Which Forms of Capital Are More Important for Economic Growth? Findings from Selected High-Income Countries

Abstract The level of social capital within an economy is one of the main factors influencing the likelihood of long-term sustainable economic development. This study examines empirical research on the relationships between social capital, natural capital, intellectual capital, and their impact on economic growth. It also presents evidence from data showing that social capital has a stronger impact on GDP per capita growth than other forms of capital. Whereas the three forms of capital were found to have positive and significant effects, social capital increases the GDP per capita more than natural capital and intellectual capital. Econometric analysis reveals that a 1 percentage point increase in social capital increases GDP per capita by 1.15 percentage points, while a 1 percentage point increase in natural capital increases GDP per capita by 0.16 percentage points, and a 1 percentage point increase in intellectual capital increases GDP per capita by 0.87 percentage points. Therefore, to facilitate policymaking, this current research provides important policy recommendations to increase social capital levels among developing countries. JEL Codes: B12, B13, B26, D24