The Effects of Social Capital on Local Government Performance and Economic Development

Abstract

The purpose of this study is to examine the idea that social interaction, government performance, and development efforts positively affect economic wealth on the local level in cities within the United States. New methods to study social capital on the city government level were developed by utilizing zip codes and NAICS industrial codes available through the U.S. Census Bureau. Institutionalism theory was linked to economic development efforts and overall wealth within cities. The use of industrial codes in the study of social capital and particularly associational density, as well as the study of the number and types of organizations involved in the economic development decision making process provides new tools for researchers to understand the role community organizations play in government performance, development efforts, and economic wealth. Some studies argue that community involvement and government performance positively affect the ability of municipalities to promote wealth. (Putnam, 1993; Guiso, Sapienza, Zingales, 2004). Other studies indicate community involvement and government performance do not necessarily promote economic wealth. This study investigates the degree to which social capital, government performance, and development efforts contribute to economic wealth on the city level. This dissertation established a new method to examine social capital on the city level within the United States using publicly available data. The study found community organizations have the greatest impact on economic wealth when included in the decision making process, and is positively related to government performance, and development efforts within the city.