement

Social capital can improve industrial growth via different mechanisms. In this study, taking the improvement of technology through social capital as one of the mechanisms, we have analyzed the effect of social capital on industrial growth theoretically and empirically. According to the findings of the article, derived from our cointegration model, and Iranian economic data (1966-2006), social capital affects technology improvement positively in the long run and the short run in manufacturing sector. On the other hand, since industrial growth is influenced by technology positively, innovation is the mechanism in which social capital can enhance industrial growth. Therefore, social capital improvement, in micro, and macro levels, is an important precondition to accelerate technology development.