Social capital and its influence on Russian economy



Култыгина И.Е. студент 1-го курса Лапина Я.С. студент 1-го курса факультет «Международные финансы» Васьбиева Д.Г., к.э.н. научный руководитель, доцент кафедра «Иностранные языки-4» Финансовый университет при Правительстве РФ Россия, г. Москва SOCIAL CAPITAL AND ITS INFLUENCE

ON RUSSIAN ECONOMY

Nowadays the problem of social capital is one of the most popular fields for research not only in Economics or Social Science, but also in politics, psychology, culturology and some other sciences.

In general, social capital is the ability of society to self-organization and collective activities based on trust, shared values, norms and networks. Social capital should promote joint actions of social groups to achieve a common goal. If a social group represents society in whole, such collective efforts can increase the level of social welfare. This kind of social capital that helps to “build new bridges” is called bridging. At the same time, some groups pursue only their own goals and use so-called bonding capital for it. Such groups usually compete for scarce resources, so social capital creates no value and its return is usually zero or even negative.

Obviously, social capital can either be a positive factor of economic development or be an obstacle of economic growth. It is connected with such things as corruption, bribery and economic crime. So, the study of social capital is a burning issue in Russia today.

As we noted, trust is an essential part of the structure of social capital. To understand the dynamic and the state of social capital in Russia we used the data from World Value Survey. Since 1989 this project has conducted surveys that help to assess conditions of the societies taking part in it. The results of surveys that were held in 1990 and 2000 show that Russia has the lowest level of trust. Furthermore, it fell from 34.7% in 1990 to 22.9% in 2000. Such a significant decline can be the result of the destruction of an old unproductive social capital. Instead of it there should be a new kind of capital that will be based on the rational trust. Countries with stable democracy such as Sweden and the USA score quite high in level of trust. In Japan trust is a part of culture. As for China, nowadays social capital has a very good dynamic because of the high rate of economic growth.

As a result of data processing they have devised several measures of social capital covering two aspects of the phenomenon, traditionally studied in the papers on this subject. They are generalized trust and activity of participation in organizations. In Russia these figures are at a quite low level. For example, the level of trust, measured as a percentage of an agreement with the statement "You can trust people", amounts to 26% according to the World Values Survey (information for 2005-2007), which is significantly lower than those of Scandinavian countries (Norway, 70%; Sweden, 68%). But at the same time it significantly exceeds the level of trust in such countries as Turkey (5%) and Brazil (9.4%).

The main part of research of social capital in Russia refers to the corporate sector and some social aspects. We’ve tried to investigate social capital in the regions and evaluate its impact on the determinants of the economic development.

Different statistical agencies in the UK, Canada, Australia and other countries regularly measure social capital according to the special system SOCAT (Social Capital Assessment Toolkit). In Russia a special fund “Public opinion” conducts some surveys which help assess Russians’ opinion on the level of trust, norms and values.

In 2007 sixty-eight Russian regions introduced a project called “Georating” which was the first opportunity to compare the subjects of the RF according to public attitudes to social trust. The results depended on the responses of the regions’ residents.

When compared, these data differ from the results of World Survey on the values: Georating results indicated lower levels of trust (on average approximately 0.18). As for regional differences in trust, the highest values of the variable of trust were recorded in Primorsky Krai (0.352), while the lowest values were in the Omsk region (0.104). In addition to the most widely used indicator of generalized trust, there are measures that characterize the consensus in society and the credibility of the "neighbour" people with whom the respondent communicates directly. The highest rate of participation in various public organizations was in the Kamchatka region (0.25), the Republic of Mari El (0.24), Irkutsk Oblast, Moscow (0.23), the Republic of Karelia and Komi (0.21) and the Vologda region (0.21). The lowest values of this indicator are in the Kurgan region (0.06), Omsk and Tambov regions (0.05), Sakhalin, Vladimir and Tver regions (0.04), the Republic of Mordovia (0.03). It should be noted that basically the participation of people in different types of organizations is quite low, and more than half of the respondents do not participate in any of the groups.

There was a positive relationship between the activity of participation in organizations (so-called “open” social capital) and the value of GDP per capita, which can be considered as a generalized characteristic of the region. Subjective indicators of trust were insignificant.

Despite the general low level of trust in society, the actual efforts to build social capital, for instance, participation in different kinds of groups, ranging from youth associations, sports clubs and ending charity organizations, have a positive impact on the regional development.

Similar studies were carried out for a number of other states. In particular, connection is established between the economic activity in the regions of England and the confidence to political institutions and membership in social associations.

Economic growth, incomes and investment in Chinese areas are strongly correlated with trust, which, in its turn, related to the level of urbanization and the development of regional markets. But those data for Poland do not allow to detect a noticeable contribution of social capital to the regional economic growth.

In conclusion, a precondition for building social capital is establishing friendly and honest relationships with members of the other group. Maintaining "mutually beneficial" conditions, i.e., constantly increasing the total social capital, members of the group are strengthening ties with each other to become richer. In other words, the stronger the relationship and the greater interdependence, the more is social capital. The more social capital, the less the need for a normative regulation of relations. Thus, time and other transaction costs reduce: there is no need in drawing up any agreements and attracting the external witnesses and arbitrators. The role of social capital in small business turns out to be quite large. And it is clear that not only the “open”, but also the “closed” type of social capital is important. This can be considered as an evidence of the impact of social networking resources. Such a "network" may in some sense even replace underdeveloped institutions in the country.