Social Capital, Innovation and Growth: Evidence from Europe

Semih Akcomak, MERIT, Maastricht University

This paper investigates the interplay between social capital, innovation and economic growth in the regions of the European Union. We identify innovation as an important mechanism that transforms social capital into economic growth. In an empirical
investigation of 102 European regions in the period 1990-2002, we
show that higher innovation performance is conducive to economic
growth and that social capital affects growth indirectly by
fostering innovation. In addition, the direct effect of social
capital on economic growth becomes smaller.

Date: 03 October 2006