Study of Relationship between Social Capital and Total Factor Productivity in Iran

Given the complexity between production, distribution and consumption in our society, the concept of capital can not be limited to traditional forms such as buildings and equipment, financial capital and human capital. But given the importance of the structures, norms and social relations among people and its effects on economic, social and cultural aspects, capital must reach beyond the traditional concepts. In this regard, the social capital is the newest concept of capital among the major issues of economic studies that have the impact on macroeconomic variables; particularly economic developmentand growth. The definitions social capital can be seen as a set of norms in social systems and permit the cooperation between members of the community, and decrease the costs of transactions and communications, it is expected that it cause positively the increase in labor productivity and total productivity in organizations and production systems. In this study after presentation different definitions of social capital and the channels of influence on other social and economic variables, we used an complex social capital index and indicators that calculated by Iranian data during 1981-2010, to study the impact of this variable on labor productivity and total factor productivity using an ARDL approach. Short and long-term results of model estimations confirm the positive and significant impact of social capital on labor productivity and total factor productivity in Iran. The results show that we can increase the productivity in production process in Iranian economy by increasing social capital concept, which, is the main principles of Islamic Republic of Iran