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Frank Fukuyama
Spring 2004

Social Capital and Development

Course Overview:

This course will look at the role of social capital in economic development.  Social capital is the instantiation of norms that permit people to cooperate in groups, or what Alexis de Tocqueville called the “art of association.”   The concept was brought into use by sociologist James Coleman in the 1980s and was popularized by Robert Putnam in his works on Italy and the United States.  Social capital has been seen as critical to civil society, which is in turn a requirement of modern democracy; at the same time, it is also important as the basis for economic activity.  At the same time, many social scientists dispute the use of the term.  Some sociologists dislike the use of an economic metaphor to describe moral and social relationships, while economists have viewed the concept as a woolly one incapable of quantification or even rigorous definition. 

One problem with the concept of social capital is that it is difficult to manipulate on a macro level directly through policies, because it is often the byproduct of deeply engrained cultural habits.  Formal institutions, on the other hand, can be shaped through policies, and social capital is a critical aspect of institutional development.  This course will therefore look at the question of creating and reforming institutions, and how social capital provides insights into the workings of organizations.

We will investigate the literature on social capital as it relates to the development of poor countries, and seek to apply it to concrete situations. One of the objectives of the seminar will be to take a hard look at the concept of social capital, and to ask questions like:  Is social capital in fact a useful concept for understanding political and economic behavior?  Are there measures of social capital, and if so, what are they?  Can it be plugged into economic models?  Does the social capital perspective offer realistic strategies for fighting poverty?  Or is this merely a passing intellectual fad?

The underlined readings on the electronic version of this syllabus can be accessed on the web simply by clicking on it.  Some of the readings will require that you be logged on to a computer that is part of the Johns Hopkins network.  If you have trouble accessing any of them, please let the instructors know.  All of the required readings should be on reserve in the SAIS library.

 There will be a class bulletin board available at http://www.sais-jhu.edu/bulletin_boards/Political_Economy/.   You must register for the bulletin board and then be admitted by Prof. Fukuyama; thereafter you may post messages which will be completely private to our class.  The syllabus is likely to be modified over the course of the semester; the authoritative version will be the one posted on Prof. Fukuyama’s web site, http://www.francisfukuyama.com/.

Requirements:

 This course is a research seminar in which students will work towards a final paper.  The paper will be an application of the concept of social capital to the situation in some developing country (or, if you are ambitious, comparatively to a group of countries).  Requirements are as follows:

1. Presentation #1, to be given during weeks 2-7 (Feb. 2-March 8), based on the course readings for that week.  Each student must sign up to present during one of these weeks.  Presentations are to be collective; students presenting on a particular week should meet ahead of the class to discuss how to frame the issues raised in the readings in a way that will provoke further discussion.  (20 percent of the final grade.)

2. An outline of a research paper topic, due prior to spring break (March 21), which I must approve.  The paper must seek to apply the concept of social capital to some aspect of development.  It can either look at how social capital functions broadly in different societies, or it can seek to incorporate the concept in a concrete development project.  It is very important to begin work on the paper early in the semester, and to have something substantive to say about the topic by the time of your presentation of it.  (10 percent of the final grade.)

3. Presentation #2, to be given individually, on the subject of the research paper, during weeks 8-13, March 23-April 26.  (20 percent of the final grade.)

4. The final research paper, from 15-25 double-spaced pages, due on the day of the final exam.  (40 percent of the final grade.)

5. In addition, all students are expected to participate actively in class discussions and in critiques of each other’s papers and presentations.  (10 percent of final grade.) 

 

A signup sheet for presentations #1 and #2 will be passed around on the first day of class.  Based on this, I will post the schedule of presentations and student email addresses so you can see who will also be presenting your week and contact them.

 

Required Readings:

  • Francis Fukuyama, State-Building:  Governance and World Order in the 21st Century.  This book will be published by Cornell University Press in March but will be available online for students in this course.
  • Francis Fukuyama, Trust:  The Social Virtues and the Creation of Prosperity (New York:  Free Press, 1996)  ISBN: 0684825252. 
  • William R. Easterly, The Elusive Quest for Growth:  Economists' Adventures and Misadventures in the Tropics (Cambridge, MA: MIT Press, 2001) ISBN 0-262-05065-X.
  • James C. Scott, Seeing Like A State: How Certain Schemes to Improve the Human Conditions have Failed (New Haven: Yale University Press, 1998) (ISBN 0300078153).
  • Hernando De Soto, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else (London: Bantam Press, 2000) ISBN 0465016154).

WEEK 1, JAN. 26.  INTRODUCTORY LECTURE. SOCIAL CAPITAL, INSTITUTIONS, AND DEVELOPMENT
James S. Coleman, "Social Capital in the Creation of Human Capital," American Journal of Sociology Supplement 94 (1988): S95-S120.

