Social capital : A key determinant of economic development in Sub-Saharan Africa?

Abstract

Social capital is believed to spur regional economic development. Since the groundbreaking works of Putnam, scholars hypothesized that it determines how well institutions function at the regional level and thus influences a region’s economic performance. In Europe, a positive association between social capital and regional per-capita income levels could be established. However, is such a relation also found in a set of developing countries? This study investigates the relationship between social capital and subnational economic development in a sample of Sub-Saharan African countries. Using Afrobarometer data on trust, it estimates the relationship by Ordinary Least Squares (OLS) and Instrument Variables (IV). The OLS results suggest that trust is not significantly related to regional economic development in Sub-Saharan Africa. Exploiting regional differences in ethnolinguistic diversity and distances to slave demand centers, the study tries to isolate a potential effect of social capital via IV estimation. Although the results seem to corroborate the OLS findings, caveats remain since distances to slave ports were unrelated and deep cleavages of ethnic diversity only weakly related to trust.