Development Projects and Economic Networks: Lessons from Rural Gambia

Simon Heß; Dany Jaimovich; Matthias Schündeln

doi:10.1093/restud/rdaa033

Development Projects and Economic Networks: Lessons from Rural Gambia

Simon Heß
, Dany Jaimovich
, Matthias Schündeln

Department of Economics

Publications: Contribution to journal › Article › Peer Reviewed

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.

Original language	English
Pages (from-to)	1347-1384
Number of pages	38
Journal	Review of Economic Studies
Volume	88
Issue number	3
DOIs	https://doi.org/10.1093/restud/rdaa033
Publication status	Published - 1 May 2021

Funding

We gratefully acknowledge financial support from theDFG(Deutsche Forschungsgemeinschaft) through project 250842093 "The dynamics of economic community networks in the development process: an empirical study in rural Gambia,West Africa."We are thankful for many helpful comments from colleagues and seminar audiences. We particularly thank Jean-Louis Arcand, Erwin Bulte, Arun Chandrasekhar, Margharita Comola, Marcel Fafchamps, Matthew Jackson, Raymond Jatta, Rachel Kranton, Adam Szeidl, and four anonymous referees for their comments, and Julien Labonne for insights into the implementation of the Gambian CDD program.We are grateful for the local support we received through the Gambia Bureau of Statistics and by the nine field workers without whom the data collection would not have been possible.

Austrian Fields of Science 2012

502008 Development economics
509004 Evaluation research

Keywords

Development projects
Gift exchange
Networks
The Gambia

Access to Document

10.1093/restud/rdaa033

Cite this

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title = "Development Projects and Economic Networks: Lessons from Rural Gambia",

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.",

keywords = "Development projects, Gift exchange, Networks, The Gambia",

author = "Simon He{\ss} and Dany Jaimovich and Matthias Sch{\"u}ndeln",

note = "Funding Information: We gratefully acknowledge financial support from theDFG(Deutsche Forschungsgemeinschaft) through project 250842093 {"}The dynamics of economic community networks in the development process: an empirical study in rural Gambia,West Africa.{"}We are thankful for many helpful comments from colleagues and seminar audiences. We particularly thank Jean-Louis Arcand, Erwin Bulte, Arun Chandrasekhar, Margharita Comola, Marcel Fafchamps, Matthew Jackson, Raymond Jatta, Rachel Kranton, Adam Szeidl, and four anonymous referees for their comments, and Julien Labonne for insights into the implementation of the Gambian CDD program.We are grateful for the local support we received through the Gambia Bureau of Statistics and by the nine field workers without whom the data collection would not have been possible. Publisher Copyright: {\textcopyright} 2020 The Author(s). Published by Oxford University Press on behalf of The Review of Economic Studies Limited.",

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AU - Schündeln, Matthias

N1 - Funding Information: We gratefully acknowledge financial support from theDFG(Deutsche Forschungsgemeinschaft) through project 250842093 "The dynamics of economic community networks in the development process: an empirical study in rural Gambia,West Africa."We are thankful for many helpful comments from colleagues and seminar audiences. We particularly thank Jean-Louis Arcand, Erwin Bulte, Arun Chandrasekhar, Margharita Comola, Marcel Fafchamps, Matthew Jackson, Raymond Jatta, Rachel Kranton, Adam Szeidl, and four anonymous referees for their comments, and Julien Labonne for insights into the implementation of the Gambian CDD program.We are grateful for the local support we received through the Gambia Bureau of Statistics and by the nine field workers without whom the data collection would not have been possible. Publisher Copyright: © 2020 The Author(s). Published by Oxford University Press on behalf of The Review of Economic Studies Limited.

PY - 2021/5/1

Y1 - 2021/5/1

N2 - 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.

AB - 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.

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KW - Networks

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Development Projects and Economic Networks: Lessons from Rural Gambia

Abstract

Funding

Austrian Fields of Science 2012

Keywords

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