Importance of Social Capital in Sustainable Development

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Importance of Social Capital in Sustainable
Development
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• I know that imagination is the most important
  creator of wealth in the new economy.
• Tom Peters

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McElroys modified IC map
Market Value
Financial Capital
Intellectual Capital
Social Capital
Human Capital
Structural Capital
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Human Capital

• ?Human capital refers to the value of knowledge,
  skills and experiences held by individual
  employees in a firm

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Human Capital
Mean Years of Schooling (gt15 years old) Gross Tertiary Science Enrollment ()
?1 ?Finland ?10.0 27.4
2 United States 12.0 13.9
3 Sweden 11.4 15.3
4 Japan 9.5 10.0
5 Korea, Rep. of 10.8 23.2
6 Netherlands 9.4 9.5
7 United Kingdom 9.4 14.9
8 Canada 11.6 14.2
9 Australia 10.9 25.3
10 Singapore 7.1 24.2
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Some non monetary and external effects of
education

• a positive link between one's own schooling and
  the schooling received by one's children
• a positive association between schooling and the
  health status of one's family members
• a positive relationship between one's own
  education and one's own health status
• a positive relationship between one's own
  education and the efficiency of choices made,
  such as consumer choices which contributes to
  well-being similar to the increased money income
• a relationship between one's own schooling and
  fertility choices in particular, decisions of
  one's female teenage children regarding
  non-marital or early childbearing
• a relationship between schooling/social capital
  of ones neighborhood and youth decisions, their
  level of schooling, non-marital childbearing, and
  participation in criminal activities.

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Human Innovation Capital

• Human innovation capital, is the sum total
  capacity of individuals to innovate
• It is a Subset of Human Capital

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Human capital is embodied in the individual

• As usually defined, human capital is embodied in
  the individual, and the national stock of human
  capital can therefore be thought of as the sum
  total of the human capital of all those normally
  resident in its territory.

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Human Innovation Capital

• However the creation of knowledge is clearly a
  social activity so it is necessary to ask whether
  a simple aggregation of the human capital
  possessed by individuals is sufficient.

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Human Innovation Capital

• The development of individual human capital is
  therefore intertwined with the social and
  collective development of knowledge.
• Human capital and knowledge can be thought of as
  joint-products, but conceptually, they are
  distinct and in the ideal would be separately
  measured.

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Social capital

• Social capital points to the value of
  relationships between people in firms, and
  between firms and other firms. Trust,
  reciprocity, shared values, networking, and norms
  are all things that, according to social capital
  theory, add value in a firm, or between firms, by
  speeding the transfer of information and the
  development of new knowledge.

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Human Capital Social Capital
Focus Individual Agent Relationships
Measures Duration of Schooling, Qualifications Attitudes Membership, Participation, Trust Level
Outcomes Direct Income, Productivity Indirect Health, Civic Activity Social Cohesion Economic Achievement More Social Capital
Model Linear Interactive, Circular
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Social capital

• Social capital consists of the networks, norms,
  relationships, values and informal sanctions that
  shape the quantity and co-operative quality of a
  societys social interactions

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Types of social capital

• Three main types of social capital can be
  distinguished
• Bonding social capital (e.g. among family members
  or ethnic groups)
• Bridging social capital (e.g. across ethnic
  groups) and
• Linking social capital (e.g. between different
  social classes)

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The components of social capital

• Social networks - who knows who
• Social norms - the informal and formal rules
  that guide how network members behave to each
  other and
• Sanctions - the processes that help to ensure
  that network members keep to the rules.

