The Boardroom C219-C220, College Building, The Burroughs, Hendon NW4 4BT
A talk by Muhammad Salman Khan, postdoctoral researcher at the Centre for Enterprise and Economic Development Research at Middlesex University. He specialises in local political economy with special focus on social capital, local governance and informal economy in Pakistan and in South Asia.
ABSTRACT: A dominant argument in the literature on the link between governance, social capital and corruption is that social capital or levels of trust facilitate corruption that influence governance institutions and their performance but not the other way around. The present paper empirically explores this link and argues that institutional fragility is also an important determinant of the ‘dark side of social capital’ in promoting corruption that in turn feeds into the fragility of formal institutions.
More specifically, the paper asks: what role does social capital plays in promoting corruption and how this operation of social capital impact upon the operation of local governance institutions? These questions are explored through a qualitative case-study of the implementation of regulations related to price, health, and quality standards in Batkhela bazaar within the district Malakand of Pakistan. The paper confirms Uslaner’s inequality trap thesis especially the role of economic inequality as determinant of the role of social capital in promoting corruption. However, it was also found that social capital stabilizes economic relations in the contexts characterised by ineffective formal institutions. In addition to this positive role, social capital is a major hurdle in the implementation of regulations.