Economic Growth and Social Cohesion: Evidence from Developing Countries

Abstract

The aim of the study is to analyze the impact of social cohesion on economic growth of the developing countries. For this purpose the panel data of 102 countries is assembled over the period of 1985 to 2010 to empirically investigate the relationship between social cohesion and economic growth. The study has employed a comprehensive measure of social cohesion that covers a large number of social indicators such as Inequality, trust, social conflicts which are explained in existing literature and it also provides the rich data covering wide range of countries for cross country analysis. This study contributes in the literature by analyzing a theoretical relationship between social cohesion and economic growth, documenting a comprehensive and systematic review of the literature. This is the first study, to the best of our knowledge that empirically tests the growth impact of social cohesion for a larger number of developing countries over a long period in a panel data setting. After applying econometrics analysis, the findings provide the evidence of strong positive relationship between social cohesion and economic growth and the result remains robust even after sensitivity analysis by inclusion of control variables or by changing the econometric techniques. Finally the study discusses the importance of social cohesion and some policy implications.