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Social capital benefits

• Social capital may contribute to a range of
  beneficial economic and social outcomes including
  high levels of and growth in GDP more
  efficiently functioning labor markets higher
  educational attainment lower levels of crime
  better health and more effective institutions of
  government

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• Different types of social capital are relevant to
  different economic and social outcomes e.g.
  bonding social capital is most important to
  health in early childhood and frail old age
  whereas bridging social capital is most important
  in adult life when looking for employment

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Trends of social capital

• There is evidence that overall levels of social
  capital have been declining in countries such as
  the United States and Australia.
• Overall levels of social capital have generally
  been stable or rising in countries such as the
  Netherlands, Sweden, Japan and Germany
• The evidence for the UK is ambiguous, with some
  key indicators showing declines, such as social
  trust, while others appear to have remained
  stable, such as volunteering

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What determine the level of social capital ?

• History and culture
• Whether social structures are flat or
  hierarchical
• The family
• Education
• The built environment
• Residential mobility
• Economic inequalities and social class
• The strength and characteristics of civil
  society and
• Patterns of individual consumption and personal
  values

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Promoting the accumulation of social capital

• At the individual level, the available levers
  include (for example)
• greater support for families and parenting
• mentoring
• new approaches to dealing with offenders and
• volunteering.
• At the community level, the available levers
  include (for example)
• promoting institutions that foster community
• community IT networks
• new approaches to the planning and design of the
  built environment
• dispersing social housing and
• using personal networks to pull individuals and
  communities out of poverty.
• At the national level, the available levers
  include (for example)
• service learning in schools
• community service credit schemes and
• measures to facilitate mutual trust.

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• Social capital can be measured using a range of
  indicators but the most commonly used measure is
  trust in other people

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Social trust

• Social trust is a core component of social
  capital, and is normally used as a key indicator
  of it, sometimes as the best or only single
  indicator.

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Level of trust in different countries
Most people can be trusted () Most people can be trusted ()
South Korea 60
Switzerland 43
East Germany 35
West Germany 32
Spain 28
Hungary 18
Slovenia 14
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Percentage of People Saying that Most People can
be Trusted.
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Social Cohesion

• Cohesion is defined as a "field of forces that
  act on members to remain in the group" or "the
  resistance of a group to disruptive forces"

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Social Cohesion

• A collectivity is structurally cohesive to the
  extent that the social relations of its members
  hold it together.
• Individuals may be embedded more or less strongly
  within a cohesive group, but if the maximum-sized
  group at a given level of strength is uniquely
  well defined, then the individuals and the group
  have a unique level of cohesion.

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Social Cohesion

• The presence of multiple paths, passing through
  different actors, implies that if any one actor
  is removed, alternative linkages among members
  still exist to maintain social solidarity
• A group is strongly (as opposed to weakly)
  structurally cohesive to the extent that multiple
  independent social relations among all pairs of
  members of the group hold it together.

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Dimensions of social cohesion

• Belonging vs. Isolation
• Which means shared values, identity, feeling of
  commitment
• Inclusion vs. Exclusion
• Which concerns equal opportunities of access
• Participation vs. Non-involvement
• Recognition vs. Rejection
• Which addresses the issue of respecting and
  tolerating differences in a pluralistic society
• Legitimacy vs. Illegitimacy
• With respect to the institutions acting as
  mediator in conflicts of a pluralistic society

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Social innovation capital

• Social innovation capital is the collective
  capacity of a group to innovate.
• It originate from human innovation capital and
  social capital

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Social Innovation Capital

• Collection of independent learners and
  communities of practice who collaborate with one
  another in self-organizing ways to develop and
  integrate shared knowledge.

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• Human and social capital are closely related to
  the way in which institutions and political and
  social arrangements impact on society. However
  the various elements need to be carefully
  distinguished, since
• Human capital resides in individuals.
• Social capital resides in social relations.
• Political, institutional and legal arrangements
  describe the rules and institutions in which
  human and social capital work

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Structural capital

• Structural capital consists of embodiment,
  empowerment, and supportive infrastructure of an
  organization that enhances performance of human
  capital.

