Social Capital and Economic Growth: a Comparative Studies between High and Low Social Capital Countries

In the recent years, social capital has been remembered as the foundation of economic growth and development in each society. According to world Bank, it embraces organs, relationships, and norms forming social interactions. Explaining the issue that social capital has a significant effect on economic growth will play an important role in economic decision makings. Accordingly, among the variables of social capital, this study compares the effect of good governance, corruption index, internet access, and female’s participation in labor market on economic growth in countries with maximum social capital as opposed to countries with minimum social capital between 1998 - 2014.Results show that indices such as good governance, internet access, the extent of enrolling in higher education, and rate of female’s participation have a direct significant effect on economic growth in countries with high social capital. Yet, corruption index has a negative effect on economic growth in these countries. Corruption index has a negative significant effect on economic growth in countries with low social capital. The effect of good governance and rate of female’s participation indices on economic growth is non-significant in countries with low social capital. The effect of internet access on economic growth is significant and negative in these countries. Yet, the extent of gross enrolling in higher education has a positive significant on the economic growth of these countries. Based on vector error correction test, there is long term causality from explanatory variables toward economic growth for both groups of countries