Social capital and investment in R&D: new externalities

    Tiago Neves Sequeira Affiliation
    ; Alexandra Ferreira-Lopes Affiliation


We introduce social capital in an endogenous growth model with physical capital, human capital, and research and development (R&D), and we compare the market with the efficient solutions. As social capital is not tradable in the market and since it favours research networks, it introduces new externalities in this framework. These externalities induce the market to invest less in social capital than would a social planner and decrease the tendency to underinvestment in R&D. We quantify the distortions in the model. In some conditions, the new distortions are strong enough to overcome the usual result of underinvestment in R&D.

Keyword : R&D, social capital, human capital, endogenous growth

How to Cite
Sequeira, T. N., & Ferreira-Lopes, A. (2013). Social capital and investment in R&D: new externalities. Journal of Business Economics and Management, 14(1), 77-97.
Published in Issue
Feb 22, 2013
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