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Title: Germs, Social Networks and Growth

Author(s): Alessandra Fogli and Laura Veldkamp

Publication Date: November 2018

Keyword(s): Development, disease, economic networks, growth, pathogens, Social Networks and technology diffusion

Programme Area(s): Development Economics and Macroeconomics and Growth

Abstract: Does the pattern of social connections between individuals matter for macroeconomic outcomes? If so, where do these differences come from and how large are their effects? Using network analysis tools, we explore how different social network structures affect technology diffusion and thereby a country's rate of growth. The correlation between high-diffusion networks and income is strongly positive. But when we use a model to isolate the effect of a change in social networks, the effect can be positive, negative, or zero. The reason is that networks diffuse ideas and disease. Low-diffusion networks have evolved in countries where disease is prevalent because limited connectivity protects residents from epidemics. But a low-diffusion network in a low-disease environment needlessly compromises the diffusion of good ideas. In general, social networks have evolved to fit their economic and epidemiological environment. Trying to change networks in one country to mimic those in a higher-income country may well be counterproductive.

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Bibliographic Reference

Fogli, A and Veldkamp, L. 2018. 'Germs, Social Networks and Growth'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13312