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ERD Working Paper No.

40

The Puzzle of Social Capital A Critical Review

M.G. Quibria

May 2003

M.G. Quibria is Advisor, Operations Evaluation Department, Asian Development Bank. This note is derived from a presentation at the ADB Institute in Tokyo on March 2002 on this topic. The author would like to thank the participants of the seminar and Ernesto Pernia, Salim Rashid, Syed Zahir Sadeque, and Juzhong Zhuang for helpful comments; to Cherry Zafaralla for editorial assistance; and to Marilen Macasaquit, Dionisa Boro, and Gina Buenaventura for research assistance.

Asian Development Bank P.O. Box 789 0980 Manila Philippines 2003 by Asian Development Bank May 2003 ISSN 1655-5236 The views expressed in this paper are those of the author(s) and do not necessarily reflect the views or policies of the Asian Development Bank.

FOREWORD

The ERD Working Paper Series is a forum for ongoing and recently completed research and policy studies undertaken in the Asian Development Bank or on its behalf. The Series is a quick-disseminating, informal publication meant to stimulate discussion and elicit feedback. Papers published under this Series could subsequently be revised for publication as articles in professional journals or chapters in books.

CONTENTS

ABSTRACT

VII

I.

INTRODUCTION

II.

DEFINITIONS OF SOCIAL CAPITAL: A CONFUSING MEDLEY

III. IS SOCIAL CAPITAL REALLY CAPITAL OR A BAD METAPHOR?

IV. TAUTOLOGICAL DEFINITION AND EXAGGERATION OF BENEFITS

V.

THE PROBLEMS WITH THE EMPIRICS OF SOCIAL CAPITAL

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VI. CONCLUDING REMARKS

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ABSTRACT

This paper provides a critical review of the burgeoning literature on social capital, highlighting a number of serious conceptual and empirical problems associated with this literature. First, the concept of social capital remains largely elusive, with many different ideas attached to it. This elusiveness has serious ramifications for empirical and policy analysis. Second, while the concept of social capital is used to highlight the positive, productive aspects of sociability, it fails in important ways to qualify as a form of capital. Third, there are both theoretical and empirical presumptions to suggest that social capital can to lead to undesirable socioeconomic outcomes. Finally, a large body of empirical work on social capital remains mired in measurement and estimation problems.

Here I learn to do a service to another, without bearing him any real kindness; because I foresee, that he will return my service, in expectation of another of the same kind, and in order to maintain the same correspondence of good offices with me or others. And accordingly, after I have served him and he is in possession of the advantage arising from my action, he is induced to perform his part, as foreseeing the consequences of his refusal. David Hume Treatise of Human Nature (1740/1978, 521)

I. INTRODUCTION
ocial interactions matter. They create social networks, foster trust and values, sustain norms and culture, create community, and influence economic and social outcomes. While these ideas have antecedents in the writings of such diversity of earlier authors as Karl Marx, David Hume, Adam Smith, Antonio Genovesi, Emile Durkeim, and Thortsen Veblen, they have taken pride of place in the recent literature on social capital. The concept of social capital has been applied to explaining a wide variety of social and economic phenomena, ranging from the growth tragedy in Africa (Easterly and Levine 1997) to the mortality crisis in Russia (Kennedy et al. 1998); from the successful group lending programs in Peru (Karlan 2003) to the flourishing township village enterprises in Peoples Republic of China (PRC) (Weitzman and Xu 1994). This concept highlights the importance of nonmarket social interactions to fill a lacuna in the traditional neoclassical economic framework. It has been argued by sociologist Granovetter (1985) that the neoclassical framework posits an undersocialized conception of man that views man as atomized, anonymous, and bereft of any social influence through social relations. In other words, the neoclassical framework ignores the role of nonmarket social interactions in determining individual and collective behavior and shaping economic and social outcomes. In the real world, there are many examples of how individual and collective behavior is shaped by nonmarket social influences in the form of culture, norms, and social structure. An individuals taste for books, restaurants, and movies is often largely determined by what is considered hip. Similarly, ones educational aspirations, or decision to smoke or take drugs, or to have children out of wedlock are all matters significantly affected by the behavior of ones peer groups, role models, and norms and values of the surrounding society. While there has been a proliferation of the literature on social capital in recent years, it is fraught with serious conceptual and empirical measurement and estimation problems. This paper highlights some of these conceptual and empirical measurement and estimation problems that seem to have arrested the pace of progress of this literature. This paper divides these issues into four broad categories. First, the concept of social capital remains largely elusive.

THE PUZZLE OF SOCIAL CAPITAL A CRITICAL REVIEW M. G. QUIBRIA

Different authors have attributed different meanings, leading to a wide range of conceptual ambiguities. Second, in parallel with human and physical capital, this literature uses the metaphor of social capital to highlight the positive, productive aspects of sociability. However, in some important ways, social capital falls short of being a form of capital. Third, the existing literature emphasizes largely the positive consequences, eschewing the bad ones. There are both theoretical and empirical presumptions that nonmarket social interactions can lead to undesirable social and economic outcomes. Fourth, a significant body of empirical works in this area remains mired in serious measurement and estimation problems. The organization of this paper is as follows. Section II deals with the definitional aspects and the confusions surrounding them. Section III addresses the question: Is social capital really a form of capital? Section IV discusses the negative aspects of social capital that have been largely ignored in the existing literature. Section V points to some measurement and estimation problems that tend to threaten advances in the literature. Given the background of this author, the empirical works that receive greater attention in this discussion are those from economists. The final section offers some concluding remarks.

II. DEFINITIONS OF SOCIAL CAPITAL: A CONFUSING MEDLEY


Social capital has been variously defined by different writers. Sociologist Bourdieu, who has provided an early exposition of the concept, views social capital as the aggregate of actual and potential resources which are linked to the possession of a durable network of more or less institutionalized relationships of mutual acquaintance or recognitionor in other words, to membership in a group (Bourdieu 1986, 248). This definition highlights the network aspect of social capital, i.e., the opportunities and advantages that accrue to individuals from group membership. Bourdieus concept of social capital is essentially individualistic. In his writings, Bourdieu focuses on the instrumental value of social capital in deriving economic and social benefits from group membership and the impetus for individual investment in such membership. An early reference to the concept of social capital in the economics literature is to be found in the work of economist Glen Loury, who has provided an incisive criticism of the neoclassical theories of racial income disparity. Loury (1977, 176) argues: The merit notion that, in a free society, each individual will rise to the level justified by his or her competence conflicts with the observation that no one travels that road entirely alone. The social context within which individual maturation occurs strongly conditions what otherwise equally competent individuals can achieve. This implies that absolute equality of opportunity is an ideal that cannot be achieved.

Lourys main contention is that the traditional view on intergenerational income mobility is highly misleading: it is based on a framework that is excessively individualistic and devoid of social dimensions. A full understanding of the issues of intergenerational income mobility, Loury argues, needs to be based on a framework that incorporates such factors as social net-

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SECTION II DEFINTIONS OF SOCIAL CAPITAL: A CONFUSING MEDLEY

works that influence ones access to opportunities. And unequal opportunities in turn can lead to persistent income disparities across ethnic groups. In other words, the orthodox economic theories that focus merely on creating a competitive market for individual human capital without consideration of social networks would be inadequate to address issues of persistent racial income disparities. In a recent paper, he further notes: Individuals are embedded in complex networks of affiliations: they are members of nuclear and extended families, they belong to religious and linguistic groupings, they have ethnic and racial identities and they are attached to particular localities. Each individual is socially situated, and ones location within the network of social affiliations substantially affects ones access to various resources. Opportunity travels along these social networks (Loury 2000, 233).

Emphasizing social network, Lourys view of social capital closely parallels that of Bourdieu in its micro perspective as an individual asset that affects ones economic locus in society. A similar micro perspective is also evident in the recent work of Glaeser, Laibson, and Sacerdote (2002, F439) who define social capital as: a persons social characteristicsincluding social skills, charisma and the size of the Rolodexwhich enables him to reap market and non-market returns from interactions with others. They further add, individual social capital includes both intrinsic abilities (e.g., being extroverted and charismatic) and the results of social capital investments (e.g., a large Rolodex). The above highlights a number of characteristics of social capital: (i) social capital is an individual asset; (ii) some aspects of it are intrinsic to an individual and some can be augmented by individual action; and (iii) social capital can be purposefully used to augment ones market and nonmarket position.1 The author who has done the most to popularize the concept, particularly in sociology, is Coleman. Colemans characterization of social capital is however astoundingly vague. According to Coleman, social capital constitutes a particular kind of resources available to an actor and he goes on to state: Social capital is defined by its function. It is not a single entity but a variety of different entities, with two elements in common: they all consist of some aspect of social structures, and they facilitate certain actions of actorswhether persons or corporate actorswithin the structure (Coleman 1988, S98).

