Posts Tagged ‘Capital’

What is Social Capital

January 15th, 2014 humas No comments


Social Capital

Social capital refers to the institutions, relationships, and norms that shape the quality and quantity of a society’s social interactions. Increasing evidence shows that social cohesion is critical for societies to prosper economically and for development to be sustainable. Social capital is not just the sum of the institutions which underpin a society – it is the glue that holds them together.

Some key concepts are elaborated below:

Horizontal Associations

A narrow view of social capital regards it as a set of horizontal associations between people, consisting of social networks and associated norms that have an effect on community productivity and well-being. Social networks can increase productivity by reducing the costs of doing business. Social capital facilitates coordination and cooperation.

Social capital also has an important “downside” (Portes and Landholt 1996): communities, groups or networks which are isolated, parochial, or working at cross-purposes to society’s collective interests (e.g. drug cartels, corruption rackets) can actually hinder economic and social development.

Vertical and Horizontal Associations

A broader understanding of social capital accounts for both the positive and negative aspects by including vertical as well as horizontal associations between people, and includes behavior within and among organizations, such as firms. This view recognizes that horizontal ties are needed to give communities a sense of identity and common purpose, but also stresses that without “bridging” ties that transcend various social divides (e.g. religion, ethnicity, socio-economic status), horizontal ties can become a basis for the pursuit of narrow interests, and can actively preclude access to information and material resources that would otherwise be of great assistance to the community (e.g. tips about job vacancies, access to credit). Read more…

Capital and Institutions Stimulate Growth

December 3rd, 2010 humas 1 comment

“…the best single predictor of the growth of an economy remains its investment rate.”

“The four key issues for defining institutional quality are: the quality of the bureaucracy; rule of law; risk of expropriation; and repudiation of contracts by government.”

... for growth

What explains the stellar economic performance of the East Asian nations since World War ll? How critical a role did government interventions and industrial policy play? And perhaps most importantly, what policy insights can be gleaned from East Asia that might spur faster economic growth in the former East Bloc and developing nations of the world?

“Most economists would agree that there are major lessons to be drawn for other countries from East Asia’s growth experience,” begins a wide-ranging paper by NBER Research Associate Dani Rodrik. “But what these lessons are remains subject to considerable controversy.”

Read more…