Community networks and poverty reduction programmes: evidence from Bangladesh

Whether basic entrepreneurship can be inculcated amongst the poorest in society and serve as a route out of poverty remains an open question. We provide evidence on this issue by looking at the effects of a large-scale asset transfer and training programme which is targeted at the poorest women in rural Bangladesh. We use a randomized control trial research design, and survey all households in the community. This allows us to map the full social network of the beneficiaries, on multiple dimensions of interaction. We find that beneficiaries' wealth levels and occupational structure converge to that of lower-middle class households. Beneficiaries use their newly found wealth to purchase household durables, and improve their human capital, as measured by business skills and their health status. We find the programme affects the composition of beneficiary households' networks: they form ties to wealthier residents after the programme. The programme also affects outcomes among social network members, but has no effect on households that are not socially connected to beneficiaries. Our findings suggest that such programs have effects beyond beneficiary households, and that the network structures and outcomes in targeted communities are transformed by them.