Social Capital and Poverty Nexus: Capital (De) Formation through Occupation-Based Informal Associations in Bangladesh

Abstract

Social capital and poverty are inversely linked. Social capital improves income of the people by disseminating appropriate information, reducing opportunistic behavior and making collective decision. The underlying factors of the relationship between the two concepts vary. We neither know whether social capital affects poverty in the context of Bangladesh, nor do we know what factors produce outcomes in making the relationship between the two concepts. The question which I broadly address in this dissertation is: whether any nexus exists between social capital and poverty through capital (de) formation, and what factors make the nexus possible. By surveying the occupation-based informal associations (OIAs) in Bangladesh, I argue that social capital and poverty is inversely linked. Participation, empowerment and collective action are the three factors, which formulate this relationship by augmenting the two specific outcomes—capability and capital. I examine capability in terms of raising voice, enhancing power, learning about the rights and meeting the emergency needs and capital i.e. physical, human and social. Focusing on participation in OIAs, I explore that taking part in group formation, group activities actively, problem analysis, conflict resolution procedure, and benefit distribution generate the outcomes significantly. Regarding empowerment, I claim that sharing benefit, accountability and collective decision play most influential role in poverty reduction. It is explicit that the poor have no access to the resources and services due to lacking of information and bridging network. The OIAs are the sources of collective action. The success of it depends on previous experience, and upon the resource accumulation and conflict resolution mechanisms. The poor fail to bridge their network collectively with other institutions due to lack of money, time and access. Hence, I argue that the higher the stock of social capital the lower is the amount of poverty. As the flow and stock of social capital depend on the participation, empowerment and collective action, the poor can reduce their poverty by strengthening social capital. The poor fail to gain more by using social capital because of having no involvement in community activities, access to the services or opportunities and engagement in bridging network. This dissertation adds that social capital can work fruitfully in reducing poverty when the three factors i.e., participation, empowerment, and collective action act jointly. Poverty at both individual and national level might be alleviated by increasing the stock of social capital of the poor, and by incorporating the social capital-poverty nexus in poverty reduction policies.