The Role of Social Capital in Providing Economic Development

Abstract

In the knowledge-based economy, the role of intangible factors in providing economic development is increasing, thus mainstreaming research on the methodological foundations forming such factors, as well as the mechanisms of their impact on the state of economies. One of such factors is social capital, which is a set of stable communications within institutional environment, whose work is based on trust. The article aims at revealing the role of social capital in providing economic development, in general, and assessing its impact on Ukraine’s economic development, in particular. The research is based on the principles of the systemic approach and was carried out using such methods as analysis and synthesis, logical generalization, graphical and tabular methods of data presentation, and systematization method. The ways in which social capital influences the development of the economy are analyzed. They can be traced in the reduction of the transaction costs level, government corruptness, and shadow economy; the creation of new available forms of business financing. Using the main indicators of the social capital level, it has become possible to establish relation between social cohesion, social conditions and economic development of states. Ukraine’s place among other states as for its social capital level is considered. Connection between social capital development, the dynamics of economic development, and prosperity index is proven.

Keywords

• crowdfunding
• economic development
• shadow economy
• social capital
• trust