Social Capital and Economic Development in a Large and Multi-Ethnic Developing Country: Evidence from Indonesia
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Publication Type:
Publisher:
Asian Development Bank (ADB)
Publication:
September 2024
This study explores the effects of social capital on economic development in Indonesia, a large and multi-ethnic developing country.
The role of social capital in economic development has been a subject of interest to both academics and practitioners of development for several decades. However, empirical evidence on social capital in the context of developing countries is still relatively scant.
This study explores the effects of social capital on economic development in Indonesia, a large and multi-ethnic developing country. Using district-level data for 2006–2019, it finds that the relationships between social capital and economic development are complex.
There are both favorable and unfavorable effects of social capital on economic development, as well as nonlinear effects. Hence, the study cannot draw unequivocal conclusions on the benefits or disadvantages of social capital for economic development. Nevertheless, it finds that trust among people across different ethnic groups, participation in communal works and social activities, and trust in government are the most important forms of social capital needed to improve people’s welfare.
Contents
- Introduction
- Data and Method
- Empirical Analysis
- Discussion
- Conclusion
