Social Capital and Development: The Coming Agenda

Social Capital and Development: The Coming Agenda

Francis Fukuyama

Social capital known generally as "social classses" is important in the transition of democratic countries.These include the incorporation of cultural factors affecting economic growth and development models. In 1990's there was an emergence of the concept of academic interest. An approach called "Washington consensus"-a form of baseline of directions for nations that are in need of provision to political, institutional, and cultural conditions for liberalization- was created and adapted by Eastern Europe, Latin America, Asia and other developing countries. It was considered as a dominant apporach for development.However, it has seen limited results as it has been applied in various countries suffering economic crises. As Fukuyama said, its failure was of ommision rather than of policy. One concept that is lacking was the understanding of the roles of values and norms of society and how it affects the economic system or more commonly known as the assessment of social capital.

Culture, institutions and democracy are important in building social capital. Cultural factors have an important role for its development, however because of its complexity (having different cultural views), it is critical to identify its distinct role for the growth of societal classes. Most economists argue thatinstitutions have more important role in building social capital. However, not all countries have the ability to provide quality institutions-like Japan's Ministry of International Trade of the Economic Planning Bureau of Korea -because of its differences in institutional efficiency, transparency and professionalism. Societies in which people are adapted with cooperation and who are working in large organizations are much more likely to develop strongly and efficiently. Social capital also supports democracy. It allows individuals to form groups to preserve their securities and form support mutual needs. Stronger and well united democracies have better stances in challenges for progress. It affects people's potential foe economic administration.

One problem of social capital according to Fukuyama is its vague definition. Because it is shaped by social norms or values that promote the cooperation of people, there are different cultural approaches to it. However, not all cultural approach to social capital is efficient. In the case of Latin America, nepotism is prevalent; therefore there are weaknesses that are associated with their economic development. The issue of trust is also a factor for their growth, where they run a "no relative policy" in business management. Because of these actions, they have limited bureaucratic systems resulting to slow expansion of businesses. They also have weaknesses for allocation of resources and the beliefe of having