Social capital and localised learning: Proximity and place in technological and institutional dynamics

This conceptual paper analyses why social capital is important for learning and economic development, how it is created and its geography. It argues that with the rise of globalisation and learning-based competition, social capital is becoming valuable because it organises markets, lowering business firms' costs of co-ordinating and allowing them flexibly to connect and reconnect. The paper defines social capital as a matrix of various social relations, combined with particular normative and cognitive social institutions that facilitate co-operation and reciprocity, and suggests that social capital is formed at spatial scales lower than the national or international, because the density of matrices of social relations increases with proximity. The paper also offers a discussion of how national and regional policies may be suited for promoting social capital.