Question

How does social capital affect local economic development? What are the micro and macro forces the affect the relationship between social capital and local economic development?

Answer 1

Social capital is defined as"the information, trust ,and norms of reciprocity inherent in one's social net works."Local economic development is the process of getting together of local government, businesses and civil society groups to increase income sustainability and the lives of the people concerned.Strong social networks improves job prospects,fosters entrepreneurial activity,leads to development of human capital and social capital also has a significant influence on household income. A community recovers from economic decline  because of social capital.

The effects of social capital on economic development are immense .Social capital affects job and income creation. Macro social capital features organizational integrity ie competance and capability of the local government and  helps in building ties and in overcoming conventional or narrow minded interests.This encourages good governance which is a necessary condition for long term development.Thus, communities which have effectual  administrative systems will be able to deliver better public services and promote  trust in  government .Micro social capital includes integration ie intracommunity ties and extra community networks ie autonomy.Both will improve local economic development.Thus at the micro level this leads to accessibility to necessary economic resources that are needed by individuals for local economic development. Economic actors get encouragement to move away from primary community interest and build a connection with outside  groups which   ensures that economic resources are not drained by the original community.Extra community network provide new ideas that can incresae development.