The purpose of this commentary is threefold. First, to review the origins
and definitions of the concept of social capital as it has developed in the
recent literature. Second, to examine the limitations of this concept when
interpreted as a causal force able to transform communities and nations.
Third, to present several relevant examples from the recent empirical
literature on Latin American urbanisation and migration. These examples
point to the significance of social networks and community monitoring in
the viability of grass-roots economic initiatives and the simultaneous
difficulty of institutionalising such forces.
Current interest in the concept of social capital in the field of national
development stems from the limitations of an exclusively economic
approach toward the achievement of the basic developmental goals:
sustained growth, equity, and democracy. The record of application of
neoliberal adjustment policies in less developed nations is decidedly
mixed, even when evaluated by strict economic criteria. Orthodox
adjustment policies have led to low inflation and sustained growth in some
countries, while in others they have failed spectacularly, leading to
currency crises, devaluations, and political instability. The ‘one-size-fits-
all’ package of economic policies foisted by the International Monetary
Fund and the US Treasury on countries at very different levels of
development have led to a series of contradictory outcomes that orthodox
economic theory itself is incapable of explaining.