Colemans work has opened up the way for a whole plethora of new definitions that often emphasize different and contradictory aspects of social capital. Indeed, Coleman himself has been a leading contributor to this potpourri of confusion. While Colemans examples of social

All social relationships need not be instrumental or driven by considerations of maximizing ones market and nonmarket positions. Social relations can be desired for their intrinsic value. In this connection, it may be noted that long ago, Aristotle argued in his Nichomachean Ethics that utilitarian friendship is a very unreliable type of friendship (van Stavern 2000).

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interactionslike the Jewish diamond merchants in New York in Coleman (1988)in maintaining trusting relationships are interesting, he includes under the rubric of social capital many disparate ideas. As Portes (1998) has correctly noted, Coleman includes under social capital both the causes and consequences of social capitalthat is, both the mechanism that generates social capital (such as the reciprocity of expectations and group enforcement of norms) and the benefits that accrue from it (such as access to group resources). Also included in this expansive definition of social capital are appropriable social organizations2 that provide the context for both sources and effects to materialize. While social capital can help generate resources for group members, it is important to distinguish between social capital itself and the outcome of social capital, i.e., the benefits one receives from group membership; between the motivations of donors who provide the gifts and those of recipients who receive the gifts. Colemans discussion of social capital does not seem to differentiate among the three elements: the beneficiaries of social capital who are making claims, the sources of social capital and those who are agreeing to the claims, and the resources themselves. The above individualistic perspective of social capital differs from the aggregate/community perspective that seems to have emerged as the dominant paradigm in the literature, particularly in the hands of political scientist Putnam. Putnam offers an even more expansive definition of social capital than Coleman. According to Putnam (1995, 67), social capital refers to features of social organization such as networks, norms, and social trust that facilitate coordination and cooperation for mutual benefit. In his recent work, he provides further elaboration on the definition: Social capital is closely related to what some have called civic virtue. The difference is that social capital calls attention to the fact that civic virtue is most powerful when embedded in a network of reciprocal social relations. A society of many virtuous but isolated individuals is not necessarily rich in social capital (Putnam 2000, 19).

According to this aggregate perspective, social capital is a property of the group or the community or even the nation as a whole, although there is less than unanimity among authors what this property is. Different authors have highlighted different aspects. Some recent notable contributors to this aggregative perspective include Inglehart, Fukuyama, Bowles, Gintis, and Hayami. Inglehart (1997, 188) equates social capital with culture: that is, a culture of trust and tolerance, in which extensive network of voluntary associations form. And to him, culture is a system of attitudes, values, and knowledge, that is widely shared within a society and is transmitted from generation to generation (Ingelhart 1997, 15). His interest is however to link these cultural dimensions to economic and political outcomes at the country levelin particular the level of democracy.

Appropriable social organizations, according to Coleman, refer to voluntary associations that are used for purposes other than their original intent. An example of an appropriable social organization is the residents association in an urban housing project. The association is initially formed for the purpose of pressuring builders to fix various problems (leaks, crumbling sidewalks, etc.). After the problems have been solved, the organization becomes available for appropriation by the residents to improve their quality of life.

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Fukuyama (1995) emphasizes the role of trusts and spontaneous sociability in reducing transactions costs and increasing economic efficiency.3 These transactions costs are salient in day-to-day economic activities like finding the appropriate buyer or seller, negotiating a contract, complying with government regulations, and enforcing that contract in the event of dispute or fraud. According to Fukuyama (1999, 16), social capital is: an instantiated set of informal values or norms shared among members of a group that permit them to cooperate with one another. If members of the group come to expect that others will behave reliably and honestly, then they will come to trust one another. Trust acts like a lubricant that makes any group or organization run more effectively.

Echoing similar themes, Bowles and Gintis (2002, F419) define social capital as: trust, concern for ones associates, a willingness to live by the norms of ones community and to punish those who do not. This definition highlights the role of trusts and norms to bind the members of the group/community to cooperate. According to Bowles and Gintis, their definition follows a social structural approach that contrasts with the individual-based approach of Glaeser and others. Hayami (2001, 291) highlights a community perspective: Relationships of mutual trust created through long-term and multiple transactions would not only be effective in suppressing moral hazards between the contracting parties but would also promote collaborative relationships within the wider community. Thus, trust accumulated through personal interactions in the community increases efficiency and reduces costs associated with the division of labor. In this regard, trust is a kind of social capital similar to social overhead capital such as roads and harbors.

As is obvious from the above, social capital has become shorthand for community. The trust and social harmony that glues a community can help overcome the opportunism and moral hazard in interpersonal relationships. This can help not only to reduce transaction costs in various types of market relationships but also overcome the free-rider problem in the provision of local public goods in a community.

Without using the term social capital, economists have long recognized the role of trusts in coping with market failures and establishing economic efficiency, well before Fukuyama. A clear explicit statement is to be found in Arrow (1971, 22) who notes: In the absence of trust, opportunities for mutually beneficial cooperation would have to be foregone. norms of social behavior, including ethical and moral codes (are) reactions of society to compensate for market failures. Even much earlier, as Bruni and Sugden (2000) note, such 18th century economists as David Hume, Adam Smith, and Antonio Genovesi recognized the importance of trust in economic transactions. Indeed they devoted considerable attention to such issues as: how trust can be rational, the conditions under which such rational trust is possible, and the economic and social institutions that reproduce these conditions.

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The above sampling of definitions suggests that social capital has been used to indicate many different notions.4 Some view social capital as an individual asset that comes from access to networks and social connections, whereas others hold that it is a collective asset in the form of a homogenous community with common interests and shared values. Some authors have focused on trusts and tolerance, while others have focused on the degree of civic and social engagements. Still others have highlighted issues of culture and social norms. The theory of repeated games5 have been used to interpret norms of behavior, culture, and informal institutions: how they emerge and how they are sustained over time.6 Given that the concept of social capital is a heterogeneous one, embodying a set of related but distinct notions, it throws up a serious measurement and aggregation problem. This is most explicitly stated by Dasgupta (2000, 327) who notes: It encourages us to amalgamate incommensurable objects, namely (in that order) beliefs, behavioral rules, and such forms of capital assets as interpersonal links, without offering a hint as to how they are to be amalgamated. This led Dasgupta to suggestquite sensibly that these different notions of social capital need to be studied separately to understand how they are interrelated.

III. IS SOCIAL CAPITAL REALLY CAPITAL OR A BAD METAPHOR?


Proponents of the concept of social capital have devoted considerable attention to explaining why it can indeed be considered as capital. Its current conceptualization draws on the early work of Pierre Bourdieu, which differentiates between different forms of capital that included economic capital, cultural capital, linguistic capital, scholastic capital, and social capital. Later on, in his work entitled The Forms of Capital, Bourdieu (1986) narrows these different types of capital into threeeconomic, cultural,7 and socialand addresses the question of how these forms of capital interrelate and can be converted from one form to the other in order to maximize accumulation. From this perspective, he defines social capital as the aggregate of

In the words of Dasgupta (2000, 325), social capital (has been) a peg on which to hang all those informal engagements we like, care for and approve of. Not only that, the concept is being continuously stressed. This has led Fischer (2001, 3) to comment that the concept is expand(ing) in all directions like a swamp in a bad weather. Repeated-game models highlight how long-run self-interest can help overcome short-term temptations of opportunism. A well-known result in game theory, known as the folk theorem, informs us that enlightened self-interest of sufficiently forward looking players is adequate to ensure a full gamut of cooperative possibilities (Gibbons 1992). The basic intuition behind the theorem is that if an individual is to be punished in the future for noncooperative behavior today, this threat is sufficient to sustain cooperation over time. This result has been further generalized by Kandori (1992) who shows that when each member of the group punishes noncooperative behavior even when she is not directly affected, it leads not only to greater cooperation but also to the emergence of a set of strictures, something akin to a social norm. This paper also shows how the idea of social sanctions can be formalized. The repeated-game approach suggests that ones understanding of the others long-term self- interests may help one to trust the other and not succumb to certain short-term temptations. However, there is more to trust than this calculative conception (Williamson 1993). To the extent that this calculative trust is important, the theory of repeated games can provide useful insights. Cultural capital refers to ones cultural features and social backgrounds (such as language, accent, manners, social conduct etc.) that influence ones advance in life. Obviously, the concepts of social and cultural capital are closely interrelated.

