Publication | Closed Access
Social Capital: Promise and Pitfalls of its Role in Development
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2000
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Development TheoryDevelopment EconomicsEconomic DevelopmentEducationEconomic GrowthEconomic InstitutionsUneven DevelopmentOrthodox Adjustment PoliciesHuman Capital DevelopmentPolitical EconomySocial CapitalSocio-economic DevelopmentPublic PolicyEconomicsSocial NetworksLatin American StudiesSocio-economic ChangeSocial FinanceEquitable DevelopmentSociologyBusinessSocial FoundationsPolitical Science
Interest in social capital arises from the limitations of an exclusively economic approach to achieving sustained growth, equity, and democracy. The commentary aims to review social capital’s origins and definitions, critique its causal claims, and illustrate its role in Latin American urbanisation and migration. The authors review recent literature, critique the concept’s causal assumptions, and present empirical examples from Latin America. Examples show that social networks and community monitoring are crucial for grassroots economic initiatives, yet institutionalizing them is difficult, and the mixed outcomes of neoliberal adjustment policies reveal contradictions that orthodox economic theory cannot explain.
The purpose of this commentary is threefold. First, to review the origins and definitions of the concept of social capital as it has developed in the recent literature. Second, to examine the limitations of this concept when interpreted as a causal force able to transform communities and nations. Third, to present several relevant examples from the recent empirical literature on Latin American urbanisation and migration. These examples point to the significance of social networks and community monitoring in the viability of grass-roots economic initiatives and the simultaneous difficulty of institutionalising such forces. Current interest in the concept of social capital in the field of national development stems from the limitations of an exclusively economic approach toward the achievement of the basic developmental goals: sustained growth, equity, and democracy. The record of application of neoliberal adjustment policies in less developed nations is decidedly mixed, even when evaluated by strict economic criteria. Orthodox adjustment policies have led to low inflation and sustained growth in some countries, while in others they have failed spectacularly, leading to currency crises, devaluations, and political instability. The ‘one-size-fits- all’ package of economic policies foisted by the International Monetary Fund and the US Treasury on countries at very different levels of development have led to a series of contradictory outcomes that orthodox economic theory itself is incapable of explaining.