Social networks near and far: The role of bonding and bridging social capital for assets of the rural poor

With formal insurance and credit markets either absent or inaccessible to rural agents in most poor rural economies, social networks play a highly important role in mitigating the risks that agricultural households face. These kinds of informal insurance schemes are presumed to be most effective in the face of idiosyncratic risk. However, social mechanisms also exist in developing countries that may reduce locally correlated risk such as the adverse economic effects of climatic conditions that affect multiple residents in a village. This paper analyzes the role of localized (bonding) and of spatially dispersed (bridging) social capital in mitigating the impact of idiosyncratic and of locally correlated shocks on farm households’ livestock endowments. Using dynamic panel generalized method of moments (GMM) system estimation with seven‐period panel dataset of over 400 households, we find that bonding social capital is able to protect households’ livestock assets against idiosyncratic shocks, but bridging social capital does not play a role in mitigating the impact of correlated shocks. The results hold up to multiple robustness checks. A test of different hypotheses about the nature of these assets’ trajectories rejects the asset poverty trap hypothesis, and instead finds that livestock asset dynamics are characterized by a single stable equilibrium.     

The Political Economy of Public Expenditures in Agriculture: Applications of Concepts to Mozambique

This paper undertakes an investigation of agricultural public investments in Mozambique, drawing on insights from qualitative field interviews conducted in Mozambique, secondary data analysis and examination of the existing empirical literature, and by situating these insights within a political economy conceptual framework. We explore the driving factors behind the amount and allocation of public funds to agriculture, and behind the differential attention that various types of public investments receive in the process of making decisions on resource allocation. Agricultural public investments are more likely to be made that have two key features: higher attributability to politicians and donors of the output of public spending, and a shorter lag time between expenditures incurred and outputs produced. Evidence on geographical targeting of agricultural public funds corresponds more closely with theories suggesting that resources are used to sway communities opposed to the ruling party, rather than to reward political supporters. Examination of the effect of actors' and organisations' incentives and constraints on resource allocation in agriculture points to the importance of not treating “government,” “the ruling party” and other institutions as monolithic bodies; the paper instead highlights how differentiated interests within seemingly coherent institutions drive what gets public expenditure attention in the agricultural sector.