BROAD SOCIAL NETWORKS BOOST ECONOMIC PERFORMANCE: THE EXPERIENCE OF ETHIOPIAN FARMERS
01 Apr 2009
Farmers in Ethiopia enjoy better harvests if they have big and diverse social networks. That is the central finding of research by Pramila Krishnan and Emanuela Sciubba, published in the April 2009 issue of the Economic Journal.
Their study finds that while network membership is always a positive factor for the harvest, the most beneficial network of relationships bring together farmers of different means, abilities, health and social status.
The mesh of interpersonal and community relations that facilitate communication, information and exchange is part of what has been called ''social capital''. This is a nebulous concept and difficult to quantify but it is generally agreed that it strongly affects behaviour and individual outcomes.
In the era of virtual social networks such as Facebook or LinkedIn, there is very little doubt that network membership is generally seen as a positive ingredient for personal achievement and increased chances of success. But is personal success the result or the pre-requisite of a large social network?
In developing countries, households who are well connected are seen to do better than households who have fewer relations within the community in which they are embedded. Is this because having many connections makes a household richer, or is it because richer households will establish a larger number of connections?
And is social capital best measured through the size of the personal network, or are there other characteristics of the complex network architecture to which each household belongs that matter? Does it matter if a household belongs to a very homogeneous group, or to a heterogeneous one? Does it matter if the network to which the household partakes is clustered, so that the household''s friends are also friends with each other, or if by contrast the network is sparse but far-reaching?
The data in this study come from a household survey in rural Ethiopia, which collected detailed information on 1400 households in 15 villages in different regions of the country.
The information includes various aspects of household structure, incomes, consumption, assets and investment. It also makes it possible to map local informal networks, such as informal insurance groups (largely funeral societies, the ''iddir''), rotating savings and credit associations (''equbs''), as well as various kinds of oxen- sharing, crop sharing and labour sharing arrangements.
The researchers find that the shape of the social networks that emerge in these villages crucially depends on how similar or dissimilar households are in characteristics such as household structure, education and wealth.
Farmers who establish relationships with farmers of similar characteristics and means tend to have smaller and highly clustered networks. Farmers who establish
relationships with farmers of dissimilar characteristics tend to have larger networks, which are sparse but far-reaching.
Both the size and the shape of the social network to which each farmer belongs are important determinants of the farmer''s harvest. While network membership is always a positive factor for the level of harvest, the study finds that the most beneficial types of relationships are the heterogeneous ones, where farmers of different means, abilities, social status and state of health get together.
The researchers conclude:
''Social capital matters. But the size of its impact on output depends on the network architecture that one chooses to join.''
''Links and Architecture in Village Networks'' by Pramila Krishnan and Emanuela Sciubba is published in the April 2009 issue of the Economic Journal.
University of Cambridge | 01223-335236 | Pramila.Krishnan@econ.cam.ac.uk
Birkbeck College, University of London. | 020 7631 6450 | firstname.lastname@example.org