Development Projects and Economic Networks: Lessons from Rural Gambia

• Simon Heß ^[1] ; Dany Jaimovich ^[2] ; Matthias Schündeln ^[1]
  1. [1] Goethe University Frankfurt

     Goethe University Frankfurt

     Frankfurt, Alemania

     
  2. [2] Universidad de Talca

     Universidad de Talca

     Provincia de Talca, Chile

     
• Localización: Review of economic studies, ISSN 0034-6527, Vol. 88, Nº 3, 2021, págs. 1347-1384
• Idioma: inglés
• Texto completo no disponible (Saber más ...)
• Resumen

  • 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.