The Contribution of Income, Social Capital, and Institutions to Human Well-Being in Africa

Using cross-sectional time series data, we examine the effects of income, institutions and social capital on literacy and life expectancy. An improvement in institutions has positive influence on literacy but does not seem to affect life expectancy. In addition, countries with high income may not need high levels of social capital as much as low-income countries do. Moreover, the interaction between good institutions and high social capital produces a positive impact on human well-being (measured by literacy). This last result suggests that social capital and institutions are complements, and it underscores the important role of institutions