The impact of social justice on economic performance

Author name: 
Kavuri AS
Shao H

A large body of literature shows that institutions positively impacts economic performance. This study proposes that social justice which is an essential virtue of institutions also positively influences economic performance. We build the case that social justice affects capital, human capital and technology accumulation. This in turn positively drives economic performance. The hypothesis is empirically supported with a cross-sectional analysis of OECD countries and panel data analysis of EU countries. The results are robust under Instrument Variable (IV) analysis and numerous controls. The examination also determines that social justice contributes significantly to the traditional neoclassical model that relates output to the stock of human and physical capital. Consequently, the results imply that if a country such as Turkey is able to raise its rating to the level of Nordic countries (e.g. Norway), GDP per capita may increase from 10,000 USD to 56,000 USD.

Publication file: 

Updated:  24 March 2017/Responsible Officer:  Crawford Engagement/Page Contact:  CAP Web Team