Social Capital - Essay Example

Social Capital Social Capital Author Author’s Affiliation Date Introduction The term Social Capital is coined for the representation of the combined benefits of the society, which can be gained from the collaboration, cooperation and just treatment with the individuals living in the society. It is the representation of the empathy and mutuality that the individuals have for one another and the individuals express it in the form of care and trust. Social Capital indicates the processes and ways that helps in the reduction of interaction cost, strengthens social bond among the individuals, and helps in provision of the best alternatives for building moral and ethical human behavior base (Thomas, 1995). The word ‘social’ means that there is no personal ownership of the assets, these resources meant for all in the relationship network and circle. The access towards social capital depends on the business diversity of person, the persons known to him and size and structure of the business. It also includes those that are not known properly but are connected indirectly through networks. The word ‘Capital’ here emphasizes the productive aspect of the social capital. It helps in the creation of value, achievement of goals, mission fulfillment and getting the right things done. The social capital market however tries to introduce the entrepreneurs with the trusted investors; it ensures creation of effective market that moves the resources from the investors towards entrepreneurs for creation of new resources (Ritz, 2012). In this paper social capital is discussed in detail, different strategies and methodologies that are used for measuring social capital are discussed, and the most important role of social capital for alleviating poverty is discussed. At the end some recommendations are also given for improving the social capital of the society so that it can help to control other social problems effectively. Explanation Social capital concept is becoming popular and is the centre of attention for the research and development organizations as well as agencies. Social capital represents a social organization that is built on trusts, customs, norms, and the networks of civil involvement (Putnam, 1992). It is the reflection of such relationships, norms and institutions that are necessary for shaping social interactions in the society both qualitatively and quantitatively. All the rules, obligations, trust and customs that are embedded in the social institutions, structures and relations, which ensure the achievement of individual and mutual objectives for the society, all are included in the social capital. The social capital structure can be better understood with the help of following Figure 1. Figure 1: The Social Capital Structure. (Source: http://www.socialcapitalresearch.com/) In short, social capital ensures communal action that is beneficial for the whole society. There are two distinct forms of social capital. Cognitive Social Capital Structural Social Capital Civil Social Capital Governmental Social Capital Cognitive Social Capital includes trust, norms, beliefs, values, custom, rules, attitudes and morals etc. Structural Social Capital helps the society in making decision based on the established and customary roles, social arrangements and structures that are supported by the rules, principles and set examples. It also helps in sharing information and taking mutual action for the betterment of the society (Grootaert. & Batelaer, 2001). Civil Social Capital however includes shared norms, traditions, same values, memberships, associations, informal systems and networks. Government social capital includes rule of law enforcement of contracts for the society and civil liberty extent (Collier, 1998). Civil social capital along with trust is mostly considered by the countries having limited governmental social capital. The importance of social capital in society can be analyzed from the following points. It helps the society to monitor government’s performance. It enables the innovation’s diffusion. It helps to increase the cooperation in order to solve the problems. It facilitates reductions of imperfections in the society. It enhances informal safety programs (Pritchett & Narayan, 1997). The government’s performance can be monitored with the help of social capital because government representatives are involved in the social programs and their performance can be judged from the provision of the public goods that are part of the social capital. Social capital helps in the diffusion of innovation by enhancing the internal linkages among the people living in the society. It also helps in building the sense of cooperative and supportive action for solving the society’s problem for the collective benefit of all the society. This objective is achieved by a common and local property prospect of the society. Moreover, it helps in the reduction of the inaccurate and imperfect information by expanding the enforcement tools range. It in turn facilitates more output transactions, wider labor market, land and credit. Furthermore, it enhances the safety programs such as insurance and other programs for the households and ensures greater return to the households that in turn helps to increase the market activities which include better production, more output and better techniques for further improvements. Moreover it also helps supporting people by preparing them socially. In order to socially prepare the individuals information is gathered regarding their resources and circumstances, situation is analyzed. Moreover, actions are prioritized to work on their desired actions; a group is organized according to their wish and preference. Then collective work and effort is ensured for implementing the actions (Albee & Boyd, 1997). The major benefit of social capital is its help for eradication of poverty. Methodologies Developed for Measurement of Social Capital. The World Bank has developed two tools for the measurement of the social capital. The Social Capital Assessment Tool (SOCAT) The Social Capital Integrated Questionnaire (SCIQ). The Social Capital Assessment Tool is a versatile instrument for the collection of data regarding household, organization and community social capital. It is however an integrated qualitative as well as quantitative tool. This method enables to get detailed and