Social Capital

(1) Aggregate productive assets, which contribute to output in the form of profit and human capital (education), and (2) beliefs and networks involving customs, relationships, and institutions that facilitate social interaction and collective action. The second connotation has more currency and extensive usage.

Social capital is critical for economic growth and sustainable development. It affects the ability of society to work as a unit in order to achieve common goals and clear policies. It is an integral precondition for inclusion, successful development projects, and nation building.

In its earliest form, it defines the virtues of sympathy, fellowship, and social interaction, which are necessary to build coherent and stable communities. These virtues can be strengthened through institutionalized relation ships and acquaintances. In the 21st century, Putnam distinguishes physical capital from social capital in terms [Page 476]of social networks and the norms of reciprocity and trust that arise from them.

The World Bank breaks the term into five component parts: (1) groups and networks, (2) trust and solidarity, (3) collective action and cooperation, (4) social cohesion and inclusion, and (5) information and communication.

Groups and networks enable individuals to come together in order to promote personal relationships, which improve welfare. Trust and solidarity foster better collective action to resolve communal challenges. Social cohesion and inclusion minimize the risk of conflicts by promoting equitable access to benefits, and information and communication provide access to constructive information to negate negative ones.

Social capital is a significant concept for enhancing the effectiveness of World Bank community-based operations. To give the concept of social capital practical meaning, in order to translate the theory of social capital into a more practical construct, the World Bank developed the Social Capital Implementation Framework (SCIF), to determine how social capital can be incorporated into the multilateral operations. For more information, see Bourdieu (1983), Coleman (1988, 1990), Hanifan (1916), Putnam (1993), Smith (2007), Woolcock (2001), and World Bank (2008).