The Role of Social Capital in Development: An Empirical Assessment

The Role of Social Capital in Development: An Empirical Assessment

The Role of Social Capital in Development: An Empirical Assessment

The Role of Social Capital in Development: An Empirical Assessment

Synopsis

Social capital can be defined as the institutions and networks of relationships between people, complemented by the attitudes, norms and values that underlie them. Based on a large volume of newly collected data from ten countries, this is the first book to provide a rigorous empirical testing of the link between social capital and economic development. It documents the pervasive role of social capital in accelerating poverty alleviation and rural development, facilitating the provision of goods and services, and easing political transition and recovery from civil conflicts.

Excerpt

As economics and other social sciences improved their analytical apparatus throughout the twentieth century, it became increasingly clear that, despite major technical refinements, their tools were not able to account entirely for observed variations in cross-country levels of economic development. Indeed, these tools — in particular as used in neoclassical growth theory — were not fully successful at explaining why countries with similar endowments of natural and physical capital experienced vastly different rates of growth and levels of per capita income. At the same time, development practitioners in the field were observing variations in project performance that could not be fully explained by differences in the quality and quantity of the inputs. Equally surprising was the observation that apparently similar communities exhibited very different track records in managing common resources or organizing for the common good.

By the mid-1960s researchers and practitioners had come to recognize that the quality of the labor factor of production was as critical as its quantity in assessing the impact of human input on growth and development (see Becker 1962, Schultz 1963). Although the subsequent search for a scientifically satisfying definition and measure of “human capital” was only partly successful, the concept has since been largely accepted by the academic, practitioner, and policymaking communities.

The addition of this new construct to the social scientists' toolkit only partly filled the conceptual and empirical gap in the understanding of the sources of growth and differences in project success. Beginning in the 1980s, a new focus on the role of personal interactions (at the micro and meso levels) and institutions (at the macro level) decisively advanced efforts to account for differences in cross-country and field project performance. Acceptance of this concept of “social capital” by the scientific community has been hampered by the absence of a body of research that rigorously demonstrates the empirical relevance of social capital in its three dimensions — micro, meso, and macro — across a variety of segments of economic life. Governments and donor organizations, which quickly understood the relevance of social capital in poverty alleviation, have had to rely on a very small body of evidence to justify incorporating . . .

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