elaborated information about the cognitive and structural social capital that is collected from the household (The World Bank, 2011). This in turn plays an important role for using the information to reduce poverty and increase the outcomes of the household and social welfare. The Social Capital Integrated Questionnaire is designed especially for the developing countries. The aim of this tool is generation of the quantitative for several dimensions and aspects of the social capital e.g., measurement and survey of the Living Standards of household and a survey of household expenditure or income. For this purpose 6 dimensions are measured which include, Groups/networks; Trust/solidarity; Collective action along with cooperation; Information & communication; Social unity and inclusion; Empowerment and taking political action ( The World Bank, 2011) This tool however helps in the analysis and use of data. This method has been tested and adopted successfully for the measurement of social capital in Nigeria and Albania and many important findings become evident like people of Nigeria seemed to be enthusiastic for providing the information about their groups and the people has responded to the questions in different ways and felt that they has the courage and right for changing their present course of life (Onu, 2002). In order to measure the social capital within groups/networks, aspects such as membership density and diversity, democratic functions and the group connections can be measured. This can be done by asking questions from people on the specific as well as on hypothetical situations. Within social networks and social relationships many trust types exist, for example, trust on the government institutions i.e., established rules, official dealings and procedures, resolution of conflict and allocation of resources. Moreover, trust towards strangers that are based on the behavior expectations, shared cultures and norms are also observed within a society. Different questions of various types can be asked in order to investigate the element of trust. The collective action extent can also be measured with the help of questions regarding helping the society members being a volunteer and attending the events of the local group/community etc. The dimension of the social capital can also be found out by knowing who is being involved in the decision making process, in taking communal actions and access to the society’s services. The question about unity perception and mutuality in society is asked in order to know about the social inclusion. Maintenance and enhancement of the social depends in the communication ability of the community member. Moreover, it also depends on how frequently they are communicating among themselves and with members of other communities (Grootaert, Narayan, Jones & Woolcock, 2004). For knowing about the communication and information aspect questions regarding communication and information means and sources e.g., telephone, radio, television, post offices and online access can be asked. Furthermore, in the Community Driven Development i.e., CDD- an approach that focuses on the controlled decisions of planning and resources for investment in the developmental projects for the society, the social capital can be measured in the project preparation, identification, appraisal, supervision, implementation and for project evaluation. In order to measure the social project in project preparation, identification and appraisal existence and variation of social capital across the country are analyzed. In order to map the social capital, it is necessary to analyze the social capital of the specific area before starting a project in that area. Analysis of the existing capital in the area, and its characteristics can be analyzed in order to know that these present social capital characteristics will support the new social capital project or not. For measuring the social capital in the project supervision and implementation, threats and opportunities can be analyzed in order to know that the people and the institutions are involved in the effective implementation of the project and they are enjoying confidence and trust that enables a project to succeed. This helps in continuous monitoring, analyzing and adjustment of the social capital that paves the way to effectual community driven development. In order to measure social capital in the evaluation of the project and influence of community driven development on the social capital the social capital development is considered. The extent of the existence of social capital and the extent of increase in the social capital because of the implementation of new project is determined. Moreover, it would also be beneficial to examine whether project of community driven development has contributed to enhancement of the social interactions, reduction of social segregation, participation of social group and increment in the collection action capacity (Gillespie, 2004). Role of Social Capital for Reduction of Poverty One of the most important roles played by social capital is the poverty reduction. The reason of selecting poverty reduction as an important function of social capital lies in the fact that social capital is a vital resource, proper management of this source can help in the diminution of poverty to a larger extent. Social capital incorporate various important aspects in itself e.g., productivity of human, physical, natural capital forms, and financial capital (Cullen & Whiteford, 2001). Additionally, social capital is the important contributor to the socio-economic health of the country. It is also an expression of the emotional feelings of poor people. Inadequate social capital creates deficiency of socio-emotional products/goods for poor people (Jones, Clark, Grusec, Hart, Plickert, & Tepperman, 2002). Sufficient social capital availability enables the poor to express freely and describe without any fear about the lack of the capital, so that their deficiency can be fulfilled and poverty can be reduced. Number of the poor in different regions can be analyzed from the Figure 2, which shows people who are living below $1.25 per day in India, Bangladesh, China, Vietnam, Ethiopia, Nepal and Tanzania etc. the greatest number of poor is in India which are living below the poverty line. All the countries shown in the following figure are developing countries