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IS SOCIAL CAPITAL REALLY CAPITAL

OR A

SECTION III BAD METAPHOR?

the actual or potential resources which are linked to possession of a durable network of more or less institutionalized relationships of mutual acquaintance and recognition which provides each of its members with the backing of collectively-owned capital (Bourdieu 1986, 248). This view of social capital as resourcesaccumulated primarily as a set of obligations from others according to the norm of reciprocitywhich agents can draw on to achieve their interests is however not new.8 A macro-aggregative perspective of social capital, as may be recalled, is to be found in the recent works of authors such as Putnam who view it as an attribute of social organization. Putnam (2000) also makes a further taxonomic distinction between two types of social capitalbonding and bridging. Bonding social capital fosters denser social networks while bridging social capital creates larger networks. Notwithstanding this taxonomic refinement and the heuristic appeal for the idea of social capital as a form of capital, the argument is yet to win many converts in social sciences, particularly among economists. At first blush, social capital may seem like a natural complement to the concepts of physical and human capital. However, this extension is far from neat and throws up serious conceptual incongruities. To Solow (2000, 6), it is an attempt to gain conviction from a bad analogy. And Arrow (2000) calls for an outright abandonment of the capital metaphor and the term social capital. To him, capital has three important characteristics: (i) capital has a time dimension; (ii) it requires deliberate sacrifice of the present for future benefit; and (iii) it is alienablethat is, its ownership can be transferred from one person to another. According to Arrow, social capital may have a time dimension similar to physical capitalfor example, reputation or trust takes time to develop and hence it satisfies (i). However, social capital does not necessarily entail any material sacrifices,9 and hence does not generally satisfy (ii). And finally, in most cases, it is difficultas with human capitalto change the ownership of social capital,10 and hence does not satisfy (iii). All this would suggest that conceptually, social capital falls short of being a form of capital. And of course, this conceptual criticism applies as much to social capital in general as to Putnams taxonomic innovation regarding bridging and bonding social capital. In this connection, Fischer (2001, 3) rightly notes that Putnams use of such metaphors, as bridging and binding social capital is somewhat infelicitous as both terms are more suited to a metaphor around ties than around capital. Solow (2000) raises some measurement problems. While physical and human capital can be measured and their rate of returns calculated, such rigorous measurements are much more

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As Portes (1998) notes, similar perspectives can be found in sociology in the classical analysis of social exchange by Simmel, which has resurfaced more recently in the works of authors of the rational action school such as Coleman and Schiff. While there may be some aspects of social capital that are costly to acquire, most others do not entail any material sacrifice. The examples of the latter include: people are born into religious and ethnic groups and into nobility; or, as noted by Glaeser et al. (2000), some people are born with inherent social skills and charisma. The problem of alienability in social capital has been expressed most starkly by Fischer (2001, 3) who observes: It (social capital) is a metaphor that misleads: Where can I borrow some social capital? What is the going interest rate? Can I move some of my social capital off-shore?

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problematic in the case of social capital.11 Solow cites the example of the East Asian miracle economies and the total factor productivity estimates of Kim and Lau, and Collin and Bosworth, and notes that these estimates seem to suggest that either there is no special social capital story underlying the Asian success, just conventional production economics, or that social capital is precisely what accounts for the ability of these societies to accumulate capital and to mobilize skilled labor effectively. He concludes that either way, there is something to look for that is at least capable of being found (Solow 2000, 9). In light of these conceptual and measurement problems, many economists are reluctant to label social capital as capital.12 In other words, although there is a general consensus that social interactions have important influences on economic outcomes, there is not much of a consensus whether these influences can beor should bemeaningfully codified into such a metaphor as social capital. The situation has been nicely summarized by Bowles and Gintis (2002, p. F420):13 Perhaps social capital, like Voltaires God, would have to have been invented if it did not exist. It may even be a good idea. A good term it is not. Capital refers to a thing that can be ownedeven a social isolate like Robinson Crusoe had an axe and fishing net. By contrast, the attributes said to make up social capital describe relationships among people. As with other trendy expressions, social capital has attracted so many disparate uses that we think it better to drop the term in favor of something more precise.

IV. TAUTOLOGICAL DEFINITION AND EXAGGERATION OF BENEFITS


The way much of the existing literature defines social capital tends to exaggerate its beneficial aspects. As Portes (1998) and Durlauf (1999) have noted, many have defined social capital in such terms that confuse its sources with consequences or its existence with functions. That is, the evidence of the existence of social capital is often inferred from its positive outcomes. As noted earlier, according to Coleman (1988) social capital is to be defined by its functions and Putnam (1995) viewed social capital in terms of features of social life that

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As Dasgupta (2000) has noted, there is a serious measurement problem with social capital, even if it is assumed that it is a type of capital. To aggregate the different components of social capital as networks and norms into a stock of capital, one would require a set of market prices associated with different types of social capital. However, these are the commodities where market failures are most conspicuous. Even many ardent advocates of the concept of social capital concede that social capital is not really a capital in the strict sense of the term. For example, Ostrom (2000), who argues that social capital is a fundamental concept that offers an essential complement to natural, physical, and human capital, notes that social capital is different from other forms of capital in some important ways. She identifies four key differences: First, social capital does not wear out with useon the contrary, it erodes from a lack of use. Second, it is not easy to see or measure. Third, it is hard to construct through external (for example donor) intervention. Finally, national and regional government institutions strongly affect the level and type of social capital available to individuals to pursue long-term development efforts. Indeed, these key differences constitute the very basis for the Arrow-Solow critique. Bowles and Gintis advocate abandoning the term social capital in favor of community that better captures the aspects of good governance that explain social capitals popularity, as it focuses attention on what groups do rather than what people own (Bowles and Gintis 2002, F.420) It is noteworthy that a recent volume by Aoki and Hayami (2001) on the subject was named, Communities and Markets in Economic Development.

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facilitate cooperation and coordination for mutual benefit. This line of argumentation leads to circuitous reasoningand exaggeration of the benefits of social capital. Social capital has its benefits and costs: it is not an unmixed blessing. It can lead to such adverse effects as exclusion of outsiders, excessive claims by insiders, restrictions of individual freedoms, and perpetuation of backward norms. The following further elaborates these points. First, social capital that opens up opportunities for the members of the network, which is often based on ethnicity, religion, language, and profession, can at the same time constitute an enormous barrier to entry for others outside the network. There are many real world examples of this type of exclusion based on race and ethnicity. As cited by Portes (1998), Waldinger (1996), in his study of immigrant labor in New York City, notes that poor blacks do not have entry to jobs in construction and service industries for lack of access to the ethnic networks that control the recruitment process. Similarly, the adverse effects of the networks of merchants have been underscored by Smith (1776/1976, 232), who notes: People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.

While the conspiracies referred to by Smith14 can help the group members to safeguard their economic interests or perpetuate monopoly privileges, they certainly do not help society. 15 Second, while a close-knit group can be a source of economic dynamism for its membership, it can also dilute personal incentives to work hard. Social capital can lead to moral hazard and the creation of welfare-haven. It can help sustain the indolence and economic impoverishment of those who failed by the resources and hard work of those who succeeded. Social capital can be a safety net that can penalize success and reward failures. A concrete illustration is provided by Geertz (1963) who notes that successful entrepreneurs in Bali were constantly

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A similar skeptical view about the network of interest groups is to be found in Olson (1982) who argues that the collusion of interest groups is harmful to economic development as it leads to unproductive rent-seeking activities. Sobel (2002) provides another interesting illustration of such a conspiracy in terms of the prisoners dilemma. When the prisoners cooperate with each other and do not confess they receive a brief sentence. This conspiracy of the culprits certainly makes the prisoners better off (relative to the equilibrium outcome), but this is unlikely to make the rest of the society better off as it would presumably want see the criminals put behind bars.

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taxed by job-hunting and money-seeking kinsmen. Social capital, in conjunction with the redistributive social norm of many traditional societies, may represent a serious obstacle to accumulation and successful entrepreneurship.16 Third, while group membership of a community has its advantages, it often enforces strict conformity, infringes on individual freedoms, and creates pressures for submission to mediocrity. Many independent-minded individuals consider these aspects of a community life suffocatingand have attempted to escape them for the freedom of urban life. As Hayami (1998) has noted, enlightenment philosophers such as Montesqieu considered traditional customs and norms as oppressing human minds. These traditional customs and norms, needless to emphasize, can have a similar dampening effect on the dynamics of economic development. In his theory of entrepreneurship, Schumpeter (1934 and 1950) discussed about industrial mutation, a process of industrial development facilitated by entrepreneurship in an evolving market economy. This industrial mutation entails transition from personal capitalism, ensnared by traditional behavior, to one of rational capitalism that breaks the crust of convention and thrives on the impersonal forces of the market. Finally, network and group coordination can often lead to the establishment of a bad equilibrium of norms and values. When a bad equilibrium is established, role model and peer group influences tend to sustain it. Such a bad equilibrium is individually rational: it is optimal for individuals to subscribe to such group norms because any deviation leads to social opprobrium and group retribution and hence lower individual welfare. However, the group as a whole is worse off because it is engaged in socially suboptimal behavior (behavior that is either destructive or risky). Teenage pregnancy and drug addiction are examples of such behavior, which is often established through role model and peer group influences and sustained through group conformity. When a network or group leads to such a bad equilibrium system of norms and values, then the members of the network or group and the society as a whole would be better off if such a network or group did not exist.

