Volume 81, Number 2, 139-155, DOI: 10.1007/s101100100091

Social and institutional factors as determinants of economic growth: Evidence from the United States counties

Anil Rupasingha, Stephan J. Goetz and David Freshwater

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Abstract

In the search for explanations of persistent differences in economic growth rates, the conditional convergence growth model has introduced the possibility of incorporating a wide set of factors as determinants of growth. Controlling for spatial dependence, we assess the contribution of differences in social and institutional variables on growth rates of per capita income for counties in the United States. The empirical results indicate that, ceteris paribus, social and institutio variables explain some of the differences in convergence rates among counties. In particular, (i) ethnic diversity is associated with faster rates of economic growth; (ii) higher levels of income inequality are associated with lower rates; and (iii) higher levels of social capital have a positive effect on economic growth rates.

JEL classification: O40, R11

Key words: Economic growth, ethnic diversity, income inequality, social capital, U.S. counties

Received: 14 August 2000 / Accepted: 16 April 2001

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