and social capital development can help them greatly for reduction of the poverty. Figure 2: The poor living below $1.25 in different regions. (Source: http://internationalaffairscanada.wordpress.com/) The increase in the social capital increases one individual’s sympathy as well as concern for other individual, which will lead to more investment in the public goods. The provision of public goods increase, which include law enactment, education, transport facility, health benefits, food protection and safety, environmental concerns, and defense etc (Robinson, Siles & Schmid, 2002). The countries rich in social capital enjoy equal income levels, citizens in such countries regard other people’s welfare and all individuals are benefitted from the public goods which ultimately help in reduction of poverty. But, this is not the case with the countries where there is narrow distribution of the social capital. The importance of social capital in reducing poverty is also evident from the case of Nigeria variation in the social capital is responsible for poverty, 62% variations in poverty are observed due to change in the social capital, at a significance level of 5% (Ijaiya, Sakariyau, Dauda, Paiko, & Zubairu, 2012). This suggests the major role that is being played by the social capital in controlling poverty. With the increase in the country’s social capital, the institutions enjoy more facility of exchange and trade is improved. The country has not to depend on the informal and illegal structures for improving the economic condition. Trade is facilitated and things are available at the reduced price improving the living standard of the country and poverty can be controlled due to availability of basic necessities to the majority individuals. In contrast the countries having disconnected and discontinuous social capital network, have to depend on the informal structures that pave the way to the poverty, corruption and unequal distribution and allocation of resources. The order of exchange however, collapses completely in case of informal structures and works efficiently if structures are formal. Moreover, social capital distribution leads to even distribution of income and helps in eliminating the difference between the poor and the rich. It however, alters the trade level and terms which in turn influence the income distribution. This means that income distribution can be altered form the social capital distribution which can help in the fall of poverty. The societies which are lacking in the social capital are economically weak which has lead to the discouraged trade system and trade specialization in such countries. Social capital helps in the market development that enables the poor to make their living. It allows the poor entrepreneurs to come forward and provide them the resources which they need. Poverty is not an issue of resources, it is issue of lack of access towards the resources available and the incapability to exploit and utilize the resources that are available. Rich people are regarded as rich because they have sufficient access to the resources of good quality and poor people lack such access towards the resources. The social capital markets help to connect the entrepreneurs with the impact and result oriented investors. In this way, with the help of social capital the investors will be able to get return on investment and entrepreneurs will be able to earn their living. The relationship is also evident fro, the following Figure 3. Figure 3: Social Capital helps in Building Relationship (Source: Intrapreneurship: the role of social capital – empirical evidence and proposal of a new model of intrapreneurship and its relationship with social capital, Business Strategy Series, Vol. 10 Iss: 6, pp.383 - 399) The importance of social capital in poverty reduction is evident from the fact that the poor in Nicaragua make the use of social capital in order to pay the funeral cost (Atria, 2004). In some other cases it is also observed that for the contingency and emergency situations, for medical expenditures and for goods supplies in case of economic crises, social capital is exchanged. The poor are often not well trained and mobile, due to rapid changes in the world, new skills are required for the economic development so poor remain behind in learning these new skills due to non availability of resources. But, social capital provides the investment opportunities through market globalization and economic restructuring, which enables the investors to invest in the social capital also. This is then distributed to the poor who can satisfy their basic necessities and helps in controlling poverty. Social capital enables to have access to tangible as well as intangible resources. The tangible resources include infrastructure that is required for the efficient management of the community resources including poor communities of the area/region. Intangible resources include provision of education and training to the poor so that they will be able to earn for themselves for satisfying their own need and family need, and in turn contribute to the development of the country that will have low poverty level. Social capital exerts positive influence on the per capita income and expenditure and reduces the prospects of remaining poor. It also enhances and accolade endowment of the human capital which helps in lowering poverty level and in turn increases the social welfare level. In this fast pace where things are changing fast, it is the social capital that can help the poor in earning their livelihood. Investing in the social capital provide greater returns to the poor. It is also confirmed from the research that investing in the social capital represents an effective and rational decision for the poor (Grotaert, 2001). Recommendations and Conclusion Social capital strengthens the social and ethical relationships between the individuals. Social capital is the representation of relationship of trust and care. The concept of social capital is becoming more popular with the passage of time. It can be in the form of the government, cognitive, civil and structural social capital. It increases cooperation, facilitates innovation diffusion, reduces false information from the society. Social Capital Assessment Tool (SOCAT) and Social Capital Integrated Questionnaire (SCIQ) are the instruments devised by the World Bank