EFFECTS OF INNOVATION AND SOCIAL CAPITAL ON ECONOMIC GROWTH: EMPIRICAL EVIDENCE FOR THE BRAZILIAN CASE

Objective of the study: The main objective of this paper is to analyze the influence of innovative activities on the economic performance of Brazilian states. Given the importance of cooperation and collaborative networks for increasing productivity, the effects of social capital are analyzed in a complementary way. Methodology/Approach: With a database composed of 297 observations analyzed from 2000 to 2010 for each federation unit, including the Federal District, this work uses the traditional panel and dynamic panel data method to measure the impact of innovation in GDP. Originality/Relevance: The use of a theoretical model of growth decomposition, which includes variables such as social capital, human capital and natural capital, and the use of data with higher level of disaggregation, at the state level, presents methodological and empirical advances for Brazilian innovation literature. Main results: The results found point to a significant and positive effect of social capital and to the non-significance of the technological variable. Moreover, as evidenced by the literature, human capital is the main factor of increase of the Brazilian product. Theoretical/Methodological contributions: Regarding the theoretical aspects, the evidences, mainly, of the social capital show that the cooperation networks exert influence on the performance of the productive activities of the country. Social/Management contributions: Identifying the results of innovative activities is of paramount importance to policymakers as they can use this information to create new measures and / or to redirect existing technology policies.