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A different kind of mechanism may be at play in developed countries where social networks can create a culture of poverty. When the disadvantaged interact only with the disadvantaged, this can foster social stagnation. As the evidence from developed countries suggests, social networks among the poor are often better at supplying information on welfare eligibility than job availability, creating more negative peer pressures than positive role models and sustaining a culture of welfare dependency than an environment of entrepreneurship and economic dynamism. A recent paper by Bertrand, Luttmer, and Mullainathan (2000) provides strong empirical support from the US in favor of this hypothesis. Their careful empirical work confirms the existence of a high degree of correlation between social networks (based on a common linguistic identity) in a neighborhood and the extent of welfare dependency among language groups that rely highly on welfare.

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SECTION V THE PROBLEMS WITH THE EMPIRICS OF SOCIAL CAPITAL

V. THE PROBLEMS WITH THE EMPIRICS OF SOCIAL CAPITAL


Recent years have seen the emergence of a sizeable empirical literature on social capital. A high profile work that has brought social capital to doorsteps of the wider policy community, particularly in developed countries, is Putnams (2000) much celebrated book, Bowling Alone: The Collapse and Revival of American Community.17 In this book, Putnam attributes a whole variety of social ills in the United States (US) todayfrom declining voting participation to increasing crime rates to shrinking philanthropyto lack of social capital. While the book puts forward an interesting hypothesis18 and culls together an impressive body of evidence, its empirical analysis remains rudimentary19 and its discussion of policy somewhat cavalier. Notwithstanding these deficiencies, the important contribution of this work has been to stimulate further research on social capital and its role in redressing social and economic problems. Social capital has also been gaining popularity as a concept for analyzing the socioeconomic problems of developing countries. The emerging literature follows three major strands. The first strand deals with the link between economic growth and social capital. Some of the notable studies in this regard include Knack and Keefer (1997), Zak and Knack (2001), Collier and Gunning (1999), Easterly and Levin (1997), and Rodrik (1998). The first two papers confirm, in the context of cross-country growth regressions, the relationship between economic performances and trust in people. The last three studies argue that ethnically heterogeneous societies (implying lower level of social capita) are slow to growth or to adjust less efficiently to external shocks.20 The second strand deals with the issue how social capital can substitute for missing capital and insurance markets. The contributions in this area include van Bastelaer (2000); Goldstein, DeJanvry, and Sadoulet (2001); Fafchamps and Lund (2003); and Morduch and Sicular (2001). The first study highlights the role of existing social capital ties in improving the poors access to social capital. In lending schemes involving groups, social ties among borrowers can help reduce transaction costs associated with screening, monitoring, and enforcement. The study by

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This book is a grandiose elaboration of his thesis contained in the earlier shorter article, Putnam (1995). A number of authorsfor example, Paxton (1999) and Ladd (1996)have contested the claim that there has been a decline in social capital in the US. Much of the analysis is conducted in terms of bivariate graphical representation, which, as is well known, cannot distinguish between correlation and causality. The study also reports some multivariate regression results that seem to be marred by problems of omitted variables and unobserved heterogeneity. An interesting qualitative study that explores the relationship between trust and macroeconomic performance is Fukayama (1995). In this study, Fukayama classifies countries into low trust and high trust countries. According to his assessment, Germany, Japan, and US are high trust countries whereas PRC; France; Hong Kong, China; Italy; Republic of Korea; and Taipei,China are low trust countries. He argues that high trust countries have greater economic success as they can implement more efficient organizational innovations. When trust is limited to families, the supply of capital and qualified managers remains constrained, and this in turn restricts the scale of private family firms. While the basic hypothesis of Fukayama seems plausible, his classification of countries based on trust is highly impressionistic as is his much-vaunted empirical relationship between trusts and economic performance. As the recent record of economic performance of nations indicates, some of his low trust countries have made remarkable organizational innovations and registered stellar economic performance (for example, the PRC) whereas some of his high trust countries seem to be mired in near perpetual economic stagnation (for example, Japan).

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Goldstein, DeJanvry, and Sadoulet highlights the role of social capital as a social safety net mechanism in Ghana and identifies the factors that help shape the social connection that underpins the insurance mechanism. The Fafchamps-Lund study relates to the Philippines and analyzes the role of networks of friends and relatives in providing mutual friends. The final study, Morduch and Sincular (2001), analyzes the effectiveness of social capital as a risksharing mechanism in rural PRC in the post-reform period. The third strand deals with the issue how social capital can help circumvent the collective action problem and help the provision of local public goods. These studies include Ostrom (2000); Ostrom, Gardner, and Walker (1994); Bardhan (2001); Kikuchi, Fujita, and Hayami (2001); and Otsuka and Tachibana (2001). In their study of the irrigations system in developing countries, Ostrom and her collaborators analyze how social capital has been helpful in eliciting cooperation among farmers, evolving a common norm of behavior, and circumventing collective actions problems. The studies by Bardhan (2001) on the irrigation communities in South India; by Kikuchi, Fujita, and Hayami on the irrigation system in the Philippines; and by Otsuka and Tachibana (2001) on the community forestry in Nepal all offer interesting illustrations on the role of social capital in the management of community resources. As a cursory review of the empirical literature on social capital would suggest, the literature is diverse in terms of methodology and the degree of analytical sophistication. Some of it is descriptiveand does little beyond suggesting the importance of social capital (in whatever sense the term is defined in the particular context). Some of it is more quantitative, often involving regression-type analysis. However, a large segment of this quantitative literature suffers from various technical, econometric problems. In a recent paper, Durlauf (2002) examines the common estimation problems that pervade the social capital literature. While he agrees that these problems are, at some level, endemic to a wide body of the empirical studies, they seem to be particularly serious for the empirical social capital literature. In the words of Durlauf (2002, F474): The empirical social capital literature seems to be particularly plagued by vague definition of concepts, poorly measured data, absence of appropriate exchangeability conditions, and lack of information necessary to make identification claims plausible. These problems are particularly important for social capital contexts as social capital augments depend on underlying psychological and sociological relations that are difficult to quantify, let alone measure.

In the context of three benchmark empirical studies,21 Durlauf notes three sets of generic problems. First, social capital studies often fail to distinguish between social capital effects and

21

These three studies have been chosen because they are well regarded in the social science literature and analyze the social capital issues in different contexts: one at the individual level in the US, another at the individual level in a developing country, and still another at the national level, involving cross-country regression analysis. Furstenberg and Hughes (1995) explore, with data from Baltimore (US), how the probability of an individual dropping out of school is related to social capital factors such as the presence of a father in the household and the educational aspirations of the persons friends. Narayan and Pritchett (1999) examine the role of social capital in the form of

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other effects that follow from group membership. However, this problem of identification is not resolved by incorporating a full range of alternative group influences; it requires a clear definition of social capital and conceptualization of the underlying causal process. Second, social capital proxies are often endogenous and this requires the use of instrumental variables based on ad hoc exogeneity assumption. However, constructing credible instrumental variables in these types of regression requires a theory of the determinants of social capital. Third, social capital regression exercises rely on untenable comparability assumptions.22 That is, the analysis assumes that the regression uses comparable objects as observations.23 In light of these problems, Durlauf suggests that empirical analyses on social capital need to step back from grandiose approaches and limit themselves to more specific sociological dimensions of individual behavior and rely on the use of more experimental data.

