Understanding the Role of Social Capital in Promoting Knowledge-Based Growth in Europe

Abstract

Social capital, as defined by the OECD, encompasses networks along with shared norms, values, and understandings that facilitate cooperation within or among groups. It is increasingly recognized as one of the key drivers of economic development. While much of the existing literature has explored the relationship between social capital and economic growth, this study focuses on a different aspect: the role of social capital in fostering smart growth within EU countries. Smart growth is a concept that emphasizes the importance of knowledge and innovation as central pillars of economic development. It is a key component of the European Union's strategic development objectives, aiming to create a more sustainable, inclusive, and innovative economy. The concept of smart growth, along with its determining factors and measurement methodologies, represents a relatively new approach in the context of EU policy. The purpose of this study is to investigate how social capital influences the processes of smart growth in EU countries. To achieve this, the study employs a soft modeling method, which is particularly well-suited for measuring and analyzing the relationships between unobserved variables. This methodological approach allows for a nuanced understanding of the complex interplay between social capital and the various dimensions of smart growth. The findings of this study are expected to provide valuable insights into how social capital can be leveraged to enhance smart growth across the EU. By examining the role of social capital in this context, the study contributes to a deeper understanding of how social networks and shared values can drive innovation and knowledge-based economic development. This research highlights the critical importance of social capital in achieving the EU's strategic objectives for smart growth. The results have important implications for policymakers, suggesting that efforts to build and strengthen social capital could play a significant role in promoting innovation-driven economic progress within the EU.