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Social Capital, Corruption and Economic Growth: Eastern and Western Europe

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Abstract
We hypothesize, that power centralisation in a political system leads to more corruption due to the monopoly power status of bureaucrats. Corruption again would then lead to a lower level of social capital, here measured as trust, and slow down economic growth even further. Indeed, when comparing the tables and weighted averages for corruption and trust, highly corrupt countries such as those in Eastern Europe, also tend have the lowest level of trust. In general, low levels of trust (measured as general trust and civic participation) are also related to smaller Gross Domestic Product per capita levels. A similar pattern is observed within Western Europe. In the European Union, ‘Northern EU’ member states generally hold less corruption, more trust and higher Gross Domestic Product per capita compared to ‘Southern EU’ member states. In perspective, the fate of Eastern Europe could then be a lesson for how to decentralise power and accumulate trust in the future thus establishing better economic policies and the general business climate for entrepreneurship.

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  • Svendsen, Gert Tinggaard, 2003. "Social Capital, Corruption and Economic Growth: Eastern and Western Europe," Working Papers 03-21, University of Aarhus, Aarhus School of Business, Department of Economics.
    • Handle: RePEc:hhs:aareco:2003_021
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    Cited by:

    1. Agata Stachowicz-Stanusch, 2013. "The relationship between National Intellectual Capital and corruption: a cross-national study," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 14(1), pages 114-136, February.
    2. Jose Mondejar-Jimenez & Juan-Antonio Mondejar-Jimenez & Maria-Leticia Meseguer-Santamaria & Manuel Vargas-Vargas, 2011. "An empirical assessment of individual-level determinants of social capital in Central European countries," Journal of East European Management Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 16(3), pages 237-250.
    3. Osei, Davina & Konte, Maty & Avenyo, Elvis Korku, 2024. "Escaping Corruption in the Demand for Public Services in Africa — The Dual Nature of Civic Networks," World Development, Elsevier, vol. 177(C).
    4. Tuna, Emelj, 2011. "Foreign Direct Investments as Initiators of Change: The ”Swedmilk” dairy case- Reasons behind the failure," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 116092, European Association of Agricultural Economists.
    5. Ann Majchrzak & Arvind Malhotra & Richard John, 2005. "Perceived Individual Collaboration Know-How Development Through Information Technology–Enabled Contextualization: Evidence from Distributed Teams," Information Systems Research, INFORMS, vol. 16(1), pages 9-27, March.
    6. Dzialek, Jaroslaw, 2009. "Social capital and economic growth in Polish regions," MPRA Paper 18287, University Library of Munich, Germany.
    7. Rabiul Islam & Greg Walkerden & Marco Amati, 2017. "Households’ experience of local government during recovery from cyclones in coastal Bangladesh: resilience, equity, and corruption," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 85(1), pages 361-378, January.
    8. Marie Poprawe, 2015. "On the relationship between corruption and migration: empirical evidence from a gravity model of migration," Public Choice, Springer, vol. 163(3), pages 337-354, June.
    9. Mohammad Javad Razmi & Mostafa Salimifar & Sahar Sherkat Bazzazan, 2013. "A Study of the Effect of Social Capital on Human Development in Islamic Countries," Economic Analysis Working Papers (2002-2010). Atlantic Review of Economics (2011-2016), Colexio de Economistas de A Coruña, Spain and Fundación Una Galicia Moderna, vol. 1, pages 1-1, June.

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    More about this item

    Keywords

    Social capital; trust; public policy; corruption; economic growth; Eastern Europe; Western Europe;
    All these keywords.

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D60 - Microeconomics - - Welfare Economics - - - General
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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