The Role of Social Capital in Development

The late twentieth century has seen an unparalleled expansion of international capital. After years of competing blocs and capital restrictions, the floodgates have broken, and private investment has poured across political borders as never before. The commercial revolution was a period of rapid output growth, urbanization, population growth and technological innovation that affected the global economy. With the various contributory factors in the world economy such as globalization (Drainville & Sassen, 2003), international trade agreements, economic cooperation, and technological advancements, it could be assumed that the world economy today is flourishing. But what is happening now is the other version of the story. With the emergence of different human conditions and overpopulation (Caldwell & Schindlmayr, 2002), political turmoil and instability, terrorism, and increase of oil prices, the world economy at present is slowing down but never ceases to recover its strength.

Meanwhile, the basic concept of social capital is about creating connection between individuals and entities that are valuable economically (Grootaert & Bastelaer, 2002). As such, connections are made through social networks that involve people who trusts and assists one another. These social relations serve as assets as they can lead to collective actions that are aimed not to satisfy personal interest but also those beneficial to others. It is an important tool that can lead to economic growth, communal harmony and a set of political pattern.

Social capital can be employed in variety of purposes that meets an individual’s goal. The contact can be utilized in the improvement of one’s job in which social ties can become useful resources. By having access to resources through social networks, individuals are given additional social credentials. Their association or membership to an organization also provides a sense of identity and recognition for the individual. Similarly, it also serves the purpose of improving one’s community. Like in the case of civil societies, the engagement of individuals to voluntary organizations that act towards the benefit of others. With such social relations, individuals are provided with network of resources that are beneficial to them and to the larger community. Such involvement paves the way for the spillover of values, beliefs and cooperatives within the organization and its members. Also, the level of participation in collective action contributes to greater political involvement. Citing all of this, it can be asserted that social capital is indeed a significant factor from the individual level to the societal, economic and political levels.

Resources are invested primarily to gain expected returns. In this sense, capital is resources that are invested in the pursuit of a specific goal such as acquiring profit. Among the different forms of economic capital, social capital has been considered to be the most salient. Fundamentally, capital entails social activity. Since capital is associated with the production and exchange of commodities, labor power becomes an indispensable part of this process. The use value of a commodity is dependent on socially necessary labor and the exchange process is also considered as a social process (Lin, 2001, pp.7).

The social capital theory provides a clearer view of the interplay between structure and action. Social capital deviates from classical theory of capital especially on capitalist’s perspectives as it expands on the concept of capital as social relations. Thus capital, is a social asset produce by the connections and access to resources of a network or a certain group (Lin, 2007, pp.19).

Primarily, social ties provide useful information about choices and the opportunities present for the organization or community. It is likely to result in greater efficiency as compared to other formal coordination techniques. Workplaces that are highly centralized tend to suffer inefficient decisions due to the delay and distortion of information as it moves from the hierarchical chains of command. Economically speaking, social capital functions to reduce the transaction costs that are associated with formal coordination techniques (Fukuyuma, 1999).

Additionally, the relationships of individuals to social ties are recognized by the organization and consider such as social credentials. This in turn, reflects the accessibility to resources through networks by an individual that is beyond his personal capital. Lastly, identity and recognition is reinforced through social relations. The membership to a social group does not only provide emotional support but also the recognition of the claims made to those resources (Lin, 2002, pp.20).

Moreover, with the interest in the promotion of democracy, social capital is measured in terms of political participation. The involvement of an individual to social ties such that of civil societies strengthens active political participation and establishes a set of ideological principles. Human development is served when associations and organizations participate in the task of self governance. Individuals are capable of acting collectively in effective manner through civil societies. As social capital is considered an asset, communities are endowed in different extents. Those that are equipped with larger social capital are able to participate in beneficial cooperation in a wider front while the ones with less social capital are likely to be less capable of effective organization. However, social capital can be created and built up since individuals can be driven to collective and participative action through purposive action (Krishna, 2002, pp3).

Failed efforts of delivering economic and social advantages from the top down are replaced with the introduction of social capital theory. It deviates from focusing on the state institution as the main concern for public policy and directs the attention equally to the grassroots levels. Moreover, the number of existing organizations and their effective participation will have an impact on the economic growth as well as in promoting communal harmony and patterns of participation in the political arena. Thus, governments are urged to invest resources in creating and building stocks of social capital (Krishna, 2002, pp.3).

Social capital is greatly attributed to one’s participation in voluntary organizations. Cooperative values, beliefs and norms are molded in a setting where trust and assistance is regarded to each other. Moreover, the degree by which beneficial cooperativeness is dependent to the scale of social capital. Hence the greater the social capital, the more likely it will cooperate in wider fronts while those with low social capital are less likely to be capable of organizing effectively. Indeed, social capital serves a wide range of purpose from the individual level to the societal in which collective actions are done. It also has it relevance in the economic growth as well as in shaping political patterns through the participation of civil societies in providing ideological principles.

References

Caldwell, J.C. & Schindlmayr. T. (2002). Historical population estimates: Unraveling the consensus. Population and Development Review, 28(2), 183-204.

Drainville, A.C. & Sassen, S. (2003). Contesting Globalization: Space and Place in the World Economy. New York: Routledge.

Fukuyama, F. (1999). Social Capital and Civil Society. International Monetary Fund, viewed on 23 April 2007 from, http://www.imf.org/external/pubs/ft/seminar/1999/reforms/fukuyama.htm

Grootaert, G. & T. V. Bastelaer Eds. (2002). The Role of Social Capital in Development: An Empirical Assessment. Cambridge, England: Cambridge University Press.

Krishna, A. (2002). Active Social Capital: Tracing the Roots of Development and Democracy. New York: Columbia University Press.

Lin, N. (2001). Social Capital: A Theory of Social Structure and Action. Cambridge, England: Cambridge University Press.