Investigation of the Relationship between Social Capital, Good Governance, and Human Development: A Comparative Study in Scandinavian Countries Using Structural Equation Modeling

Document Type : Original Article

Authors

1 Department of Economics, Razi University, Kermanshah. (PhD Student in Economic Sciences)

2 Department of Economics, Razi University, Kermanshah. Iran

3 PhD in Economic Sciences, Researcher. , Razi University, Kermanshah. Iran

Abstract

Human development in advanced economies remains shaped by a range of institutional and social dynamics, notably social capital and the quality of governance. This study investigates the causal relationships among social capital, good governance, and human development in two Scandinavian countries—Sweden and Denmark. The primary aim is to conduct a structural analysis of these interconnections within the context of relatively efficient governance systems and institutionalized social capital. To test the theoretical model, the study employs partial least squares structural equation modeling (PLS-SEM) using the SMART-PLS software. The analysis spans the period from 2000 to 2022, based on data availability. Social capital indicators are drawn from the World Values Survey, governance metrics from the World Bank, and human development data from United Nations reports. The results reveal a strong and positive relationship between social capital and human development. Conversely, the link between social capital and good governance in both countries is negative. Moreover, good governance shows a weak or even negative association with human development, potentially reflecting a saturation effect in welfare outcomes typical of highly developed societies. These findings underscore the continued importance of social capital in enhancing quality of life, even in contexts characterized by strong governance. As such, social capital should remain a central consideration in the formulation of social and development policies.

References

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Governance and Development
Volume 5, Issue 4
December 2025
Pages 89-124

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