Francis Fukuyama, “Culture and Economic Development,” from the Encyclopedia of the Social and Behavioral Sciences, Elsevier, 2002.  

Francis Fukuyama, Trust:  The Social Virtues and the Creation of Prosperity (New York:  Free Press, 1996), chapter 1, pp. 3-12.

Christiaan Grootaert and Thierry van Bastelaer, Understanding and Measuring Social Capital: A Synthesis of Findings and Recommendations (Washington, DC: World Bank SCI 24, 2001).

Suggested Readings:
· Francis Fukuyama,  “Social Capital and Civil Society,” IMF Working Paper WP/00/74, April 2000.
· Robert M. Solow, “Notes on Social Capital and Economic Performance,” in Ismail Serageldin and Partha Dasgupta, eds., Social Capital:  A Multifaceted Perspective (Washington, DC: World Bank, 2000).

 

WEEK 2, FEB. 2.  THE DEVELOPMENT PROBLEM.
Easterly, William R., The Elusive Quest for Growth:  Economists' Adventures and Misadventures in the Tropics (Cambridge, MA: MIT Press, 2001), chaps. 1-7, pp. 5-139.

Hernando De Soto, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else (London: Bantam Press, 2000), Chapters 1-2, pp. 1-31.

James C. Scott, Seeing Like A State: How Certain Schemes to Improve the Human Conditions have Failed (New Haven: Yale University Press, 1998), Introduction, pp. 1-8.

James A. Robinson and Daron Acemoglu, The Colonial Origins of Comparative Development:  An Empirical Investigation (Washington, DC: NBER, working paper 7771, 2000).

 WEEK 3, FEB. 9.  SOCIAL CAPITAL:  A SOLUTION TO THE DEVELOPMENT PROBLEM?
Stephen Knack and Philip Keefer, Does Social Capital Have an Economic Payoff?  A Country Investigation (College Park, MD: Univ. of Maryland IRIS, 1997).

Stephen Knack and Paul J. Zak, Trust and Growth (College Park, MD: IRIS Working Paper 219, 1998).  You may skip

over the description of the model, pp. 7-16 and the appendix.

Joseph E. Stiglitz, Towards a New Paradigm for Development:  Strategies, Policies, and Processes (Geneva: 1998 Prebisch Lecture, UNCTAD, 1998).

Michael Woolcock and Deepa Narayan, "Social Capital: Implications for Development Theory, Research, and Policy," World Bank Research Observer 15 (2000): 225.

ID21 Insights Issue #34: “It’s not what you know, it’s who you know!  Economic Analysis of Social Capital.”

Suggested Readings:
· Woolcock, Michael, "Social Capital and Economic Development: Towards a Theoretical Synthesis and Policy Framework," Theory and Society 27 (1998): 151.

 WEEK 4, FEB. 16.   SOCIAL CAPITAL, TRADE, AND DEVELOPMENT.
Francis Fukuyama, Trust:  The Social Virtues and the Creation of Prosperity, chaps. 8, 9, 14, 15, pp. 69-95, 161-183.

Marcel Fafchamps and Bart Minten, "Relationships and Traders in Madagascar," Journal of Development Studies 35 (1999): 1-35.

Marcel Fafchamps, Networks, Communities, and Markets in Sub-Saharan Africa:  Implications for Firm Growth and Investment (Oxford, UK: CSAE WPS/99-24, 1999).

Diane Singerman, Avenues of Participation:  Family, Politics, and Networks in Urban Quarters of Cairo (Princeton, NJ: Princeton University Press, 1995), chapter 3, “Networks:  the Political Lifeline of Community.”

Sara Berry, No Condition is Permanent: The Social Dynamics of Agrarian Change in Sub-Saharan Africa (Madison, WI: University of Wisconsin Press, 1993), Chap. 7, “Investing in Networks:  Farmers’ Use of Income and their Significance for Agrarian Change.” 

Avner Greif , 1993. "Contract Enforceability and Economic Institutions in Early Trade:  The Maghribi Traders' Coalition," American Economic Review 83(3): 525-48.

 WEEK 5, FEB. 23.  ETHNICITY, ENTREPRENEURSHIP, AND CONFLICT.
World Bank, Attacking Poverty (World Development Report 2000/01)  (Oxford: Oxford University Press, 2000), Chapter 7, Removing Social Barriers and Building Social Institutions.

Ivan H. Light and Steven J. Gold, Ethnic Economies (San Diego, CA: Academic Press, 2000), chaps. 1-2, pp. 3-54.

