From Economic Meltdown to Social Crunch: Lessons about Social Capital and Economic Crises

Examining the impact of the current global recession on social capital building amongst poor people in developing countries, his paper draws on the experiences of the Far East Economic Crisis in 1998 and argues that: (1) the poor depended heavily on bonding social capital during the Crisis, but the crunch-point beyond which they felt no longer able to rely on this is less certain; (2) bridging social capital could both be created and destroyed during the Crisis; (3) the impact of the Crisis affected men and women differently, but how different groups of men and women were affected by the Crisis is less clear; (4) NGOs could help build social capital with the poor, but their role could be restricted by financial difficulties. In light of the heterogeneous impact and complicated trade-offs between policies, this paper proposes five principles for policy interventions: (1) all social and economic programmes to deal with the current financial downturn should be ‘social capital- focused’; (2) local communities should have the power to decide what social capital programmes are implemented in their communities; (3) governments should make use of the food- and fuel-subsidy programmes to promote community participation; (4) targeting certain social groups to maximise the impact of social capital building is possible; (5) a better integration of quantitative and qualitative research is crucial to inform policy making.