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Development Projects and Economic Networks: Lessons from Rural Gambia

Author

Listed:
  • Simon Heß
  • Dany Jaimovich
  • Matthias Schündeln

Abstract

This article 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 transfers in these networks in treatment villages. Guided by a theoretical framework, we investigate several possible mechanisms and find evidence that is consistent with two channels. First, the evidence points to modest wealth effects and a village-level transformation process towards a more formal economy. Second, we also find evidence that is consistent with elite capture, favouritism, 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.

Suggested Citation

  • Simon Heß & Dany Jaimovich & Matthias Schündeln, 2021. "Development Projects and Economic Networks: Lessons from Rural Gambia," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 88(3), pages 1347-1384.
    • Handle: RePEc:oup:restud:v:88:y:2021:i:3:p:1347-1384.
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    File URL: http://hdl.handle.net/10.1093/restud/rdaa033
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    Citations

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    Cited by:

    1. Petr Matous, 2023. "Male and stale? Questioning the role of “opinion leaders” in agricultural programs," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 40(3), pages 1205-1220, September.
    2. Kensuke Sakamoto & Yuya Shimizu, 2025. "Design-Based and Network Sampling-Based Uncertainties in Network Experiments," Papers 2506.22989, arXiv.org, revised Sep 2025.
    3. Belard, Amandine & Farolfi, Stefano & Jourdain, Damien & Manyanga, Mark & Pedzisa, Tarisayi & Willinger, Marc, 2025. "They know each other, but do they trust each other? Social capital and selected beneficiaries of community-based development projects: A lab-in-the-field in rural Zimbabwe," World Development Perspectives, Elsevier, vol. 40(C).
    4. Walter Sosa-Escudero & Maria Victoria Anauati & Wendy Brau, 2022. "Poverty, Inequality and Development Studies with Machine Learning," Advanced Studies in Theoretical and Applied Econometrics, in: Felix Chan & László Mátyás (ed.), Econometrics with Machine Learning, chapter 0, pages 291-335, Springer.
    5. Lnu,Anukriti & Herrera-Almanza,Catalina & Karra,Mahesh Venkat, 2022. "Bring a Friend : Strengthening Women’s Social Networks and Reproductive Autonomy in India," Policy Research Working Paper Series 10107, The World Bank.
    6. Andre Groeger & Yanos Zylberberg, 2026. "The Pick of the Crop: Agricultural Practices and Clustered Networks in Village Economies," Journal of the European Economic Association, European Economic Association, vol. 24(1), pages 271-310.
    7. Murphy, David M.A., 2023. "Sobriety, social capital, and village network structures," World Development, Elsevier, vol. 166(C).
    8. Attanasio, Orazio & Meghir, Costas & Mommaerts, Corina & Zheng, Yu, 2025. "Growing apart: Declining within- and across-locality insurance in rural China," Journal of Development Economics, Elsevier, vol. 172(C).
    9. Michael Callen & Jonathan L. Weigel & Noam Yuchtman, 2024. "Experiments About Institutions," Annual Review of Economics, Annual Reviews, vol. 16(1), pages 105-131, August.
    10. Barsbai, Toman & Licuanan, Victoria & Steinmayr, Andreas & Tiongson, Erwin & Yang, Dean, 2024. "Information and immigrant settlement," Journal of Development Economics, Elsevier, vol. 170(C).

    More about this item

    Keywords

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    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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