Ashutosh Varshney, "Ethnic Conflict and Civil Society:  India and Beyond," World Politics 53 (2001): 362-98.

Edna Bonacich, "A Theory of Middleman Minorities," American Sociological Review 38 (1972): 583-594.

Nat J. Colletta and Michelle L. Cullen, Violent Conflict and the Transformation of Social Capital: Lessons From Cambodia, Rwanda, Guatemala, and Somalia (: World Bank, 2000), chap. 1, pp. 3-16, chaps. 6-7, pp. 85-123.

 

WEEK 6, MARCH 1.  THE STATE AND CIVIL SOCIETY.
Jane Jacobs, The Death and Life of Great American Cities (New York: Random House, 1961), Chap. 2, pp. 29-54.

Peter Evans, “Introduction,” and Wai Fung Lam, “Institutional Design of Public Agencies and Coproduction:  A Study of Irrigation Associations in Taiwan,” in Peter B. Evans, State-Society Synergy: Government and Social Capital in Development (Berkeley: University of California Press, 1997), pp. 1-47.

James C. Scott, Seeing Like A State: How Certain Schemes to Improve the Human Conditions have Failed (New Haven: Yale University Press, 1998), chapter 2, “Cities, People, and Language,” pp. 53-83, chapter 7, “Compulsory Villagization in Tanzania,” pp. 261.

Francisco E. Thoumi, “Why a Country Produces Drugs and How This Determines Policy Effectiveness:  A general model and some applications to Colombia.”  March 2002.

 

WEEK 7, MARCH 8.  SOME THEORY.
Robert C. Ellickson, Order without Law:  How Neighbors Settle Disputes (Cambridge, MA: Harvard University Press, 1991), pp. 137-166.

Francis Fukuyama, The Great Disruption:  Human Nature and the Reconstitution of Social Order (New York:  Touchstone, 2000), chapters 8-11, pp. 143-193.

Elinor Ostrom, Governing the Commons:  The Evolution of Institutions for Collective Action (Cambridge: Cambridge University Press, 1990), chap. 1, “Reflections on the Commons,” pp. 1-28; Chap. 3, “Analyzing Long-enduring, Self-Organized, and Self-Governed CPRs,” pp. 58-102; chap. 6, “A Framework for Analysis of Self-organizing and Self-governing CPRs,” pp. 182-216.

Mark S. Granovetter, "The Strength of Weak Ties," American Journal of Sociology 78 (1973): 1360-80.

Suggested Readings:
· Matt Ridley, The Origins of Virtue:  Human Instincts and the Evolution of Cooperation (New York: Viking, 1997), pp. 51-84.

SPRING BREAK

WEEK 8, MARCH 22.  INSTITUTIONS.
Hernando De Soto, The Other Path:  The Invisible Revolution in the Third World (New York: Harper and Row, 1989), Chap. 1, “Introduction,” pp. 3-13; Chap. 5, “The Costs and Importance of the Law,” pp. 131-187.

World Bank, The State in a Changing World (World Development Report 1997), chapter 1, pp. 19-28.  

Francis Fukuyama, State-Building, chapter 1, “The Missing Dimensions of Stateness.”

Douglass North, Institutions, Institutional Change and Economic Performance (New York:  Cambridge University Press, 1990), chapters 1-3, pp. 3-26.

World Bank, Building Institutions for Markets  (World Development Report 2002) (New York:  Oxford University Press 2002), chapter 1, pp. 3-27.

WEEK 9, MARCH 29.  SOCIAL CAPITAL AND GOVERNANCE:  THE ROLE OF PROPERTY RIGHTS.
Hernando De Soto, The Other Path:  The Invisible Revolution in the Third World (New York: Harper and Row, 1989), Chap. 1, “Introduction,” pp. 3-13; Chap. 5, “The Costs and Importance of the Law,” pp. 131-187.

Hernando De Soto, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else (London: Bantam Press, 2000), chaps. 3-4, pp. 32-92; chaps. 6-7, pp. 137-209.

Easterly, William R. and Levine, Ross, 2002. Tropics, Germs, and Crops:  How Endowments Influence Economic Development (Cambridge, MA: NBER Working Paper 9106).

Marcel Fafchamps and Bart Minten, Property Rights in a Flea Market Economy (Oxford, UK: CSAE WPS/99-25, 1999).

Suggested Readings:
· Marcel Fafchamps, "The Enforcement of Commercial Contracts in Ghana," World Development 24 (1996): 427-48.

WEEK 10, APRIL 5.  SOCIAL CAPITAL, ORGANIZATIONS, AND PUBLIC ADMINISTRATION.
World Bank, Building Institutions for Markets, chap. 5, pp. 99-116.

