Social Capital and Growth in Brazilian Municipalities

Several authors (Coleman, 1990; Putnam, 1993; Fukuyama, 1995) highlight that social capital could affect 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 choose to 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.