Firm Size and Export Performance: Some Empirical Evidence

There is scope for Governments to take more account of social capital in policy development, according to a Productivity Commission study.

The study — Social Capital: Reviewing the Concept and its Policy Implications — reports evidence confirming that social capital generally brings economic as well as social benefits, while noting that it can sometimes have perverse effects.

The Commission’s review indicates that high levels of trust and social engagement can generate wide ranging benefits, such as reduced need for personal security and policing, improved workplace efficiency and lower costs of doing business.

The Commission said that governments should consider ways of harnessing and enhancing social capital to deliver programs more effectively.

The study also identified areas of government policy, including public liability laws, certain labour market regulations, and bureaucratic controls on community groups and events, where there is potential to erode social capital. Governments should examine the scope for modifying policies and regulations that are found to have such effects.

Commission Chairman, Gary Banks, observed "The available evidence tells us that while some Government actions can undermine social capital, it is much harder for Governments to create or rebuild it."

The Commission warned against the simplistic use of the social capital concept, arguing that the concept is evolving, difficult to measure, and that its practical policy implications remain unsettled.