capital has a significant positive effect on the rate of per capita income growth. They
state “social and institutional variables explain some of the differences in convergence
rates among counties. In particular, (i) ethnic diversity is associated with faster rates of
economic growth; (ii) higher levels of income inequality are associated with lower rates;
and (iii) higher level of social capital has a positive effect on economic growth rates”.
Narayan and Prichett study for Tanzania show that there is a positive relation between
income and membership levels in various associations. Kenak and Keefer showed that
nations with higher and more equal incomes have stronger trust and civic norms.
Helliwell and Putnam showed in regions that have a higher level social capital, per capita
GDP convergence is faster and equilibrium levels of income are higher (Rupasingha et
al.). Knack and Keefer found that social capital variables have a strong and significant
relationship to growth so that a 10% point rise in trust is associated with an increase in
growth of 0.8% point (Knak and Keefer).
Prediction of long-run rates of economic growth is always not easy. So it is not
surprising why the prediction of East Asian miracle or sub-Saharan Africa in 1960’s was
not correct. World Bank teams and researchers thought that Burma, Sri Lanka, and The
Philippines would have stronger growth rates and more development progress than South
Korea. In contrary with the prediction of World Bank, seven African countries that
suppose to have a high economic growth rates, had negative per capita Growth rates
between 1970 - 1988. Temple and Johnson’s predictions were wrong because
“researchers sought the origins of long-run growth in the wrong places. In particular, they
neglected the role of “social capability” in economic development.” In their paper they
show that researchers could have better predictions for growth rates if they used the index