ABSTRACT
Globalization means growing mobility. Loyalty means a common value – the ‘we’ – of people who see locations as the basis for long-term growth. The connection between globalization and loyalty is the application of the concept of social capital to mobility. Social capital is not a new concept; indeed, only the analysis of economic and social externalities under the assumption of social capital as a property right, combined with the increasing mobility of people, seems to be new. Classic growth theories imply that any restrictions on the mobility of human capital lead to market failures and to non-optimal factor allocation. But in the case of social capital as a complement to all other economic resources, unrestricted mobility can also lead to market failure, due to under-investment in social capital. The existence of market failures does not necessarily mean that the government has to intervene. On the contrary, we propose that the best solution to the problem of underinvestment in social capital is a non-governmental, liberal solution.