VI. CONCLUDING REMARKS


As the foregoing discussion suggests, social capital has come to signify different things for different authors. Given the wide diversity of notions associated with the term social capital, the concept has remained largely amorphous and is yet to reach the clarity and precision required of a tool to be used for rigorous empirical work. Notwithstanding this limitation, recent years have seen a mushrooming of a literature that applies many different notions of social capital to analyze many diverse economic and social issues. Despite its exaggerated claims, as Portes and Landolt (1996) rightly note, much of this literature does not go beyond calling attention to the possible individual and family benefits of sociability or a nuanced understanding of the pros and cons of groups and communities. The policy conclusions are often very banal.24 Durlauf (2002, F459) is even more critical in his assessment of the empirics of social capital when he asserts that whether these

22

23

24

membership of groups in influencing household outcomes in rural Tanzania. Finally, Knack and Keefer (1997) examine in the context of a cross-country regression framework the impact of social capitalsuch as civic cooperation and truston economic growth. As quoted by Durlauf (2002), Draper et al. (1993, 1) describes the importance of exchangeability in empirical exercises in the following manner: Statistical methods are concerned with combining information from different observational units and with making inferences from the resulting summaries to perspective measurements on the same or other units. These operations will be useful only when the units to be combined are judged to be similar (comparable or homogenous). As is now widely known, results of cross-country growth regressions are often extremely fragile. These types of exercises have been subject to considerable criticism by both economic theorists and econometricians. Growth theorists find the empirical equations ad hoc without any sound analytical basis, while econometricians complain about the various technical econometric problemssuch as unobserved fixed effects, measurement errors, endogeneity, parameter heterogeneity etc.that sully the effort. See Quibria (2002) for further details on this. In a recent paper, Costa and Kahn (2003) surveys the proliferating economic literature on how the determinants of civic engagement in a community. This survey covers about 15 studies encompassing different nations, different social capital measures, and different time periods. The policy message that emerges from this survey, as the authors report, is, heterogeneity reduces civic engagement. This message, which should surprise nobody, provides very little guidance for policies. As much of the heterogeneity takes the form of ethnic and racial diversity and hence is not amenable to policy manipulationexcept by odious political means!this type of message is cold comfort to real world policymakers!

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(social capital) studies establish the empirical importance of social capital in understanding the various socio-economic outcomes, my conclusion is no. These assessments are obviously not very salutary nor do they provide a clean bill of health regarding the state of empirical analysis in this area. To move the literature forward, it would be useful first to get the concept right. It should begin with the acknowledgement that there is no single entity called social capital, but many distinct notionssuch as trusts, norms, culture, community, and networkshighlight the many different aspects of nonmarket social interactions. It is heartening to note that recent works in this area, particularly in economics, seem to reflect this heterogeneity of perspectives, focusing on different aspects of social interactions and drawing distinctly different analytical and policy implications. However, to avoid confusion and to achieve greater analytical traction and empirical understanding, social capital studies need to proceed with a clear definition of the specific notion of social capital being applied.25 As noted earlier, despite the recent proliferation of studies in social capital, this has not been accompanied by a commensurate increase in analytical rigor. Analytical rigor does not necessarily mean heavy reliance on quantitative methods. Indeed, there are certain questions that are better addressed in broad qualitative terms, while others require greater reliance on the quantitative approach. However, the success of the quantitative studies depends on the availability of the relevant and reliable data. Measuring social capital, which is often vested in such entities as trust, community, peer pressure, role models, and networks, is difficult. The task becomes doubly difficult if this measurement needs to incorporate both quality and quantity. However, further progress with the empirical analysis of social capital is inextricably connected with the availability of betterquality data. However, this is not easily obtained. Data on social capital have been sourced in a number of different ways. First, surveys of perceptions can be a major source. However, they are often an imperfect source, as the respondents to surveys have no incentive to answer honestly or carefully.26 Second, the standard practice in empirical social sciences including economics is to infer the nature of economic and social interactions from observations of outcome data. However, such outcome data have limited ability to discriminate among alternative hypotheses regarding the underlying processes. Finally, economic experiments can be an important source of data on social capital. As social capital concepts relate to social interactions involving subjective processes, it is therefore only natural that social capital studies rely

25

26

This definition is important to guide empirical analysisin particular, its choice of the social- capital indicator. Different social-capital indicatorseven if we assume they are interconnected and reflect the different attributes of the underlying social-capital processdo not move in sympathy. Fischer (2001) examines seven indicators of social capital trusting most people, church attendance, belonging to organizations, socializing with neighbors, socializing with friends outside the neighborhood, and giving money to charityfrom the General Social Surveys (1972-1999) and finds little coherence among them. The different indicators often display little correlation, and they even sometimes exhibit opposite trends. The emerging experimental literature confirms this divergence. In a recent paper, Bertrand and Mullainathan (2001) provide a more in-depth discussion with illustrative examples why such subjective survey data can be misleading.

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REFERENCES

considerably on experimental and subjective data.27 However, this is something that until recently, with perhaps the exception of social psychologists, aroused very little enthusiasm among economists and other social scientists.

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An interesting recent study that relies on such experimental data is Glaeser et al. (2000). The study uses a sample of Harvard undergraduates to carry out two experimental trust games and generate data on trust. They also make a survey about trustworthiness. The survey and the experiments together provide a number of empirical results regarding trust and trustworthiness. These results include: trusting behavior and trustworthiness rise with social connections and decrease with differences in race and nationalities; while certain individuals appear to be persistently more trusting, they do not reveal that they are more trusting in their surveys: and people behave in a more trustworthy manner toward individuals of higher social status. What is to be noted is the difference between the survey and the experimental results.

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MONOGRAPH SERIES (Published in-house; Available through ADB Office of External Relations; Free of charge)
EDRC REPORT SERIES (ER)
No. 1 No. 2 ASEAN and the Asian Development Bank Seiji Naya, April 1982 Development Issues for the Developing East and Southeast Asian Countries and International Cooperation Seiji Naya and Graham Abbott, April 1982 Aid, Savings, and Growth in the Asian Region J. Malcolm Dowling and Ulrich Hiemenz, April 1982 Development-oriented Foreign Investment and the Role of ADB Kiyoshi Kojima, April 1982 The Multilateral Development Banks and the International Economys Missing Public Sector John Lewis, June 1982 Notes on External Debt of DMCs Evelyn Go, July 1982 Grant Element in Bank Loans Dal Hyun Kim, July 1982 Shadow Exchange Rates and Standard Conversion Factors in Project Evaluation Peter Warr, September 1982 Small and Medium-Scale Manufacturing Establishments in ASEAN Countries: Perspectives and Policy Issues Mathias Bruch and Ulrich Hiemenz, January 1983 A Note on the Third Ministerial Meeting of GATT Jungsoo Lee, January 1983 Macroeconomic Forecasts for the Republic of China, Hong Kong, and Republic of Korea J.M. Dowling, January 1983 ASEAN: Economic Situation and Prospects Seiji Naya, March 1983 The Future Prospects for the Developing Countries of Asia Seiji Naya, March 1983 Energy and Structural Change in the AsiaPacific Region, Summary of the Thirteenth Pacific Trade and Development Conference Seiji Naya, March 1983 A Survey of Empirical Studies on Demand for Electricity with Special Emphasis on Price Elasticity of Demand Wisarn Pupphavesa, June 1983 Determinants of Paddy Production in Indonesia: 1972-1981A Simultaneous Equation Model Approach T.K. Jayaraman, June 1983 The Philippine Economy: Economic Forecasts for 1983 and 1984 J.M. Dowling, E. Go, and C.N. Castillo, June 1983 Economic Forecast for Indonesia J.M. Dowling, H.Y. Kim, Y.K. Wang, and C.N. Castillo, June 1983 Relative External Debt Situation of Asian Developing Countries: An Application of Ranking Method Jungsoo Lee, June 1983 New Evidence on Yields, Fertilizer Application, and Prices in Asian Rice Production William James and Teresita Ramirez, July 1983 Inflationary Effects of Exchange Rate Changes in Nine Asian LDCs Pradumna B. Rana and J. Malcolm Dowling, Jr., December 1983 No. 22 Effects of External Shocks on the Balance of Payments, Policy Responses, and Debt Problems of Asian Developing Countries Seiji Naya, December 1983 Changing Trade Patterns and Policy Issues: The Prospects for East and Southeast Asian Developing Countries Seiji Naya and Ulrich Hiemenz, February 1984 Small-Scale Industries in Asian Economic Development: Problems and Prospects Seiji Naya, February 1984 A Study on the External Debt Indicators Applying Logit Analysis Jungsoo Lee and Clarita Barretto, February 1984 Alternatives to Institutional Credit Programs in the Agricultural Sector of Low-Income Countries Jennifer Sour, March 1984 Economic Scene in Asia and Its Special Features Kedar N. Kohli, November 1984 The Effect of Terms of Trade Changes on the Balance of Payments and Real National Income of Asian Developing Countries Jungsoo Lee and Lutgarda Labios, January 1985 Cause and Effect in the World Sugar Market: Some Empirical Findings 1951-1982 Yoshihiro Iwasaki, February 1985 Sources of Balance of Payments Problem in the 1970s: The Asian Experience Pradumna Rana, February 1985 Indias Manufactured Exports: An Analysis of Supply Sectors Ifzal Ali, February 1985 Meeting Basic Human Needs in Asian Developing Countries Jungsoo Lee and Emma Banaria, March 1985 The Impact of Foreign Capital Inflow on Investment and Economic Growth in Developing Asia Evelyn Go, May 1985 The Climate for Energy Development in the Pacific and Asian Region: Priorities and Perspectives V.V. Desai, April 1986 Impact of Appreciation of the Yen on Developing Member Countries of the Bank Jungsoo Lee, Pradumna Rana, and Ifzal Ali, May 1986 Smuggling and Domestic Economic Policies in Developing Countries A.H.M.N. Chowdhury, October 1986 Public Investment Criteria: Economic Internal Rate of Return and Equalizing Discount Rate Ifzal Ali, November 1986 Review of the Theory of Neoclassical Political Economy: An Application to Trade Policies M.G. Quibria, December 1986 Factors Influencing the Choice of Location: Local and Foreign Firms in the Philippines E.M. Pernia and A.N. Herrin, February 1987 A Demographic Perspective on Developing Asia and Its Relevance to the Bank E.M. Pernia, May 1987 Emerging Issues in Asia and Social Cost Benefit Analysis I. Ali, September 1988

