Social Capital and Economic Development

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• Social Capital and Economic Development
• In the North East of England
• Dr. Nicholas J.O. Miles
• Miles Strategic Consulting Ltd
• Building Social Capital Beyond the Theory
• 11th July 2005
• The Glebe Centre, Murton, East Durham

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INTRODUCTION

• Presentation based on work undertaken for ONE
  by a team from
• MSC Ltd
• Durham University ICRRDS
• White Young and Green
• Focus of the work was on
• social capital and economic inclusion
• form of social capital investigated was
• that built community development programmes
  and projects
• Interpretation of economic inclusion used was
• improved employability and increased employment

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THE PROBLEMATIC

• Multiple deprivation
• Worklessness
• (nearly 1 in 5 of the working age pop claims
  benefits relating to worklessness)
• Economic exclusion
• High cost to public purse
• (5.4 billion spent in 2003 in the North
  East on unemployment and incapacity benefit,
  which is 41 of total public spend)

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WHAT LIES BENEATH THESE FIGURES?

• Old industries virtually gone
• Weak reindustrialisation
• Considerable regeneration efforts
• BUT, still areas and social groups unmoved
• Economies can change (quickly and adversely!)
• BUT NE characterised by social and cultural
  drag, and depleted communities
• Cognitive lock-in in terms of the ways in which
  people think of the labour market
• Cultural change needed - aspiration, confidence,
  social inventiveness.
• Need to build capacities and capabilities to
  revive depleted communities

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THE SOLUTION?

• Build Social Capital
• Develop individual and community based
  capacities and capabilities
• Nurture confidence, aspirations, social
  inventiveness. Raise skill levels.
• Support community development programmes and
  projects that do just that!

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IT SEEMS ATTRACTIVE ! MANY COUNTRIES ARE
EXPLORING THE POLICY IMPLICATIONS OF SOCIAL
CAPITAL

• Policy Implications discussed
• in the IRISH (May 2003) report
• Engagement of Citizens
• Facilitates self-help and self reliance
• Draws on civic energy
• Divided we fall united we stand
• Affects quality of public governance
• Strengthens community development
• Highlights importance of the local

Lead to
Specific policy recommendations
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A STEP BACK WELL, WHAT IS IT!?

• All about personal contacts
• And what those contacts can give an individual
  (and a community)
• shared norms, values and understandings
• resources such as information, trust, mutual
  support
• All this can be accumulated
• Can result in improved confidence and
  capabilities
• Is often regarded as the social glue that
  holds together an economy
• An absence of which is seen as a market failure
  characterised by a lack of collective action,
  risk sharing, innovation and entrepreneurship

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• In more formal terms of results in
• reduced transactions costs
• lower risks associated with economic behaviour
• increased likelihood of effective collective
  action
• More specifically for our project, social capital
  can lead to
• improved employability and
• Increased the likelihood of employment

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• CONTINEGENCY MATTERS!
• Different circumstances
• lead to different outcomes
• Olson effect
• Putnam effect
• Crimal gangs
• The grey economy of the NE!
• Religious affiliations and violence in NI
• For our project, key contingency
• The labour market
• Whats the point of building social
  capital if the jobs arent there?
• The return of demand management?!

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The Hypothesised Pathways From Social Capital
to Economic Inclusion
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Social Capital and Community Development
Programmes

• How is confidence built?
• How are capabilities increased?
• How are contact networks formed?
• The projects help participants move from ME to
  THEM to US
• Via this process, internalise feeling of
  confidence and social trust, and establish
  personal contacts and social networks
• That allow them to identify and (hopefully)
  subsequently access employment opportunities

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RESULTS!

• Project Descriptions - Janet Tulley this
  afternoon!
• In summary
• Confidence was built
• Employability was improved
• Some employment opportunities were accessed.
• Community based programmes do make a difference

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RESULTS!

• BUT no direct link
• Social capital does not automatically lead to
  improved employability
• Improved employability does not automatically
  lead to increased employment and economic
  inclusion
• Some perverse outcomes staying within the
  safe confines of the project

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Policy Implications

• Building Social Capital is important (inherent
  value and specific purpose)
• But it matters
• What type you build
• How you support the build and its subsequent use
• The context within which you do both
• Firstly, policy response must be co-ordinated
• Secondly, context must be considered type of
  economic development required for economic
  inclusion in the North East?
• Lastly, type of social capital to be built will
  relate to the type of economic development
  feasible in the North East

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RECOMMENDATIONS
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INFORMAL INSTIT. FRAMEWORK the context that
defines the type of social capital. Educational /
social policy important.
CIVIL SOCIETY INSTITUTIONAL FRAMEWORK
Institutions and organisations assisting those
marginalised participate (and become part of
them) and integrate (and become part of us)
e.g. Community based / voluntary organisations.
STATE INSTITUTIONAL FRAMEWORK - Institutions and
organisations assisting target groups find work
and/or establish businesses e.g. Business Links
LSC Local Authorities Job Centre Plus.
Interactions Between institutions?
Interactions Between institutions?
Different Institutions and different policy
levers applicable at different stages of the
formation and use of social capital projects
designed to increased employability and
employment rates. A key issue of that joining
up the relevant institutions and policy regimes.
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The Radical Suggestion?

• NE economic forecasts indicates continuing
  difficulties
• Indeed, not everyone can be integrated into the
  (new) formal economy
• The history and culture of the North East
  matters

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What type of Social Capital is needed for the
North East?
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The Radical Suggestion?

• So we need to think differently about employment
  alternative employment
• And we need to foster a social capital of a
  particular kind
• And we need to concentrate on programmes and
  projects that give participants access to real
  capital (micro-enterprise lending circles?)
• It may well be that social capital outcomes
  (Confidence, trust , an ability to more
  effectively manage risks and opportunities) are
  valid and important outcomes in their own right
  (and often underpin stable and socially inclusive
  communities) but in order to actively promote
  economic inclusion we may have to be more
  focused, selected and targeted

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Thank you for your attention Any questions? Dr
Nicholas J.O. Miles njomiles_at_aol.com