Introduction: social capital and economic development

This contribution focuses on the relationship between social capital and economics, with particular emphasis on the relationship between social capital and economic development. It starts distinguishing different types of social capital. Each of these types of social capital is used to explain different economic phenomena. Linking social capital contributes to explain national economic growth, bonding and bridging social capital to explain local economic development, individual social capital to explain single economic actors’ behaviour. This essay then tries to answer the question why is social capital important in economics. The theoretical reference is the theory of transaction cost and incomplete contracts. Social capital plays a role by reducing the costs and risks of transactions, increasing the opportunities for trade and leading to greater economic efficiency. The impact of social capital on economics is often mediated by intermediate actors. In less developed countries, this role is often played by local community leaders; in developed countries by intermediate institutions. Finally the essay focuses on the policy issue. It is certainly true that social capital is the product of long run historical process with a strong element of path dependency but, this is the thesis, the endowment of social capital can be increased and improved by policies implemented at national and local level. Different types of policies able to affect social capital are mentioned and briefly discussed.