CHAPTER 2: LITERATURE REVIEW
The contradictory nature of socio-economic relations of the past that is characterised by uneven distribution of wealth among countries, individuals and groups has made some countries advance and others to remain poor. The reality is that approximately 20 percent of the population controls 80 percent of the world’s wealth (Rist, 2008). Moreover, unfair distribution of resources, together with natural and man-made catastrophes, has left millions of people in a deprivation trap. As various authors, for instance, Stewart (1997); De Beer and Swanepoel (1998); Haynes (2008); Graaff and Venter (2001), Romm (2001); Servaes and Verschooten (2008) argue that this is mainly the effect of the past 60 years of development that has left a traumatic memory and created harm to the environment in the form of pollution and drought. Furthermore, the Western-engineered conventional development theories, including modernisation and dependency, as well as Marxism, did not add much value to the poor and marginalised population of the developing world; rather, their application resulted in inequality, ecological imbalance, environmental deterioration, massive poverty and hunger (Melkote & Steeves, 2001:156). Relatively little attention was paid to the extent and quality of institutional infrastructure and social capital, which is widely accepted today as the main determinants of the success by which developing countries can create and effectively deploy resources and capabilities, and gain access to markets, which are critical for their development (Hittne, 1995:99).
In this regard, Peet and Hartwick (2009:21) posit that the conventional theories accept the existing basic capitalist structure as the best kind of society, essentially unchangeable, as the only kind of society that can persist. These theories emphasise economic growth over development as the only means to increase human wellbeing. Furthermore, these theories accept the notion that accumulation of wealth by a few would stimulate entrepreneurship and innovation (Melkote & Steeves, 2001:34; Rist, 2008:45; Haynes, 2001:23). Until the 1990s the major theories of development held rather narrow, even contradictory, views of the role of social relations in economic development, and offered little by way of constructive policy recommendation. In the1950s, for example, modernisation theory regarded traditional social relationships and ways of life as an impediment to development. The social characteristics of poor countries and communities were defined almost exclusively in terms of their relations to the means of production, and the inherent antipathy between the interests of capital and labour (Woolcock & Narayan, 2000:4; Woolcock, 2000:18; Lin, 2002 & Treurnicht, 1997:23).
The centrally-planned development approaches of the past did not work as expected. Attempts by national governments to modernise “traditional” rural populations, with the assistance of international organisations and experts, led to thousands of projects and piles of technical reports but little in the way of tangible achievements. The provision and maintenance of programmes were often top-down. Once completed, projects were rarely sustainable by the communities themselves and such dependency has reduced empowerment (Mehchy & Kabbani, 2007:4).
As mentioned above, such a development effort leads towards socio-economic inequality and widens the gap between the rich and poor. This has been severe in many developing countries, Ethiopia in particular, where the level of poverty and ill-being apparently has been very high (Gobezie, 2007) and about 44 percent of its population earns less than two USD per day (World Bank, 2009). Moreover, in Ethiopia factors such as drought, environmental degradation, and political instability have worsened the situation even more than the past development experience by hampering development in general and sustainable development in particular. All these are found to have aggravated human suffering and left the livelihoods of people unsustainable. The end result is Ethiopia’s permit position as a one of the least developed countries in the world.
The past several years of development experience, a modernisation approach in particular has increased disparities among humanities in the Third World and has lead to a search for an alternative. The alternative approach is inclusive in that it encourages popular participation, grassroots initiation, indigenous and acquired knowledge-based collective thinking and personal action. More specifically, the search is for a new model that includes social capital-based socio-economic entrepreneurship and livelihood diversification that encourages system interdependence and cooperation with all development actors (World Bank, 2002).
The inclusive approach to sustainable development begins with existing locally-and culturally-based knowledge (Coetzee, 2001; Hesse & Wissink, 2004:49). This requires encouraging participation and self-reliance on the part of those people who are supposed to harvest the benefits of development. In this connection, social capital is a necessary ingredient for sustainable development to take place. Sustainability presupposes use of renewable and non-renewable resources with causation and care beyond the current generation and leaves more opportunity for the future generations. It is unthinkable to ensure sustainable livelihoods without sustainable development. In this regard, social capital plays a socio-economic role in community empowerment by fostering social and cultural coherence of society, the norms and values that govern interactions among people and initiate social capital- based microcredit formation for rural entrepreneurship to diversify rural livelihoods.
This chapter discusses the various theoretical concepts related to the proposed research objectives and questions. Accordingly, the first section discusses the theoretical aspects of social capital including, structural and cognitive forms of social capital, as well as its bonding and bridging nature (Uphoff, 1999:2; Grootaert & Van Bastelaer, 2002).
The second section discusses community empowerment in terms of people’s capacity building, enhancing their capabilities to do something better. Exercising their own capabilities through participation, and organising themselves in their own initiatives are considered as one form of empowerment.
The third section describes and explains entrepreneurship in general and emerging social entrepreneurship, in particular. Here the emphasis is on the social dimension of entrepreneurship in which social activists, business people, academics, and those involved in government and NGOs play a role in promoting social entrepreneurship to improve livelihood.
