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Did Industrialization Destroy Social Capital in Indonesia?

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  • Miguel, Edward A.
  • Gertler, Paul
  • Levine, David I.

Abstract

This paper examines the effect of industrialization on social capital in Indonesia during 1985 to 1997 using repeated cross-sections of nationally representative surveys. We analyze a rich set of social capital measures including multiple measures of voluntary associational activity, levels of trust and informal cooperation, and family outcomes. There are three main findings. First, districts that experienced rapid industrialization showed significant increases in most social capital measures. Second, districts that neighbor rapidly industrializing areas exhibited high rates of out-migration, significantly fewer community credit cooperatives, and a reduction in "mutual cooperation" as assessed by village elders. Finally, initial social capital in a district did not predict subsequent industrial development. We present a model of social capital investment and migration consistent with these patterns. The empirical findings challenge existing results in the social capital literature, and may have implications for social instability in Indonesia since 1997.

Suggested Citation

  • Miguel, Edward A. & Gertler, Paul & Levine, David I., 2003. "Did Industrialization Destroy Social Capital in Indonesia?," Center for International and Development Economics Research, Working Paper Series qt9kt2m860, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
  • Handle: RePEc:cdl:ciders:qt9kt2m860
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    Cited by:

    1. Nguyen, Tu Chi & Rieger, Matthias, 2017. "Community-Driven Development and Social Capital: Evidence from Morocco," World Development, Elsevier, vol. 91(C), pages 28-52.
    2. Duflo, Esther, 2004. "The medium run effects of educational expansion: evidence from a large school construction program in Indonesia," Journal of Development Economics, Elsevier, vol. 74(1), pages 163-197, June.
    3. Keefer, Philip & Knack, Stephen, 2003. "Social capital, social norms and the New Institutional Economics," MPRA Paper 25025, University Library of Munich, Germany, revised 2004.
    4. Guido Tabellini, 2008. "The Scope of Cooperation: Values and Incentives," The Quarterly Journal of Economics, Oxford University Press, vol. 123(3), pages 905-950.
    5. Munasib, Abdul B.A. & Jordan, Jeffrey L., 2006. "Are Friendly Farmers Environmentally Friendly? Environmental Awareness as a Social Capital Outcome," 2006 Annual Meeting, February 5-8, 2006, Orlando, Florida 35281, Southern Agricultural Economics Association.
    6. Maya Federman & David I. Levine, 2005. "Industrialization and Infant Mortality," Development and Comp Systems 0504008, University Library of Munich, Germany.
    7. Federman, Maya & Levine, David I., 2003. "Does Industrialization = "Development"? The Effects of Industrialization on School Enrollment and Youth Employment in Indonesia," Center for International and Development Economics Research, Working Paper Series qt3t10238h, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
    8. Stefano Bartolini & Luigi Bonatti, 2006. "How Can the Decline in Social Capital be Reconciled with a Satisfactory Growth Performance?," Department of Economics University of Siena 477, Department of Economics, University of Siena.
    9. Barron, Patrick & Kaiser, Kai & Pradhan, Menno, 2009. "Understanding Variations in Local Conflict: Evidence and Implications from Indonesia," World Development, Elsevier, vol. 37(3), pages 698-713, March.
    10. Leonard, Tammy & Croson, Rachel T.A. & de Oliveira, Angela C.M., 2010. "Social capital and public goods," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(4), pages 474-481, August.
    11. Barron, Patrick & Kaiser, Kai & Pradhan, Menno, 2004. "Local conflict in Indonesia : Measuring incidence and identifying patterns," Policy Research Working Paper Series 3384, The World Bank.
    12. Baliamoune-Lutz, Mina & Lutz, Stefan H., 2004. "The contribution of income, social capital, and institutions to human well-being in Africa," ZEI Working Papers B 07-2004, University of Bonn, ZEI - Center for European Integration Studies.

    More about this item

    Keywords

    Social capital; industrialization; Indonesia; community groups; civic participation; migration;

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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