The Role of Social Capital in Economic Development:Presenting a Theoretical Model

Nowadays human resources are known as the first and the key factor for the development of society. A study of the world evolution indicates that most advanced Societies have invested on social and human capital over the years. On this basis social capital as an intangible asset in economic performance of societies have been the topics of interest to economic and social enthusiasts. Social capital is mainly based on cultural and social factors, identifying it as an investment in macroeconomic management of developing countries and management of organizations can create new knowledge and help managers to manage their firms better. Many economists believe that social capital is the missing link in th backward countries for the solution of economic and social problems. They believe that the rise of social relations based on trust and cooperation will lead to growth and development of the backward countries.This paper presents the concepts and definitions of social capital and its role on economic performance. Finally a theoretical model is presented and the impact of social capital on economic development is discussed and proper recommendations are rendered.