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Development Projects and Economic Networks: Lessons from Rural Gambia
[Network Structure and the Aggregation of Information: Theory and Evidence from Indonesia]

Author

Listed:
  • Simon Heß
  • Dany Jaimovich
  • Matthias Schündeln

Abstract

This article investigates the effects of development projects on economic networks. To this end, we study the impact that a randomly allocated Community-Driven Development program in The Gambia has on economic interactions within rural villages. The program provides an exogenous source of variation to village-level stocks of productive capital and to village-wide collective activities. Based on detailed data on economic and social networks, we find a significant reduction of transfers in these networks in treatment villages. Guided by a theoretical framework, we investigate several possible mechanisms and find evidence that is consistent with two channels. First, the evidence points to modest wealth effects and a village-level transformation process towards a more formal economy. Second, we also find evidence that is consistent with elite capture, favouritism, and unequally distributed benefits leading to reductions in social capital and thus economic transactions. Overall, our findings suggest changes in networks as an avenue through which development interventions may have unintended consequences.

Suggested Citation

  • Simon Heß & Dany Jaimovich & Matthias Schündeln, 2021. "Development Projects and Economic Networks: Lessons from Rural Gambia [Network Structure and the Aggregation of Information: Theory and Evidence from Indonesia]," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 88(3), pages 1347-1384.
    • Handle: RePEc:oup:restud:v:88:y:2021:i:3:p:1347-1384.
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    File URL: http://hdl.handle.net/10.1093/restud/rdaa033
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    Citations

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    Cited by:

    1. Petr Matous, 2023. "Male and stale? Questioning the role of “opinion leaders” in agricultural programs," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 40(3), pages 1205-1220, September.
    2. Murphy, David M.A., 2023. "Sobriety, social capital, and village network structures," World Development, Elsevier, vol. 166(C).
    3. Michael Callen & Jonathan L. Weigel & Noam Yuchtman, 2023. "Experiments about Institutions," NBER Working Papers 31964, National Bureau of Economic Research, Inc.
    4. Lnu,Anukriti & Herrera-Almanza,Catalina & Karra,Mahesh Venkat, 2022. "Bring a Friend : Strengthening Women’s Social Networks and Reproductive Autonomy in India," Policy Research Working Paper Series 10107, The World Bank.

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