Knowledge and Social Capital: Increasing Returns in Regional Growth

Knowledge drives the growth of nations and regions in a competitive space-economy. Hence, we would expect a strong correlation between investments in knowledge and learning processes, on the one hand, and productivity increases, on the other. However, the empirical evidence shows consistent discrepancies between knowledge inputs and economic performance across geographical units. This paper addresses this issue from a regional perspective, by highlighting theoretically and empirically the strategic importance played by social capital in mediating between knowledge production and regional growth. The main proposition of the paper, subject to empirical testing, is that social capital amplifies the contribution of knowledge by determining the formation of increasing returns to knowledge exploitation.