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Structural innovation capital

• Structural innovation capital is the value of
  supportive infrastructure of an organization that
  enhances and increases the capacity of a group to
  innovate.
• Structural innovation capital is a subset of
  structural capital

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Innovation Capital

• Innovation capital is the collective capacity of
  an organization to innovate
• It includes
• Human innovation capital
• Social innovation capital and
• Structural innovation capital
• Innovation capital is a subset of intellectual
  capital

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Social Capital
Social Innovation Capital
Structural innovation capital is the value of
supportive infrastructure of an organization
that enhances and increases the capacity of a
group to innovate.
Structural capital consists of embodiment,
empowerment, and supportive infrastructure of an
organization that enhances performance of human
capital.
?Human capital refers to the value of knowledge,
skills and experiences held by individual
employees in a firm
Social capital is the value of relationships
between people in firms, and between firms and
other firms.
Human innovation capital, is the sum total
capacity of individuals to innovate
Social innovation capital is the collective
capacity of a group to innovate.
Human Capital
Human Innovation Capital
Structural Capital
Structural Innovation Capital
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Social Capital
Social Innovation Capital
Human Capital
Human Innovation Capital
Structural Capital
Structural Innovation Capital
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Social Innovation Capital
Human Innovation Capital
Innovation Capital
Innovation capital is the collective capacity of
an organization to innovate
Structural Innovation Capital
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Innovation Capital

Rank Economy value added per capita index
1 Switzerland 1
2 United States 0.873
3 Japan 0.851
4 Sweden 0.673
5 Germany 0.655
6 Finland 0.645
7 Canada 0.585
8 France 0.539
9 Austria 0.529
10 Norway 0.491
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Innovation Capital

Rank Economy Manufactured Exports Per capita Index
1 Switzerland 0.760
2 Singapore 0.717
3 Sweden 0.562
4 Belgium 0.521
5 Japan 0.518
6 Finland 0.490
7 United States 0.481
8 Germany 0.466
9 Canada 0.451
10 Netherlands 0.431
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Innovation Capital

Rank Economy Share of medium- and high-tech activities in manufacturing value added Index
1 Switzerland 0.840
2 Japan 0.633
3 Sweden 0.627
4 Singapore 0.616
5 Germany 0.592
6 United States 0.551
7 Finland 0.523
8 Belgium 0.491
9 Canada 0.448
10 Denmark 0.420
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Innovation Capital

Rank Economy Share of medium-tech and high-tech products in Manufactured Exports final index
1 Switzerland 0.808
2 Japan 0.725
3 Germany 0.635
4 Sweden 0.633
5 United States 0.599
6 Singapore 0.587
7 Finland 0.494
8 Belgium 0.489
9 Canada 0.474
10 France 0.450
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Innovation Capital
Complex Exports Complex Exports Complex Exports Simple Exports Simple Exports Simple Exports
High tech Medium Tech H M Tech High tech Medium Tech H M Tech
1 Japan 29.6 51.5 81.1 8.0 6.3 ?14.3
2 Philippines 64.3 10.4 74.7 13.8 6.9 20.7
3 Singapore 56.7 17.6 74.3 6.6 13.3 19.9
4 Mexico 26.6 38.9 65.5 16.9 5.9 22.9
5 United States 31.0 34.4 65.4 10.1 11.1 21.2
6 Malaysia 46.9 18.2 65.1 9.9 15.0 24.9
7 Germany 17.1 47.7 64.8 13.7 11.2 24.9
8 Switzerland 23.2 39.7 62.9 15.4 16.4 31.8
9 United Kingdom 28.2 34.7 62.9 12.4 14.2 26.7
10 Korea, Republic of 27.2 35.1 62.3 19.1 9.8 28.9
11 Taiwan 35.0 26.3 61.3 29.1 5.3 34.3
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Innovation Capital
Technology Achievement Index Patents per Million People
?1 ?Finland ?0.744 ?187
2 United States 0.733 289
3 Sweden 0.703 271
4 Japan 0.698 994
5 Korea, Rep. of 0.666 779
6 Netherlands 0.630 189
7 United Kingdom 0.606 82
8 Canada 0.589 31
9 Australia 0.587 75
10 Singapore 0.585 8
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