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Shifting Revealed Comparative Advantage: Experiences of Asian and Pacific Developing Countries P.B. Rana, November 1988 Agricultural Price Policy in Asia: Issues and Areas of Reforms I. Ali, November 1988 Service Trade and Asian Developing Economies M.G. Quibria, October 1989 A Review of the Economic Analysis of Power Projects in Asia and Identification of Areas of Improvement I. Ali, November 1989 Growth Perspective and Challenges for Asia: Areas for Policy Review and Research I. Ali, November 1989 An Approach to Estimating the Poverty Alleviation Impact of an Agricultural Project I. Ali, January 1990 Economic Growth Performance of Indonesia, the Philippines, and Thailand: The Human Resource Dimension E.M. Pernia, January 1990 Foreign Exchange and Fiscal Impact of a Project: A Methodological Framework for Estimation I. Ali, February 1990 Public Investment Criteria: Financial and Economic Internal Rates of Return I. Ali, April 1990 Evaluation of Water Supply Projects: An Economic Framework Arlene M. Tadle, June 1990 Interrelationship Between Shadow Prices, Project Investment, and Policy Reforms: An Analytical Framework I. Ali, November 1990 Issues in Assessing the Impact of Project and Sector Adjustment Lending I. Ali, December 1990 Some Aspects of Urbanization and the Environment in Southeast Asia Ernesto M. Pernia, January 1991 Financial Sector and Economic Development: A Survey

No. 56

No. 57

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No. 67

Jungsoo Lee, September 1991 A Framework for Justifying Bank-Assisted Education Projects in Asia: A Review of the Socioeconomic Analysis and Identification of Areas of Improvement Etienne Van De Walle, February 1992 Medium-term Growth-Stabilization Relationship in Asian Developing Countries and Some Policy Considerations Yun-Hwan Kim, February 1993 Urbanization, Population Distribution, and Economic Development in Asia Ernesto M. Pernia, February 1993 The Need for Fiscal Consolidation in Nepal: The Results of a Simulation Filippo di Mauro and Ronald Antonio Butiong, July 1993 A Computable General Equilibrium Model of Nepal Timothy Buehrer and Filippo di Mauro, October 1993 The Role of Government in Export Expansion in the Republic of Korea: A Revisit Yun-Hwan Kim, February 1994 Rural Reforms, Structural Change, and Agricultural Growth in the Peoples Republic of China Bo Lin, August 1994 Incentives and Regulation for Pollution Abatement with an Application to Waste Water Treatment Sudipto Mundle, U. Shankar, and Shekhar Mehta, October 1995 Saving Transitions in Southeast Asia Frank Harrigan, February 1996 Total Factor Productivity Growth in East Asia: A Critical Survey Jesus Felipe, September 1997 Foreign Direct Investment in Pakistan: Policy Issues and Operational Implications Ashfaque H. Khan and Yun-Hwan Kim, July 1999 Fiscal Policy, Income Distribution and Growth Sailesh K. Jha, November 1999

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ECONOMIC STAFF PAPERS (ES)


No. 1 International Reserves: Factors Determining Needs and Adequacy Evelyn Go, May 1981 Domestic Savings in Selected Developing Asian Countries Basil Moore, assisted by A.H.M. Nuruddin Chowdhury, September 1981 Changes in Consumption, Imports and Exports of Oil Since 1973: A Preliminary Survey of the Developing Member Countries of the Asian Development Bank Dal Hyun Kim and Graham Abbott, September 1981 By-Passed Areas, Regional Inequalities, and Development Policies in Selected Southeast Asian Countries William James, October 1981 Asian Agriculture and Economic Development William James, March 1982 Inflation in Developing Member Countries: An Analysis of Recent Trends A.H.M. Nuruddin Chowdhury and J. Malcolm Dowling, March 1982 Industrial Growth and Employment in Developing Asian Countries: Issues and Perspectives for the Coming Decade Ulrich Hiemenz, March 1982 Petrodollar Recycling 1973-1980. Part 1: Regional Adjustments and the World Economy Burnham Campbell, April 1982 Developing Asia: The Importance of Domestic Policies Economics Office Staff under the direction of Seiji Naya, May 1982 Financial Development and Household Savings: Issues in Domestic Resource Mobilization in Asian Developing Countries Wan-Soon Kim, July 1982 Industrial Development: Role of Specialized Financial Institutions Kedar N. Kohli, August 1982 Petrodollar Recycling 1973-1980. Part II: Debt Problems and an Evaluation of Suggested Remedies Burnham Campbell, September 1982 Credit Rationing, Rural Savings, and Financial Policy in Developing Countries William James, September 1982 Small and Medium-Scale Manufacturing Establishments in ASEAN Countries: Perspectives and Policy Issues Mathias Bruch and Ulrich Hiemenz, March 1983 Income Distribution and Economic Growth in Developing Asian Countries J. Malcolm Dowling and David Soo, March 1983 Long-Run Debt-Servicing Capacity of Asian Developing Countries: An Application of Critical Interest Rate Approach Jungsoo Lee, June 1983 External Shocks, Energy Policy, and Macroeconomic Performance of Asian Developing Countries: A Policy Analysis William James, July 1983 The Impact of the Current Exchange Rate System on Trade and Inflation of Selected Developing Member Countries Pradumna Rana, September 1983 Asian Agriculture in Transition: Key Policy Issues William James, September 1983 The Transition to an Industrial Economy in Monsoon Asia Harry T. Oshima, October 1983 The Significance of Off-Farm Employment and Incomes in Post-War East Asian Growth Harry T. Oshima, January 1984 Income Distribution and Poverty in Selected Asian Countries John Malcolm Dowling, Jr., November 1984 ASEAN Economies and ASEAN Economic Cooperation Narongchai Akrasanee, November 1984 Economic Analysis of Power Projects Nitin Desai, January 1985 Exports and Economic Growth in the Asian Region Pradumna Rana, February 1985 Patterns of External Financing of DMCs E. Go, May 1985 Industrial Technology Development the Republic of Korea S.Y. Lo, July 1985 Risk Analysis and Project Selection: A Review of Practical Issues J.K. Johnson, August 1985 Rice in Indonesia: Price Policy and Comparative Advantage I. Ali, January 1986 Effects of Foreign Capital Inflows on Developing Countries of Asia Jungsoo Lee, Pradumna B. Rana, and Yoshihiro Iwasaki, April 1986 Economic Analysis of the Environmental Impacts of Development Projects John A. Dixon et al., EAPI, East-West Center, August 1986 Science and Technology for Development: Role of the Bank Kedar N. Kohli and Ifzal Ali, November 1986 Satellite Remote Sensing in the Asian and Pacific Region Mohan Sundara Rajan, December 1986 Changes in the Export Patterns of Asian and Pacific Developing Countries: An Empirical Overview Pradumna B. Rana, January 1987 Agricultural Price Policy in Nepal Gerald C. Nelson, March 1987 Implications of Falling Primary Commodity Prices for Agricultural Strategy in the Philippines Ifzal Ali, September 1987 Determining Irrigation Charges: A Framework Prabhakar B. Ghate, October 1987 The Role of Fertilizer Subsidies in Agricultural Production: A Review of Select Issues M.G. Quibria, October 1987 Domestic Adjustment to External Shocks in Developing Asia Jungsoo Lee, October 1987 Improving Domestic Resource Mobilization through Financial Development: Indonesia Philip Erquiaga, November 1987 Recent Trends and Issues on Foreign Direct Investment in Asian and Pacific Developing Countries P.B. Rana, March 1988 Manufactured Exports from the Philippines: A Sector Profile and an Agenda for Reform I. Ali, September 1988 A Framework for Evaluating the Economic Benefits of Power Projects I. Ali, August 1989 Promotion of Manufactured Exports in Pakistan

