Aspects of Social Capital in Local Economic Development: Evidence from Regional Latvia

Social capital is a concept that refers to obtaining various resources by means of formal and informal networks, and considers social interactions, which underlie and generate economic development. The authors consider the benefits, risks and socio-economic impact using three commonly accepted dimensions of social capital (Nahapiet & Gloshal, 1998). There is a literature on peculiarities arising from the historical post-soviet context, which influences public activities and outcomes. The authors find that attitudes prevalent in post-soviet societies associated with structural and relational dimensions contribute to negative outcomes through cognitive dimension and may create risks of “vicious circles”. Using statistical data, recent research and local surveys, the authors examine if regional social capital differs in distinct regional socio-economic situations. This article provides available empirical data on social capital within the socio-economic context and historical background of regional Latvia. The research is important because Latvia as a small and open economy is a subject of external shocks and it is important to understand how social capital affects local economic development.