SOCIAL CAPITAL AND ECONOMIC GROWTH IN SOUTH AMERICA: A PANEL DATA ANALYSIS

Abstract

This research focused on determining the impact of social capital on economic growth in South American countries based on data associated with the prosperity index generated by the Legatum Institute from 2007 to 2023. The relationship was analysed by estimating both static and dynamic panel data models, considering aggregate social capital and its components. The results indicate that while the prosperity index at the aggregate level has a positive and significant effect on GDP per capita, this is not the case for all dimensions. In the static approach, all the components of the economic and people empowerment dimensions are significant, while in the institutional component, social capital was not statistically significant, which is corroborated by the dynamic results. While the disaggregation of social capital reveals some elements that have a positive effect on economic performance, such as personal and family relationships and personal trust, civic participation shows an inverse relationship with GDP per capita. These findings confirm the existence of strong bonding personal and family relationships that influence territorial performance yet require the strengthening of bridging and linking ties.