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It's not what you know - it's who you know! Economic analysis of social capital
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Friends in high places? An overview of Social Capital
Pathways of influence in South Africa
Preferential credit for ethnic firms?
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Choosing better technology. Does social capital help?
Networking for success and survival in Ghana?
Unequal access to social capital in Tanzania
Sites for Sore Eyes: Online Sources on Social Capital
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September 2000 Insights Issue #34

Back to Insights #34

Friends in high places? An overview of social capital

Social capital can be split into three connecting strands: bonding social capital (strong ties between immediate family members, neighbours, close friends, and business associates sharing similar demographic characteristics); bridging social capital (weaker ties between people from different ethnic, geographical, and occupational backgrounds but with similar economic status and political influence); linking social capital (ties between poor people and those in positions of influence in formal organisations such as banks, agricultural extension offices, schools, housing authorities, or the police).

Poor people typically have plenty of bonding social capital - links with people in similar circumstances to themselves; they have some bridging social capital - scattered friends, acquaintances, and distant relatives in other areas; but next to no linking social capital or 'friends in high place' to help deal with commercial, educational, legal, or political organizations.

Without bridging and linking social capital, the poor will succumb more easily to natural disasters and economic shocks, and struggle to take up new opportunities for advancement. Were a hurricane or crop failure to strike an entire village, bonding social capital could offer immediate practical help. Bridging social capital might provide longer-term support such as shelter, jobs, or credit and help tackle problems needing collective action such as road maintenance. Linking social capital helps alleviate the effects of disasters by providing access to a broader range of assets (e.g. official aid), and by enabling poor people’s organizations to advance their interests and aspirations.

In rural north India, social groups in poor communities simply provide basic protection and solidarity. For the better off, extensive networks offer strategic advantage, strengthening material interests. In Africa poor entrepreneurs running small local firms form 'solidarity' networks that help reduce risk and uncertainty. Larger firms form 'innovation' networks to share knowledge about technology and markets, to increase productivity, profits, and market share. Endowments of bonding, bridging, and linking social capital may vary along gender lines: in Ghana women pool risk with other women in the village whilst the men pool risk both within and outside the village.

A three-pronged approach by NGOs, firms, and government agencies is thus essential to:

  • mobilize bonding social capital within communities

  • build more extensive bridging social capital to markets

  • enhance linking social capital to public institutions.

How does social capital contribute to long-term development?

In rural Kenya, over 200,000 community groups provide support to members but are isolated and lack outside resources to fight poverty. Linking social capital is thus essential: NGOs and churches, for example, provide support for community groups to give poor people a voice and boost their economic opportunities. Capacity building over time helps to engender trust and partnership. Myrada, an Indian NGO, delivers microfinance to the poor and acts as a broker between poor people's organizations and commercial banks. By mobilizing bonding social capital, Myrada has formed credit management groups, with representatives on regional federations - to enhance bridging social capital. The credit groups hold accounts with commercial banks and gradually gain the confidence and skills to court formal institutions (linking social capital). Five years on, group members are totally independent and more than capable of managing the accounts themselves. Peasant federations in Bolivia, Ecuador, and Peru, for over thirty years have been linking community-based groups with shared economic, political, or cultural interests - a unique form of social capital rooted in social relationships and shared identities. The federations also use the social capital embedded in community groups to create linking social capital - reflected in interactions with government agencies, civil society organizations, and markets. The linkages in some cases have:

  • increased regional capacities to manage natural resources

  • increased access to external financial and technical resources

  • increased participation in decision-making on local development issues

  • improved relationships between local groups and government

  • prompted removal of barriers to market access by adding value to rural products, increasing product quality, and establishing links to new markets

Contributor(s): Michael Woolcock

Further information:
Michael Woolcock
Development Research Group
The World Bank
1818 H Street NW, Washington, DC 20433
USA

Tel: + 1 (202) 473 9258
Fax: + 1 (202) 522 1153
Email: mwoolcock@worldbank.org

The World Bank

See Also:
Social Capital: Implications for Development Theory, Research, and Policy, World Bank Research Observer 15(2) (2000 forthcoming) also presented at the CSAE conference, ‘Opportunities in Africa: Micro-evidence on firms and households’ April 2000, Oxford, by Michael Woolcock and Deepa Narayan.
World Development Report 2000/01, Chapter 7, New York: Oxford University Press (forthcoming).

Other related links:
Search Eldis for sources on social capital

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