No. 21

No. 2

No. 22

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No. 24 No. 25 No. 26 No. 27

No. 4

No. 5 No. 6

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No. 52

Jungsoo Lee and Yoshihiro Iwasaki, September 1989 Education and Labor Markets in Indonesia: A Sector Survey Ernesto M. Pernia and David N. Wilson, September 1989 Industrial Technology Capabilities and Policies in Selected ADCs Hiroshi Kakazu, June 1990 Designing Strategies and Policies for Managing Structural Change in Asia Ifzal Ali, June 1990 The Completion of the Single European Community Market in 1992: A Tentative Assessment of its Impact on Asian Developing Countries J.P. Verbiest and Min Tang, June 1991 Economic Analysis of Investment in Power Systems Ifzal Ali, June 1991 External Finance and the Role of Multilateral Financial Institutions in South Asia: Changing Patterns, Prospects, and Challenges Jungsoo Lee, November 1991 The Gender and Poverty Nexus: Issues and Policies M.G. Quibria, November 1993 The Role of the State in Economic Development: Theory, the East Asian Experience, and the Malaysian Case Jason Brown, December 1993

No. 53

No. 54

No. 55

No. 56

No. 57 No. 58

No. 59 No. 60

The Economic Benefits of Potable Water Supply Projects to Households in Developing Countries Dale Whittington and Venkateswarlu Swarna, January 1994 Growth Triangles: Conceptual Issues and Operational Problems Min Tang and Myo Thant, February 1994 The Emerging Global Trading Environment and Developing Asia Arvind Panagariya, M.G. Quibria, and Narhari Rao, July 1996 Aspects of Urban Water and Sanitation in the Context of Rapid Urbanization in Developing Asia Ernesto M. Pernia and Stella LF. Alabastro, September 1997 Challenges for Asias Trade and Environment Douglas H. Brooks, January 1998 Economic Analysis of Health Sector ProjectsA Review of Issues, Methods, and Approaches Ramesh Adhikari, Paul Gertler, and Anneli Lagman, March 1999 The Asian Crisis: An Alternate View Rajiv Kumar and Bibek Debroy, July 1999 Social Consequences of the Financial Crisis in Asia James C. Knowles, Ernesto M. Pernia, and Mary Racelis, November 1999

OCCASIONAL PAPERS (OP)


No. 1 Poverty in the Peoples Republic of China: Recent Developments and Scope for Bank Assistance K.H. Moinuddin, November 1992 The Eastern Islands of Indonesia: An Overview of Development Needs and Potential Brien K. Parkinson, January 1993 Rural Institutional Finance in Bangladesh and Nepal: Review and Agenda for Reforms A.H.M.N. Chowdhury and Marcelia C. Garcia, November 1993 Fiscal Deficits and Current Account Imbalances of the South Pacific Countries: A Case Study of Vanuatu T.K. Jayaraman, December 1993 Reforms in the Transitional Economies of Asia Pradumna B. Rana, December 1993 Environmental Challenges in the Peoples Republic of China and Scope for Bank Assistance Elisabetta Capannelli and Omkar L. Shrestha, December 1993 Sustainable Development Environment and Poverty Nexus K.F. Jalal, December 1993 Intermediate Services and Economic Development: The Malaysian Example Sutanu Behuria and Rahul Khullar, May 1994 Interest Rate Deregulation: A Brief Survey of the Policy Issues and the Asian Experience Carlos J. Glower, July 1994 Some Aspects of Land Administration in Indonesia: Implications for Bank Operations Sutanu Behuria, July 1994 Demographic and Socioeconomic Determinants of Contraceptive Use among Urban Women in the Melanesian Countries in the South Pacific: A Case Study of Port Vila Town in Vanuatu T.K. Jayaraman, February 1995 No. 12 Managing Development through Institution Building Hilton L. Root, October 1995 Growth, Structural Change, and Optimal Poverty Interventions Shiladitya Chatterjee, November 1995 Private Investment and Macroeconomic Environment in the South Pacific Island Countries: A Cross-Country Analysis T.K. Jayaraman, October 1996 The Rural-Urban Transition in Viet Nam: Some Selected Issues Sudipto Mundle and Brian Van Arkadie, October 1997 A New Approach to Setting the Future Transport Agenda Roger Allport, Geoff Key, and Charles Melhuish June 1998 Adjustment and Distribution: The Indian Experience Sudipto Mundle and V.B. Tulasidhar, June 1998 Tax Reforms in Viet Nam: A Selective Analysis Sudipto Mundle, December 1998 Surges and Volatility of Private Capital Flows to Asian Developing Countries: Implications for Multilateral Development Banks Pradumna B. Rana, December 1998 The Millennium Round and the Asian Economies: An Introduction Dilip K. Das, October 1999 Occupational Segregation and the Gender Earnings Gap Joseph E. Zveglich, Jr. and Yana van der Meulen Rodgers, December 1999 Information Technology: Next Locomotive of Growth? Dilip K. Das, June 2000

No. 13

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No. 22

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STATISTICAL REPORT SERIES (SR)


No. 1 Estimates of the Total External Debt of the Developing Member Countries of ADB: 1981-1983 I.P. David, September 1984 Multivariate Statistical and Graphical Classification Techniques Applied to the Problem of Grouping Countries I.P. David and D.S. Maligalig, March 1985 Gross National Product (GNP) Measurement Issues in South Pacific Developing Member Countries of ADB S.G. Tiwari, September 1985 Estimates of Comparable Savings in Selected DMCs Hananto Sigit, December 1985 Keeping Sample Survey Design and Analysis Simple I.P. David, December 1985 External Debt Situation in Asian Developing Countries I.P. David and Jungsoo Lee, March 1986 Study of GNP Measurement Issues in the South Pacific Developing Member Countries. Part I: Existing National Accounts of SPDMCsAnalysis of Methodology and Application of SNA Concepts P. Hodgkinson, October 1986 Study of GNP Measurement Issues in the South Pacific Developing Member Countries. Part II: Factors Affecting Intercountry Comparability of Per Capita GNP P. Hodgkinson, October 1986 Survey of the External Debt Situation in Asian Developing Countries, 1985 Jungsoo Lee and I.P. David, April 1987 A Survey of the External Debt Situation in Asian Developing Countries, 1986 Jungsoo Lee and I.P. David, April 1988 Changing Pattern of Financial Flows to Asian and Pacific Developing Countries Jungsoo Lee and I.P. David, March 1989 The State of Agricultural Statistics in Southeast Asia I.P. David, March 1989 A Survey of the External Debt Situation in Asian and Pacific Developing Countries: 1987-1988 Jungsoo Lee and I.P. David, July 1989 A Survey of the External Debt Situation in Asian and Pacific Developing Countries: 1988-1989 Jungsoo Lee, May 1990 A Survey of the External Debt Situation in Asian and Pacific Developing Countries: 19891992 Min Tang, June 1991 Recent Trends and Prospects of External Debt Situation and Financial Flows to Asian and Pacific Developing Countries Min Tang and Aludia Pardo, June 1992 Purchasing Power Parity in Asian Developing Countries: A Co-Integration Test Min Tang and Ronald Q. Butiong, April 1994 Capital Flows to Asian and Pacific Developing Countries: Recent Trends and Future Prospects Min Tang and James Villafuerte, October 1995