in order to measure the social capital. the major role played by social capital is the reduction of poverty. This role is played by making the resources available to the poor, by training, educating them, by giving them freedom of expression, by developing market for the Poor and by introducing the entrepreneurs to the investors that really cares for the business development. In order to improve the social capital such policies should be framed that are aimed at enhancing the social capital formation. These policies should ensure that resources are available to the poor and they have access to the utilization of these resources. Moreover, social capital can become conductive for reducing poverty if it passes through appropriate institutional planning and arrangements. This will in turn enhances functioning at an individual level that speeds up the process of development. Furthermore, employment opportunities, education, accommodation, health benefits, psychological and financial support are crucial aspects for reduction of poverty. They provide access to the resources and all these aspects are social capital products, so for improvement in social capital all these facets of society should be given due consideration. References Albee, A., & Boyd, G. (1997). Doing it Differently:Networks of Community Development Agents. United Nations Development Programme,Human Development Report, New York, 1990. Retrieved from http://www.caledonia.org.uk/networks/Network%20-%20Doing%20it%20Differently.pdf Atria, R. (2004). Social Capital and Poverty Reduction in Latin America and the Caribbean:Towards a New Paradigm. United Nations Publications. Bastelaer, C. G. (2001). Understanding and Measuring Social Capital: A Synthesis of Findings and Recommendations from the Social Capital Initiative. Social Capital Initiative Working Paper No. 24. The World Bank Social Development Department Social Capital Working Paper Series. Retrieved from http://siteresources.worldbank.org/INTSOCIALCAPITAL/Resources/Social-Capital-Initiative-Working-Paper-Series/SCI-WPS-24.pdf Collier, P. (1998). Social Capital and Poverty. Social Capital Initiative Working Paper No.4. The World Bank Social Development Department, Social Capital Working Paper Series. Retrieved from http://siteresources.worldbank.org/INTSOCIALCAPITAL/Resources/Social-Capital-Initiative-Working-Paper-Series/SCI-WPS-04.pdf Cullen, M., & Whiteford, H. (2001). The Interrelations of Social Capital with Health and Mental Health. Commonwealth of Australia 2001. Retrieved from http://www.health.gov.au/internet/main/publishing.nsf/content/63AC7D77E983E319CA257288000BCE0C/$File/intsoc.pdf Gillespie, S. (2004). SCALING UP COMMUNITY-DRIVEN DEVELOPMENT:A SYNTHESIS OF EXPERIENCE. FCND DISCUSSION PAPER NO. 181.International Food Policy Research InstituteWashington, D.C. Retrieved from http://www.ifpri.org/sites/default/files/pubs/divs/fcnd/dp/papers/fcndp181.pdf Grootaert, C. (2001). DOES SOCIAL CAPITAL HELP THE POOR?A SYNTHESIS OF FINDINGS FROM THE LOCAL LEVELINSTITUTIONS STUDIES IN BOLIVIA, BURKINA FASO AND INDONESIA. Local Level Institutions Working Paper No. 10. The World Bank Social Development Department Publications. Retrieved from http://siteresources.worldbank.org/INTRANETSOCIALDEVELOPMENT/882042-1111748261769/20502262/LLI-WPS-10.pdf Grootaert, C., & Batlelaer, T. V. (2001). Understanding and Measuring Social Capital: A Synthesis of Findings and Recommendations from the Social Capital Initiative. Social Capital Initiative Working Paper No.24.The World Bank Social Development Department, Social Capital Working Paper Series. Retrieved from http://siteresources.worldbank.org/INTSOCIALCAPITAL/Resources/Social-Capital-Initiative-Working-Paper-Series/SCI-WPS-24.pdf Grootaert,Christiaan., Narayan,Deepa., Jones,Veronica Nyhan.& Woolcock,Michael. (2004). Measuring Social Capital:An Integrated Questionnaire. Retrieved from http://biblioteca.hegoa.ehu.es/system/ebooks/14697/original/Measuring_Social_Capital.pdf IJAIYA, M. A., O.B.SAKARIYAU, DAUDA, C., PAIKO, I., & ZUBAIRU, U. (2012). Social Capital and Poverty Reduction in Nigeria: A Case Study of Minna Metropolis. International Journal of Business and Social Science.Vol. 3 No. 12, 229-235. Retrieved from http://www.ijbssnet.com/journals/Vol_3_No_12_Special_Issue_June_2012/23.pdf Onu, D. J. (2002). Report of Social Capital Household Survey Pilotin Adamawa State, Nigeria July 2002. The World Bank. Retrieved from http://siteresources.worldbank.org/INTSOCIALCAPITAL/Resources/Social-Capital-Integrated-Questionnaire/AdamawaStatePilotRptShortVersionAug02.pdf Pritchett, L., & Narayan, D. (1997). Cents and Sociability:Household Income and Social Capital in Rural Tanzania. Retrieved from http://www.sfu.ca/~akaraiva/e455/Cents.pdf Putnam, R. D. (1992). Making Democracy Work: Civic Traditions in Modern Italy. New Jersey: Princeton University Press. Ritz, A. (2012). Social Capital Markets – On Impact, Measurability and Trust. Huffington Post / Schwab Foundation – Social Entrepreneurship, 2013. Retrieved from http://www.studentreporter.org/2012/06/social-capital-markets-on-impact-measurability-and-trust/ Robison, L. J., Siles, M. E., & Schmid, A. A. (2002). Social Capital and Poverty Reduction:Toward a Mature Paradigm. Agricultural Economics Report No. 614, 1-45. Retrieved from http://www.aec.msu.edu/aecreports/aec614.pdf The World Bank. (2011). Measuring Social Capital. Retrieved from The World Bank Organization: http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTSOCIALDEVELOPMENT/EXTTSOCIALCAPITAL/0,,contentMDK:20193059~menuPK:418220~pagePK:148956~piPK:216618~theSitePK:401015,00.html Thomas, C. Y. (1995). Capital markets, Financial Markets and Social Capital. XXVII Conference of Monetary Studies, 1-33. Thomas, C. Y. (1995). Capital Markets, Financial Markets and Social Capital. XXVII Annual Conference of Monetary Studies. Retrieved from http://www.ccmf-uwi.org/files/publications/conference/533.pdf Thomas, C. Y. (1995). Capital Markets, Financial Markets and Social Capital. XXVII Annual Conference of Monetary Studies. Retrieved from http://www.ccmf-uwi.org/files/publications/conference/533.pdf Whiteford, H. (2001). The Interrelations of Social Capital with Health and Mental Health. Commonwealth of Australia 2001. Retrieved from http://www.health.gov.au/internet/main/publishing.nsf/content/63AC7D77E983E319CA257288000BCE0C/$File/intsoc.pdf Read More

