Components of Social Capital and Economic Growth in Islamic Countries: A Panel Quantile Regression Approach

Extended Abstract
 
Introduction and Objectives: In the last two decades, the attention of researchers and economic policymakers to the role of social capital in explaining differences in economic growth among countries has increased dramatically (Haldane & Halpern, 2025). Social capital, as a multidimensional concept, encompasses mutual relationships between individuals and groups, social trust, social networks, and the level of civic participation, and has a potential and direct impact on the macroeconomic performance of countries (Xue et al., 2023; Jantoń-Drozdowska & Majewska, 2015). Social trust, as one of the main components of social capital, plays an unparalleled role in economic growth by reducing transaction costs and facilitating economic cooperation at various levels (Haldane & Halpern, 2025; Rahimi et al., 2023), thereby paving the way for innovation, knowledge transfer, and the formation of economic investments (Haldane & Halpern, 2025; Xue et al., 2023).
Strong social networks can also optimize human and occupational capital, accelerating the resolution of collective problems, resource exchange, and risk sharing in the economy (Soithong & Suksawas, 2025; Xing et al., 2021). In contrast, perceived corruption is considered an element incompatible with social capital, and societies with high levels of perceived corruption usually face reduced social trust, weak institutions, and decreased investment (Robbani, 2021).
The main objective of this study is to investigate the effect of social capital components on the economic growth of selected Islamic countries using a panel quantile regression approach. To achieve this goal, from among the 57 member countries of the Organization of Islamic Cooperation (OIC), a selection of 26 Islamic countries was chosen based on the availability of all required data over the period from 2000 to 2022. The present study also examines controlling factors such as the education index, women’s participation rate, and other control variables, as these factors can have a significant impact on the interaction between social capital and economic growth. Without including them in the models under investigation, economic analyses would be incomplete and sometimes misleading.
Research Method: The independent variables used in this study were selected through an analysis of the theoretical and empirical literature in this field. To investigate the role of social capital components on economic growth, a selection of Islamic countries (including Iran, Iraq, Armenia, Azerbaijan, Bangladesh, Benin, Cameroon, Egypt, Gabon, Indonesia, Jordan, Kazakhstan, Kuwait, Kyrgyzstan, Lebanon, Malaysia, Mali, Morocco, Pakistan, Qatar, Saudi Arabia, Tajikistan, Tunisia, Turkey, Uzbekistan, and Yemen) was considered.
The panel quantile regression method was introduced in 1978 by Koenker and Bassett, combining panel data analysis and quantile regression. This method, based on a conditional quantile function, minimizes absolute error values in variables with asymmetric distributions and is today used in numerous economic and financial studies (Afolabi & Ndamsa, 2025). This approach provides valuable insights beyond mean-based analyses, particularly for research focusing on inequality, the behavior of different groups within society, or asymmetric responses (Afolabi & Ndamsa, 2025).
Findings: The estimation results of the panel quantile regression indicate heterogeneous relationships between the explanatory variables and GDP per capita at different levels of the conditional distribution.

Civil Society Participation Index (CSPI): A positive and significant effect (p-value < 0.05) is evident in all quantiles except the 0.75 quantile, indicating the increasing role of civil society in weaker economies (in terms of lower GDP per capita).
Social Trust (ST): Shows a positive and significant effect (p < 0.05) at all quantile levels.
Social Networks Index (SN): Exhibits a dual effect across quantiles.
Corruption Perception (CP): With positive and significant coefficients at the 0.50 Q and 0.75 Q quantiles, confirms the inhibitory effect of corruption on economic growth and performance at medium economic levels.
Women’s Economic Participation Rate (PRF): Shows a uniform positive and significant effect at the 0.05 Q, 0.25 Q, and 0.50 Q quantiles, explaining the peak impact of women’s economic participation in less affluent economies (in terms of GDP per capita). This result emphasizes the importance of women’s economic participation in the early stages of economic growth.
Education Index (ED): Demonstrates a positive and significant effect on GDP per capita in almost all quantiles (except 0.05 Q), indicating the central role of human capital education in medium and high-development economies.
Fertility Rate (FR): Has a negative coefficient at all quantile levels.

Discussion and Conclusion: The main findings of this research indicate that social trust (ST), as the only variable with a positive and significant effect in all quantiles (0.05 to 0.95), plays a fundamental role in facilitating economic cooperation and reducing transaction costs. In contrast, social networks (SN) show a dual behavior: a positive effect in less affluent economies (0.05 quantile) and a negative effect at advanced growth levels (0.95 quantile), likely due to networks transforming into rent-seeking channels in the absence of efficient institutions.
Civil society participation (CSPI) has a stronger reinforcing effect on economic growth, particularly in weaker economies (0.05 quantile). Furthermore, corruption perception (CP) significantly hinders economic growth at intermediate levels (0.50 quantile).
Among the control variables, the Human Development Index (HDI) has its strongest increasing effect in advanced economies (0.95 quantile), indicating the progressive returns on investment in human capital quality at higher stages of development.
Therefore, based on the research findings, the following policy implications are proposed:

Policy-making in less developed OIC member countries should focus on strengthening civil institutions, immediate control of fertility and unemployment rates, and investment in basic education.
Policy-making in OIC member countries with higher economic growth should focus on transferring resources from informal networks to transparent institutions and optimizing investment in human development.

Declarations
Conflict of Interest: The authors declare no conflict of interest.