growth model, human capital, low income country, social capital

Abstract: Criticisms towards neo-classical growth theory nowadays are mostly related to the endless production growth. First, the measurement of welfare based only on income per capita doubtlessly requires revision. Second, physical capital is the capital referred in the growth model. Even though social capital and human capital are no new remedies for development, they are often studied separately. How social capital and human capital can replace physical capital in production enhancement and in welfare improvement demands attention. This paper makes an attempt to answer this question by studying seven low income Asian countries. The interview result suggests certain social capital and human capital can substitute physical capital, spending can therefore be reduced, and satisfaction can be improved. Preserving assets like family bonds, community ties, traditional skills and certain traditional values not only substitutes financial spending but also generates or reinforces spiritual values.