Figure 1: The Social Capital Structure. (Source: http://www.socialcapitalresearch.com/) In short, social capital ensures communal action that is beneficial for the whole society. There are two distinct forms of social capital. Cognitive Social Capital Structural Social Capital Civil Social Capital Governmental Social Capital Cognitive Social Capital includes trust, norms, beliefs, values, custom, rules, attitudes and morals etc. Structural Social Capital helps the society in making decision based on the established and customary roles, social arrangements and structures that are supported by the rules, principles and set examples.

It also helps in sharing information and taking mutual action for the betterment of the society (Grootaert. & Batelaer, 2001). Civil Social Capital however includes shared norms, traditions, same values, memberships, associations, informal systems and networks. Government social capital includes rule of law enforcement of contracts for the society and civil liberty extent (Collier, 1998). Civil social capital along with trust is mostly considered by the countries having limited governmental social capital.

The importance of social capital in society can be analyzed from the following points. It helps the society to monitor government’s performance. It enables the innovation’s diffusion. It helps to increase the cooperation in order to solve the problems. It facilitates reductions of imperfections in the society. It enhances informal safety programs (Pritchett & Narayan, 1997). The government’s performance can be monitored with the help of social capital because government representatives are involved in the social programs and their performance can be judged from the provision of the public goods that are part of the social capital.

Social capital helps in the diffusion of innovation by enhancing the internal linkages among the people living in the society. It also helps in building the sense of cooperative and supportive action for solving the society’s problem for the collective benefit of all the society. This objective is achieved by a common and local property prospect of the society. Moreover, it helps in the reduction of the inaccurate and imperfect information by expanding the enforcement tools range. It in turn facilitates more output transactions, wider labor market, land and credit.

Furthermore, it enhances the safety programs such as insurance and other programs for the households and ensures greater return to the households that in turn helps to increase the market activities which include better production, more output and better techniques for further improvements. Moreover it also helps supporting people by preparing them socially. In order to socially prepare the individuals information is gathered regarding their resources and circumstances, situation is analyzed.

Moreover, actions are prioritized to work on their desired actions; a group is organized according to their wish and preference. Then collective work and effort is ensured for implementing the actions (Albee & Boyd, 1997). The major benefit of social capital is its help for eradication of poverty. Methodologies Developed for Measurement of Social Capital. The World Bank has developed two tools for the measurement of the social capital. The Social Capital Assessment Tool (SOCAT) The Social Capital Integrated Questionnaire (SCIQ).

The Social Capital Assessment Tool is a versatile instrument for the collection of data regarding household, organization and community social capital. It is however an integrated qualitative as well as quantitative tool. This method enables to get detailed and elaborated information about the cognitive and structural social capital that is collected from the household (The World Bank, 2011). This in turn plays an important role for using the information to reduce poverty and increase the outcomes of the household and social welfare.

The Social Capital Integrated Questionnaire is designed especially for the developing countries.

Read More