The structure of society as a determinant of economic growth

ABSTRACT: The rate of growth is found to depend on the structure, or more specifically the size, degree of connection, efficiency, and `community spirit` of the network of relationships that exists within the economy. This structure, which is assumed to be exogenously determined, is important because it determines how effectively news of productivity increasing technological change spreads throughout the economy. The extent to which exclusive groups or cliques exist within the economy is also found to be important, although they are not necessarily detrimental. The model provides an explanation of why growth rates vary between economies and between different regions, modern and informal sectors, classes and ethnic groups within an economy. It also suggests that there might be a policy link between social planning and economic growth.