A Layman’s Guide to Social Capital and the Relevance for Economic Development

Abstract

The previous paper (Menz, this issue) explored the nexus between agricultural extension and social capital. This chapter spells out the nature of social capital in a more extensive way. Although social capital is a relatively new concept, one of its attractions is that it can accommodate both economic and social science philosophies. An illuminating elucidation of social capital was given by Alejandro Portes: “Whereas economic capital is in people’s bank accounts and human capital is inside their heads, social capital is (inherent) in the structure of their relationships. To possess social capital, a person must be related to others, and it is these others . . . who are the actual source of his or her advantage.” Building social capital can help economic development by reducing the cost of conducting day-to-day business, it facilitates the spread of knowledge and innovation and it promotes cooperation and market-based interaction. From the review of the literature on social capital and economic development, it can be concluded that social capital is strongly linked to economic development. This empirical result supports the positive theoretical and operational linkages between social capital and agricultural extension as outlined previously. Those linkages could reasonably be expected to be particularly important in conflict areas.