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Impacts of Social Capital on the Economic Development and Well-Being of Rural Areas
D. L. Debertin
Department of Agricultural Economics
Perhaps the most fundamental of all questions in rural economic development is whether development strategies that focus directly on attracting jobs to a rural area come first, or whether a rural community should instead try to take the necessary steps to make day-to-day living in the community as attractive as possible. The basic hypothesis to be tested in this project is that the presence and amount of social capital influences the course of economic development in rural areas, with particular application to economic development within rural Kentucky.
From a rural community policy perspective, the basic question this study will attempt to answer is "does social capital matter at all in influencing the course of rural economic development?" In particular, do communities that devote the greatest efforts toward making their locales nice places for people to live also improve their prospects for economic growth? If so, are there specific forms of social capital that communities should focus on as economic development strategy?
2010 Project Description
Social capital refers to the "...stocks of social trust, norms and networks that people can draw upon in order to solve common problems". These networks involve activities of "civic engagement" such as volunteerism and participation in neighborhood associations, service clubs and charitable groups.
A rapidly expanding literature exists on social capital and its importance to rural and urban areas. In both rural and urban areas, social capital refers to the institutions and mechanisms whereby residents relate to and interact with each other to solve problems for the common good. The year 2010 marked the completion of a paper on social capital that has been a continuing effort within the project over a number of years. The title of the paper was "Social Capital Formation in Rural, Suburban and Urban Communities." Social capital was defined from a number of different perspectives and then linked to the concept of a community.
Based on these definitions, a conceptual framework for analyzing and measuring social capital and its indicators was developed. A typology for analyzing social capital was then created based on different types of communities. The characteristics of three prototype communities-a small rural community, a modern city suburb, and a community located in the core of a central city are outlined. For each prototype community, social capital formation strategies and indicators suggesting evidence of social capital are identified. Implications for future research efforts dealing with social capital were discussed.
Understanding how social capital affects the lives and progress of both farm and non-farm people living in rural areas is critical in helping local farm and non-farm communities succeed and make fundamental economic progress. The social capital literature stresses the linkage between the successful use of social capital and how it influences the progress of rural regions.
During the economic crisis that began in late 2007, it is clear that rural regions of the US have fared better than most of their urban-centered counterparts. For example, the significant decline in real estate values over the period that dominated many previously rapidly growing urban areas (with previously rapidly appreciating home values) , was felt far less if at all in many if not most of the rural regions. Could it be that part of the explanation lies with the possibility that many rural areas simply work better as communities than do many of their urban counterparts function as communities? People in rural areas facing crises may tend to band together to solve common problems more effectively via social capital principles than do a lot of people living in the more nearly anonymous urban world.
In the past few years, the US has become almost two completely different worlds, with people living in many different areas observing but not being a part of the crisis played out in the media. Urban people often have acted as if they are both wealthier and smarter than people living in rural areas, which they consider to be backward. But this time, it seems reasonable to argue that rural people employing effective social capital networking are far ahead of a lot of people living in urban areas who previously thought they had huge advantages over their rural counterparts.
Debertin, David L. and Stephan J. Goetz, "Social Capital Formation in Rural, Urban and Suburban Communities" in Environmental Politics: From Sociability to Sustenance, ed Prasenjit Maiti, pp.166-195. Discovery Publishing House PVT.LTD New Delhi (India) 2010