The last section defines and explains concepts of sustainable development and sustainable livelihood. Since the two are two sides of the same coin, this section elaborates on managing and utilising resources in a manner that does not compromise the future generation, but argues that in a situation where poverty is persistent, achieving this goal is unlikely. Thus, this section will emphasise the need for a proper economic value on biodiversity and adopting a nature-friendly socio-economic development approach.
The term social capital entails multiple concepts and varies in definition. Nevertheless, for the sake of this study, the review of social capital will focus on the major definitions, categories, characteristics, values, limitations; and then social capital in Ethiopia with particular focus on the social capital-based community organisations and their contribution to socio-economic welfare.
Putnam (1993:177) defines social capital as norms of generalised reciprocity, networks of civic engagement, social trust to reduce defects and uncertainty, and provide models for further cooperation of the society. Putnam’s treatise on social capital argues about the significance of social capital and the quality of civic life in the cultivation of a democratic society. He draws the conclusion from his study of an Italian society that the norms and networks of civic engagement powerfully affect the performance of representative government. Later, he turns his attention to social capital in the United States in his article Bowling Alone, delineating the declining trend of civic engagement and social connectedness among the people of the United States. The rationale behind the diminishing of social capital in the United States include the movement of women into the labour force, increased weekly working hours, mobility of people and other demographic transformations among others (Putnam, 1995).
In his later writings, Putnam discusses social capital as connections among individuals – social networks and the norms of reciprocity and trustworthiness that arise and compares it with human capital; he argues that physical capital refers to objects and human capital indicates property of individuals. Social capital is closely related to civic virtue which is most powerful when embedded in networks and social relations (Putnam, 2000). However, Putnam’s analysis does not indicate how social relations and networks can enhance the livelihood of the poor in developing counties.
The World Bank (1999 and 2000) defines social capital as institutions, relationships and norms that shape the quality and quantity of a society’s social interactions. In this regard, institutional social capital is vital for community networks and civil society, and it is largely the product of the political, legal and institutional environment. Senanayake (2006:87) and Warren (1999) define social capital as indigenous and local knowledge, the poor’s main asset that can be invested in survival, to produce food, to provide shelter and to achieve a degree of control over their own lives. It is a unique form of people-generated knowledge rooted in a particular place and set of experiences. Social capital has different categories and multiple entities.
Categories of Social Capital
According to Coleman (1988:110), Woolcock and Narayan (2000:7) divide social capital into two categories, i.e. bonding and bridging social capital. Bonding social capital has to do with relations between family members, close friends, and neighbours. Bonding social capital indicates a horizontal dimension and it has a strong tie or intra-community bonding that gives family and community a sense of identity and common purpose. Bridging social capital is concerned more with distant friends, associates, and colleagues. Bridging social capital indicates a vertical dimension and a weak tie or inter-community bridging social capital that crosses various social divides, those based on religion, class, ethnicity gender and socio-economic status.
Different combinations of bonding, bridging, and linking social capital are responsible for the range of outcomes and for incorporating a dynamic component in which optimal combinations change over time. These distinctions have particular significance for understanding the plight of the poor, who typically have a close-knit and intensive stock of bonding social capital. In this connection, social capital is a set of social relations that enables actors to gain, maintain or expand access to economic resources that can lead to increased productivity (Woolcock, 2000 & Van Bastelaer, 2002:4).
Coleman (1988:98) argues that social capital does not exhibit a single entity, but a variety of different entities, with two elements in common: they all consist of some aspect of social structure, and they facilitate certain actions of actors that can take place between actors and among actors within the given structure. Social capital of a society includes the institutions, the relationships, the attitudes and values that govern interactions among people and contribute to economic and social development (Hobbs, 2000 & Woolcock, 2000:8
Uphoff (1999:218-19); Grootaert and Van Bastelaer (2002:6) present two distinct but interrelated forms of structural and cognitive social capital. Structural social capital involves various forms of social organisation roles, rules, precedents, procedures and networks that contribute to co-operation and indicate the institutional aspect of the structure. On the other hand, cognitive social capital includes norms, values and beliefs. Norms and values along with their associated attitudes and beliefs are the mechanisms by which social capital is built up and accumulated, stored, modified, expressed and perpetuated at micro or community level (Putnam, 1993).
Larsen, Harlan, Bolin, Hacket, Hope, Kirby, Nilson, Rex and Wolf (2004), who conducted an empirical study in eight Phoenix, Arizona neighbourhoods, state that social capital is related to social status, i.e. bonding social capital is high among residents with higher levels of education, ethnic groups, migrants from similar origin and duration of stay in the specific neighbourhood. Residents who stay for long times in the neighbourhoods may introduce the new resident to others, and thus expedite the social connections that otherwise would have taken a longer time, a number of meetings and much effort to enhance bonding capital. Furthermore, they find empirical support for the notion that bonding and bridging capital are distinct constructs that have different sets of predictors. Bridging capital is required to make connections beyond the neighbourhood. The study suggests that bonding social capital must exist before bridging social capital can develop. Bridging social capital was identified as taking neighbourhood action to address environmental problem and the presence of bonding social capital is a significant predictor of taking civic action and these authors positively correlate the two forms of social capital, namely bonding and bridging social capital.
