Social Capital and Knowledge Spillovers: Is Social Capital The Force Majeure Controlling EU Cohesion?
The paper contributes to scholarly debate on impacts of social capital on total factor productivity. Earlier studies
employed rather narrow meaning of social capital and came to ambiguous conclusions. Our approach is to employ a
composite indicator of social capital – KOFsoc launched by ETH Zürich that appears to lead to robust estimates in growth
regressions and assume that social capital captures spillover effects unfolded through knowledge networks. On the EU panel
data spanning 1995 through 2010 our estimations suggest that social capital indeed accounts for large variation in the total
factor productivity, and that the effects are larger for countries lagging in knowledge capacities.
Key Words - social capital, total factor productivity, European Union, knowledge spillover, endogenous growth