Working Paper: CEPR ID: DP9188
Authors: Alessandra Fogli; Laura Veldkamp
Abstract: Does the pattern of social connections between individuals matter for macroeconomic outcomes? If so, how does this effect operate and how big is it? Using network analysis tools, we explore how different social structures affect technology diffusion and thereby a country?s rate of technological progress. The network model also explains why societies with a high prevalence of contagious disease might evolve toward growth-inhibiting social institutions and how small initial differences can produce large divergence in incomes. Empirical work uses differences in the prevalence of diseases spread by human contact and the prevalence of other diseases as an instrument to identify an effect of social structure on technology diffusion.
Keywords: development; disease; economic networks; growth; pathogens; social networks; technology diffusion
JEL Codes: E02; I1; O1; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| higher levels of communicable diseases (I12) | more collectivist social structures (P32) |
| more collectivist social structures (P32) | slower technology diffusion (O33) |
| slower technology diffusion (O33) | lower productivity and income levels (O49) |
| higher levels of communicable diseases (I12) | slower technology diffusion (O33) |
| higher levels of communicable diseases (I12) | lower productivity and income levels (O49) |
| individualism (P14) | increase in productivity (O49) |