No. 10

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No. 9

SPECIAL STUDIES, OUP (SS,OUP) (Co-published with Oxford University Press; Available commercially through Oxford University Press Offices, Associated Companies, and Agents)
1. Informal Finance: Some Findings from Asia Prabhu Ghate et. al., 1992 $15.00 (paperback) Mongolia: A Centrally Planned Economy in Transition Asian Development Bank, 1992 $15.00 (paperback) Rural Poverty in Asia, Priority Issues and Policy Options Edited by M.G. Quibria, 1994 $25.00 (paperback) Growth Triangles in Asia: A New Approach to Regional Economic Cooperation Edited by Myo Thant, Min Tang, and Hiroshi Kakazu 1st ed., 1994 $36.00 (hardbound) Revised ed., 1998 $55.00 (hardbound) Urban Poverty in Asia: A Survey of Critical Issues Edited by Ernesto Pernia, 1994 $18.00 (paperback) Critical Issues in Asian Development: Theories, Experiences, and Policies Edited by M.G. Quibria, 1995 $15.00 (paperback) $36.00 (hardbound) Financial Sector Development in Asia Edited by Shahid N. Zahid, 1995 $50.00 (hardbound) Financial Sector Development in Asia: Country Studies Edited by Shahid N. Zahid, 1995 $55.00 (hardbound) 9. Fiscal Management and Economic Reform in the Peoples Republic of China Christine P.W. Wong, Christopher Heady, and Wing T. Woo, 1995 $15.00 (paperback) From Centrally Planned to Market Economies: The Asian Approach Edited by Pradumna B. Rana and Naved Hamid, 1995 Vol. 1: Overview $36.00 (hardbound) Vol. 2: Peoples Republic of China and Mongolia $50.00 (hardbound) Vol. 3: Lao PDR, Myanmar, and Viet Nam $50.00 (hardbound) Current Issues in Economic Development: An Asian Perspective Edited by M.G. Quibria and J. Malcolm Dowling, 1996 $50.00 (hardbound) The Bangladesh Economy in Transition Edited by M.G. Quibria, 1997 $20.00 (hardbound) The Global Trading System and Developing Asia Edited by Arvind Panagariya, M.G. Quibria, and Narhari Rao, 1997 $55.00 (hardbound) Social Sector Issues in Transitional Economies of Asia Edited by Douglas H. Brooks and Myo Thant, 1998 $25.00 (paperback) $55.00 (hardbound)

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SPECIAL STUDIES, COMPLIMENTARY (SSC) (Published in-house; Available through ADB Office of External Relations; Free of Charge)
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Improving Domestic Resource Mobilization Through Financial Development: Overview September 1985 Improving Domestic Resource Mobilization Through Financial Development: Bangladesh July 1986 Improving Domestic Resource Mobilization Through Financial Development: Sri Lanka April 1987 Improving Domestic Resource Mobilization Through Financial Development: India December 1987 Financing Public Sector Development Expenditure in Selected Countries: Overview January 1988 Study of Selected Industries: A Brief Report April 1988 Financing Public Sector Development Expenditure in Selected Countries: Bangladesh June 1988 Financing Public Sector Development Expenditure in Selected Countries: India June 1988 Financing Public Sector Development Expenditure in Selected Countries: Indonesia June 1988 Financing Public Sector Development Expenditure in Selected Countries: Nepal June 1988 Financing Public Sector Development Expenditure in Selected Countries: Pakistan June 1988 Financing Public Sector Development Expenditure in Selected Countries: Philippines June 1988 Financing Public Sector Development Expenditure in Selected Countries: Thailand June 1988 Towards Regional Cooperation in South Asia: ADB/EWC Symposium on Regional Cooperation in South Asia February 1988 Evaluating Rice Market Intervention Policies: Some Asian Examples April 1988 Improving Domestic Resource Mobilization Through Financial Development: Nepal November 1988 Foreign Trade Barriers and Export Growth September 1988 The Role of Small and Medium-Scale Industries in the Industrial Development of the Philippines April 1989 19. The Role of Small and Medium-Scale Manufacturing Industries in Industrial Development: The Experience of Selected Asian Countries January 1990 20. National Accounts of Vanuatu, 1983-1987 January 1990 21. National Accounts of Western Samoa, 1984-1986 February 1990 22. Human Resource Policy and Economic Development: Selected Country Studies July 1990 23. Export Finance: Some Asian Examples September 1990 24. National Accounts of the Cook Islands, 1982-1986 September 1990 25. Framework for the Economic and Financial Appraisal of Urban Development Sector Projects January 1994 26. Framework and Criteria for the Appraisal and Socioeconomic Justification of Education Projects January 1994 27. Investing in Asia Co-published with OECD, 1997 28. The Future of Asia in the World Economy Co-published with OECD, 1998 29. Financial Liberalisation in Asia: Analysis and Prospects Co-published with OECD, 1999 30. Sustainable Recovery in Asia: Mobilizing Resources for Development Co-published with OECD, 2000 31. Technology and Poverty Reduction in Asia and the Pacific Co-published with OECD, 2001 32. Guidelines for the Economic Analysis of Telecommunications Projects Asian Development Bank, 1997 33. Guidelines for the Economic Analysis of Water Supply Projects Asian Development Bank, 1998

15. 16. 17. 18.

SPECIAL STUDIES, ADB (SS, ADB) (Published in-house; Available commercially through ADB Office of External Relations)
1. Rural Poverty in Developing Asia Edited by M.G. Quibria Vol. 1: Bangladesh, India, and Sri Lanka, 1994 $35.00 (paperback) Vol. 2: Indonesia, Republic of Korea, Philippines, and Thailand, 1996 $35.00 (paperback) Gender Indicators of Developing Asian and Pacific Countries Asian Development Bank, 1993 $25.00 (paperback) External Shocks and Policy Adjustments: Lessons from the Gulf Crisis Edited by Naved Hamid and Shahid N. Zahid, 1995 $15.00 (paperback) Indonesia-Malaysia-Thailand Growth Triangle: Theory to Practice Edited by Myo Thant and Min Tang, 1996 $15.00 (paperback) Emerging Asia: Changes and Challenges Asian Development Bank, 1997 $30.00 (paperback) Asian Exports Edited by Dilip Das, 1999 $35.00 (paperback) $55.00 (hardbound) 7. Development of Environment Statistics in Developing Asian and Pacific Countries Asian Development Bank, 1999 $30.00 (paperback) 8. Mortgage-Backed Securities Markets in Asia Edited by S.Ghon Rhee & Yutaka Shimomoto, 1999 $35.00 (paperback) 9. Rising to the Challenge in Asia: A Study of Financial Markets Asian Development Bank Vol. 1: An Overview, 2000 $20.00 (paperback) Vol. 2: Special Issues, 1999 $15.00 (paperback) Vol 3: Sound Practices, 2000 $25.00 (paperback) Vol. 4: Peoples Republic of China, 1999 $20.00 (paperback) Vol. 5: India, 1999 $30.00 (paperback) Vol. 6: Indonesia, 1999 $30.00 (paperback) Vol. 7: Republic of Korea, 1999 $30.00 (paperback) Vol. 8: Malaysia, 1999 $20.00 (paperback) Vol. 9: Pakistan, 1999 $30.00 (paperback) Vol. 10: Philippines, 1999 $30.00 (paperback) Vol. 11: Thailand, 1999 $30.00 (paperback) Vol. 12: Socialist Republic of Viet Nam, 1999 $30.00 (paperback) 10. Corporate Governance and Finance in East Asia: A Study of Indonesia, Republic of Korea, Malaysia,

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Philippines and Thailand J. Zhuang, David Edwards, D. Webb, & Ma. Virginita Capulong Vol. 1: A Consolidated Report, 2000 $10.00 (paperback) Vol. 2: Country Studies, 2001 $15.00 (paperback) 11. Financial Management and Governance Issues Asian Development Bank, 2000 Cambodia $10.00 (paperback) Peoples Republic of China $10.00 (paperback) Mongolia $10.00 (paperback) Pakistan $10.00 (paperback) Papua New Guinea $10.00 (paperback) Uzbekistan $10.00 (paperback) Viet Nam $10.00 (paperback) Selected Developing Member Countries $10.00 (paperback) 12. Government Bond Market Development in Asia Edited by Yun-Hwan Kim, 2001 $25.00 (paperback) 13. Intergovernmental Fiscal Transfers in Asia: Current Practice and Challenges for the Future Edited by Paul Smoke and Yun-Hwan Kim, 2002 $15.00 (paperback) 14. Guidelines for the Economic Analysis of Projects

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17.

18.

19.

20.

Asian Development Bank, 1997 $10.00 (paperback) Handbook for the Economic Analysis of Water Supply Projects Asian Development Bank, 1999 $10.00 (hardbound) Handbook for the Economic Analysis of Health Sector Projects Asian Development Bank, 2000 $10.00 (paperback) Handbook for Integrating Risk Analysis in the Economic Analysis of Projects Asian Development Bank, 2002 $10.00 (paperback) Handbook for Integrating Povery Impact Assessment in the Economic Analysis of Projects Asian Development Bank, 2001 $10.00 (paperback) Guidelines for the Financial Governance and Management of Investment Projects Financed by the Asian Development Bank Asian Development Bank, 2002 $10.00 (paperback) Handbook on Environment Statistics Asian Development Bank, 2002, Forthcoming

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