Community driven development (CDD) has been a key operational strategy supported by the World Bank for more than a decade – averaging about $2 billion in lending every year and now covering more than 80 countries. By emphasizing empowerment and putting resources in the direct control of community groups, CDD’s rapid spread stems from its promise of achieving inclusive and sustainable poverty reduction. Yet despite its popularity, evidence on whether these programs work still remains limited and scattered. Recently, two significant efforts have been made by the Bank to pull together the different strands of evidence there is on CDD and provide a summary picture of what we know and what we don’t (please see What Have Been the Impacts of World Bank Community-Driven Program? and Localizing Development – Does Participation Work?). The reviews find on the positive end that CDD-type programs, when implemented properly, do well on delivering service delivery outcomes in sectors like health and education, improve resource sustainability, and help in constructing lower cost and better quality infrastructure.
Like cholesterol, “social capital” comes in bad and good types.
Elusive to define, social capital consists of those bonds created by belonging to a group that instills trust, solidarity, and cooperation among members. We know that good social capital has an enormous development potential, positively influencing economic growth, democracy, cognitive development, and adoption of farming practices, among others.
In a recent study on crime in Colombia1, a colleague from American University, Erik Alda, and I show that high rates of crime help destroy social capital (victims trust less). But social capital can also reduce crime when it effectively increases the involvement of all of us in the prevention and management of crime and violent behavior and when it reduces the temptation of each individual to let others solve the problem of crime.
Stronger interpersonal trust, however, also allows an easier exchange of information and know-how among criminals, reducing their costs of committing a crime. Because bonding and trust within these groups demands the exclusion of others, a perverse social capital may lead to the kind of extreme violence and hatred seen in the Mafia, the Ku Klux Klan, maras, or genocides.
As surprising as it may seem, there is a deep dark secret at the core of the System of National Accounts (SNA) – the accounts used by Finance ministries worldwide to measure economic performance. The numbers don’t add up. We can see this in the table below, showing the net worth of Brazil and its composition in 2005. The final two lines in the table report a measure of Brazil’s net national income and the implicit rate of return on wealth (the ratio of income to net worth). The return to Brazil’s produced and natural capital is over 18%! As good economists, we should all be investing our pension funds in Brazil. Why? Because financial market data tell us that the long run real rate of return across the broad range of assets averages only about 5% a year.
|Table – Net worth and net national
Income (NNI) in Brazil, 2005, $million
|Net financial assets||-117,221|
|Implicit rate of return||18.2%|
|Source: The Changing Wealth of Nations
World Bank (2011)
This season in Bangladesh marks the 40th anniversary of the 1970 cyclone which ravaged the southern coast and killed over half a million people, decimated the homes of countless families, destroyed millions of livestock, key infrastructure, and damaged productive land. The recent cyclones Sidr in 2007 and Aila in 2008 also claimed the lives of over 3000 people each, leaving millions of poor more vulnerable to climate change than ever before. In the wake of all these cyclones, questions were raised about how to build resilience to climate change impacts without compromising national development goals. Is Bangladesh developing differently? What lessons can be learned from experience of Bangladesh to reframe development and climate action as mutually supportive objectives?
When I think of social capital, I think of a group, an organization or a coalition of groups that hold memberships of common interests, purposes and visions, where there is solidarity, reciprocity and collective strength, and which wields power and resources to forge collective benefits. Community empowerment, group formation, civil society strengthening, coalition building are integral components of social capital and social development interventions, which are gradually getting recognition for their economic and political potential in serving broader development goals. But social capital can be highly contextual. One kind of social capital may be good in one setting but not necessarily in another setting. Therefore, it is very important to understand negative and positive consequences of social capital in designing policy and program interventions.
From the High Andes of Peru -- Ann Kendall, project leader of the DM2009 winning project to restore ancient, water-conserving mountain terraces in a poor agricultural community in Peru, reports in an email:
"I have had a very interesting and productive meeting and exchange with one of the other Peruvian DM winners, Association Andes, with Alejandro Agumedo, who approached us and would like us to join them in planning an international seminar focused on the traditional terrace systems....Funds for this will have to be sought, which I believe they are planning to do! Cusichaca Trust [Kendall's group] and Association Andes have had, in 2006, the experience of putting on a national conference in Lima, bringing highland communities in from previous local events to meet with researchers, academics, and NGOs, which was very successful. AA envisages organising an event bringing people from China, Asia, etc....We welcome this collaboration."
There are a lot of highly interesting talks and events on governance at the World Bank these days, often we discuss them here in our blog. The other week we had a guest from the United Nations Democracy Fund (UNDEF), Roland Rich, who is the Fund's Executive Head. He gave a remarkable presentation, full of memorable propositions that would all merit a blog post or two. From "We're all footnotes to Plato" to "An idea is not responsible for the people who support it" there was a lot of food for thought. For this post, I'll pick only one of his many inspiring ideas: the role of social capital in development.