Social Capital and Growth in Brazilian Municipalities

Several authors (Coleman (1990) Foundations of social theory. Harvard University Press, Cambridge MA; Putnam RD (1993); Fukuyama (1995) Trust: the social virtues and the creation of prosperity. Free Press, New York) highlight that social capital could affect the economic performance of a country through a number of channels. Empirical evidence backs these theories, finding a positive relationship between growth, efficiency and the level of trust. Nonetheless, previous analyses focus on a single country or develop a cross-country dimension: we contribute to this literature by investigating the role of social capital at a sub national level. We focus on a country characterized by large disparities, Brazil, and we investigate the relationship between economic growth and social capital over the period 2000–2003, at the municipal level. We derive a number of social capital indicators from official data, and analyse them by means of factor component analysis. Overall, we find evidence of a positive relationship between social capital and income per capita growth.