According to Van Staveren & Knorringa (2007:15), bonding and bridging social capital are not mutually exclusive. Bonding social capital generates external linkages with individual agents who can generate certain social capabilities, e.g. mutual help, trustworthiness, sociability, loyalty, responsibility and knowledge sharing. Bridging social capital builds on these social capabilities and may require the existence of bonding social capital (Wolf, 2004). Bridging social capital occurs when members of one group connect with members with other groups to seek access or support or to gain information (Larsen et al., 2004:66). Furthermore, bridging social capital enables the emergence of economic transactions between unfamiliar persons and helps to reduce the inevitable transaction costs arising from incomplete contracts and uncertainties (Glaeser, Liabson & Sacrerdote, 2000:14)
Characteristics of Social Capital
Social capital also exhibits different characteristics. Grootaert and Van Bastelaer (2002) explain that social capital, like physical capital, accumulates as a stock that produces a stream of benefits, particularly in the form of information sharing, collective decision making and action. Like physical capital, social capital requires an initial investment and regular maintenance, in the form of social interaction and trust-building behavior. Trust based social capital thus fosters collective action, outcomes and benefit sharing and social entrepreneurs tie all aspects of social capital together (Hasan, 2005). Social capital can take years to build and is more easily destroyed than built and rebuilt. Moreover, social capital exhibits several features that set it apart from physical and human capital. Firstly, and by definition, social capital, unlike human capital, cannot be built individually. Secondly, unlike physical capital (but like human capital), the stock of social capital does not decrease but can actually increase (Lin, 2002).
CHAPTER ONE: INTRODUCTION
1.1 A CONTEXUAL OVERVIEW OF ETHIOPIA
1.2 RESEARCH PROBLEM
1.3 RESEARCH OBJECTIVES
1. 4 LIMITATIONS TO AND SCOPE OF THE STUDY
1.5 IMPORTANCE OF THE STUDY
1.6 RESEARCH METHODOLOGY
1.7 RESEARCH TECHNIQUES
1.8 CLARIFICATION OF TERMS
1.9 CHAPTER LAYOUT
CHAPTER 2: LITERATURE REVIEW
2. 1 INTRODUCTION
2.2 SOCIAL CAPITAL
2.3 COMMUNITY EMPOWERMENT
2. 5 SUSTAINABLE DEVELOPMENT AND LIVELIHOODS
CHAPTER THREE: IDDIRS, SHGs AND SHDPOs
3.2 NGOs IN ETHIOPIA
3.4 SELF-HELP GROUPS (SHGs)
CHAPTER FOUR: RESEARCH FINDINGS ON IDDIRS
4.2 DEMOGRAPHIC FEATURES OF RESPONDENTS
4.3 ELEMENTS OF IDDIRs
4.4 GENDER EQUITY
4.5 THE IDDIRS BYLAWS AND LEVEL OF AWARENESS
4.6 SOCIAL CAPITAL
4.7 EXTERNAL LINKAGES
4.8 POVERTY STATUS
4.9 SOCIO-ECONOMIC EMPOWERMENT
4. 11 CONCLUSIONS
CHAPTER FIVE: RESEARCH FINDINGS ON SHGs
5.2 DEMOGRAPHIC FEATURES OF SHG RESPONDENTS
5.3 ELEMENTS OF SHGs
5.4 GENDER EQUITY
5.5 THE SHGs BYLAWS AND LEVEL OF AWARENESS
5. 6 SOCIAL CAPITAL
5.7 EXTERNAL LINKAGES
5.8 THE SHGs RESPONDENTS’ POVERTY STATUS
5.9 SOCIO-ECONOMIC EMPOWERMENT
5.10 SHG SUSTAINABILITY
CHAPTER SIX: COMPARATIVE ANALYSIS OF KEY FINDINGS ON IDDIRS ANDSHGs
6.2 LEVEL OF EDUCTION
6.3 THE CORRELATION BETWEEN SOCIAL CAPITAL AND EMPOWERMENT
6.4 THE CO-RELATIONSHIP BETWEEN EMPOWERMENT, ENTREPRENUERSHIP AND SUSTAINABLE LIVELIHOODS
CHAPTER SEVEN: DISCUSSION, CONCLUSION AND RECOMMENDATIONS
7.2 THE EFFECT OF SOCIAL CAPITAL ON EMPOWERMENT
7.3 THE PLACE OF SOCIAL CAPITAL IN RURAL ENTREPRENEURSHIP
7.4 THE ROLE OF THE IDDIRS AND SHGs IN SUSTAINABLE LIVELIHOODS
7. 5 POLICY REVIEW IN RELATION TO IDDRS AND SHGs
7.6 CONCLUSION AND RECOMMENDATIONS
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