Dany Jaimovich, Universidad de Talca

Sala 209

“Development Projects and Economic Networks: Lessons From Rural Gambia”

Coautoreado con Simon Heß y Matthias Schündeln

Abstract: This paper investigates the effects of development projects on economic networks. To this end, we study the impact that a randomly allocated Community-Driven Development program in The Gambia has on economic interactions within rural villages. The program provides an exogenous source of variation to village-level stocks of productive capital and to village-wide collective activities. Based on detailed data on economic and social networks, we find a significant reduction of interactions in these networks in treatment villages. We investigate several possible mechanisms and find evidence that is consistent with two channels. First, the evidence points towards a modest village-level transformation process from a gift economy to a more formal economy. Second, we also find evidence that is consistent with elite capture, favoritism, and unequally distributed benefits leading to reductions in social capital and thus economic transactions. Overall, our findings suggest changes in networks as an avenue through which development interventions may have unintended consequences.