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Local institutions, poverty, and household welfare in Bolivia

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  • Grootaert, Christiaan
  • Narayan, Deepa

Abstract

The authors empirically estimate the impact of social capital on household welfare in Bolivia--where they found 67 different types of local associations. They focus on household memberships in local associations as being especially relevant to daily decisions that affect household welfare and consumption. On average, households belong to 1.4 groups and associations: 62 percent belong to agrarian syndicates, 16 percent to production groups, 13 percent to social service groups, and 10 percent to education and health groups. Smaller numbers belong to religious and government groups. Agrarian syndicates, created by government decree in 1952, are now viewed mainly as community-initiated institutions to manage conmunal resources. They have been registered as legal entities to work closely with municipalities to represent the interests and priorities of local people in municipal decisionmaking. The effects of social capital operate through (at least) three mechanisms: sharing of information among association members; the reduction of opportunistic behavior; and better collective decisionmaking. The effect of social capital on household welfare was found to be 2.5 times that of human capital. Increasing the average educational endowment of each adult in the household by one year (about a 2.5-percent increase) would increase per capita household spending 4.2 percent; a similar increase in the social capital endowment would increase spending 9 to 10.5 percent. They measured social capital along six dimensions: density of memberships, internal heterogeneity of associations (by gender, age, education, religion, etc.), meeting attendance, active participation in decisionmaking, payment of dues (in cash and in kind), and community orientation. The strongest effect came from number of memberships. Active membership in an agrarian syndicate is associated with an average 11.5 percent increase in household spending. Membership in another local association is associated with a 5.3-percent higher spending level. Empirical results partly confirm the hypothesis that social capital provides long-term benefits such as better access to credit and a higher level of trust in the community as a source of assistance in case of need.

Suggested Citation

  • Grootaert, Christiaan & Narayan, Deepa, 2001. "Local institutions, poverty, and household welfare in Bolivia," Policy Research Working Paper Series 2644, The World Bank.
    • Handle: RePEc:wbk:wbrwps:2644
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Gandhi, Vasant P. & Marsh Robin, 2003. "Development and Poverty Reduction: Do Institutions Matter? A Study on the Impact of Local Institutions in Rural India," IIMA Working Papers WP2003-09-06, Indian Institute of Management Ahmedabad, Research and Publication Department.
    2. Gandhi, Vasant P. & Marsh, Robin, 2003. "Development And Poverty Reduction: Do Institutions Matter? A Study On The Impact Of Local Institutions In Rural India," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa 25928, International Association of Agricultural Economists.
    3. Fisayo Fagbemi & Babafemi Oladejo & Opeoluwa A. Adeosun, 2020. "The Effectiveness of Poverty Alleviation Policy: Why is the Quality of Institutions the Bane in Nigeria?," Working Papers of the African Governance and Development Institute. 20/099, African Governance and Development Institute..
    4. Nuzhat AHMAD* & Mahpara SADAQAT** & Nighat Bilgrami-JAFFERY**, 2014. "An Aggregate Model Of Social Capital And Household Welfare In Pakistan," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 24(2), pages 179-194.
    5. Fisayo Fagbemi & Babafemi Oladejo & Opeoluwa A. Adeosun, 2020. "The Effectiveness of Poverty Alleviation Policy: Why is the Quality of Institutions the Bane in Nigeria?," Research Africa Network Working Papers 20/099, Research Africa Network (RAN).
    6. McCarthy, Nancy & Sun, Yan, 2009. "Participation by Men and Women in Off-Farm Activities: an Empirical Analysis in Rural Northern Ghana," 2009 Conference, August 16-22, 2009, Beijing, China 51040, International Association of Agricultural Economists.
    7. Mahajna, Ahmad & Benzion, Uri & Bogaire, Ravid & Shavit, Tal, 2008. "Subjective discount rates among Israeli Arabs and Israeli Jews," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(6), pages 2513-2522, December.
    8. Fisayo Fagbemi & Babafemi Oladejo & Opeoluwa A. Adeosun, 2020. "The Effectiveness of Poverty Alleviation Policy: Why is the Quality of Institutions the Bane in Nigeria?," Working Papers 20/099, European Xtramile Centre of African Studies (EXCAS).
    9. Şebnem Eroğlu, 2010. "The Irrelevance Of Social Capital In Explaining Deprivation: A Case Study Of Turkish Gecekondu Households," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 101(1), pages 37-54, February.
    10. Anh Thu Quang Pham & Pundarik Mukhopadhaya, 2022. "Multidimensionl Poverty and The Role of Social Capital in Poverty Alleviation Among Ethnic Groups in Rural Vietnam: A Multilevel Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 159(1), pages 281-317, January.
    11. Hartwich, Frank & Alexaki, Anastasia & Baptista, Rene, 2007. "Innovation systems governance in Bolivia: Lessons for agricultural innovation policies," IFPRI discussion papers 732, International Food Policy Research Institute (IFPRI).
    12. Fisayo Fagbemi & Babafemi Oladejo & Opeoluwa Adeniyi Adeosun, 2020. "The Effectiveness of Poverty Alleviation Policy: Why Is the Quality of Institutions the Bane in Nigeria?," Review of Development and Change, , vol. 25(2), pages 215-236, December.
    13. Bhanu Pratap Singh, 2021. "Institutional quality and poverty reduction in BRICS," Poverty & Public Policy, John Wiley & Sons, vol. 13(4), pages 335-350, December.

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