Fukuyama, State-Building, chapter 2.

World Bank, Building Institutions for Markets, chap. 3, pp. 55-74.

Herbert Simon, "Organizations and Markets," Journal of Economic Perspectives 5(2), 1991: 25-44.

Michael Woolcock and Lant Pritchett, “Solutions when the Solution is the Problem:  Arraying the Disarray in Development,” Center for Global Development Working Paper No. 10, Sept. 2002.

 

WEEK 11, APRIL 12.  GOVERNANCE.
Hernando De Soto, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else (London: Bantam Press, 2000), chaps. 3-4, pp. 32-92; chaps. 6-7, pp. 137-209.

James C. Scott, Seeing Like A State, Chapter 9, “Thin Simplifications and Practical Knowledge:  Metis,” pp. 309-341.

William R. Easterly, The Elusive Quest for Growth:  Economists' Adventures and Misadventures in the Tropics (Cambridge, MA: MIT Press, 2001), chap. 11, “Governments Can Kill Growth,” pp. 217-240; chapter 12, “Corruption and Growth,” pp. 242-253.

Judith Tendler, Good Government in the Tropics (Baltimore, MD: Johns Hopkins University Press, 1997), chapter 6:  “Civil Servants and Civil Society, Governments Central and Local.”

WEEK 12, APRIL 19.  IS SOCIAL CAPITAL A USEFUL DEVELOPMENT TOOL OR FAD?
Mary Kay Gugerty and Michael Kremer, Outside Funding of Community Organizations: Benefiting or Displacing the Poor? (Washington, DC: NBER Working Paper No. W7896, 2000).

Anthony Bebbington, "Social Capital and Rural Intensification:  Local Organizations and Islands of Sustainability in the Rural Andres," Geographical Journal 163 (1997): 189-97.

Marina Ottaway and Thomas Carothers, Funding Virtue:  Civil Society and Democracy Promotion (Washington, DC: Carnegie Endowment, 2000), chapters 1, 11, pp. 3-16, 293-310.

 Suggested Readings:
· John Harriss, De-Politicizing Development:  The World Bank and Social Capital (London: Wimbledon Publishing Company, 2002).

WEEK 13, APRIL 26.  RESERVED FOR PRESENTATIONS.

OTHER READINGS (WHICH CAN BE USED IN PREPARING YOUR PAPERS):

Norman Uphoff, “Understanding Social Capital:  Learning from the Analysis of Experience of Participation,” in Ismail Serageldin and Partha Dasgupta, eds., Social Capital:  A Multifaceted Perspective (Washington, DC: World Bank, 2000), pp. 215-249.

Bernardo Kliksberg, "Social Capital and Culture: Master Keys to Development," CEPAL Review (1999): 83-102.

Abigail M. Barr, Enterprise Performance and the Functional Diversity of Social Capital (Oxford, UK: CSAE WPS/98-1, 1998).

Abigail M. Barr, Social Dilemmas and Shame-Based Sanctions:  Experimental Results from Rural Zimbabwe (Oxford, UK: CSAE WPS/2001.11, 2001).

Jonathan Isham, The Effects of Social Capital on Technology Adoption:  Evidence from Rural Tanzania (College Park, MD: IRIS Working Paper 235, 2000).

Satu Kähkönen, Does Social Capital Matter in Water and Sanitation Delivery? A Review of Literature (College Park, MD: IRIS Working Paper 249, 1999).

Enrique Pantoja, Exploring the Concept of Social Capital and its Relevance for Community-based Development (Washington, DC: World Bank, SCI 18, 1999).

Sheoli Pargal and Mainul Huq, Social Capital in Solid Waste Management: Evidence from Dhaka, Bangladesh (Washington, DC: World Bank, SCI 16, 1999).

Jonathan Fox, "How Does Civil Society Thicken?  The Political Construction of Social Capital in Mexico," World Development 24 (1996): 1089-103.

Deepa Narayan and Christiaan Grootaert, Local institutions, poverty, and household welfare in Bolivia (Washington, DC: World Bank Pol. Res. Working Paper, 2001).

Abigail M. Barr, Familiarity and Trust:  An Experimental Investigation (Oxford, UK: CSAE WPS/99-23, 1999).

Abigail M. Barr, Trust and Expected Trustworthiness:  An Experimental Investigation (Oxford, UK: CSAE WPS/2001.12, 2001).

Jonathan Morduch, "Between the State and Market:  Can Informal Insurance Patch the Safety Net?" World Bank Research Observer 14 (1999): 187-207.

Deepa Narayan and Lant Pritchett, "Cents and Sociability: Household Income and Social Capital in Rural Tanzania," Economic Development and Cultural Change 47 (1999): 871.