Can Good Projects Succeed in Bad Communities?

Date Published:

Dec 1, 2007

Abstract:

The lack of "social capital" is increasingly forwarded as an explanation for why communities perform poorly. Yet, to what extent can these community-specific constraints be compensated? I address this question by examining determinants of collective success in a costly problem in developing economies—the upkeep of local public goods. One difficulty is obtaining reliable outcome measures for comparable collective tasks across well-defined communities. In order to resolve this I conduct detailed surveys of community-maintained infrastructure projects in Northern Pakistan. The findings show that while community-specific constraints do matter, they can be compensated by better project design. Inequality, social fragmentation, and lack of leadership in the community do have adverse consequences but these can be overcome by changes in project complexity, community participation and return distribution. Moreover, the evidence suggests that better design matters even more for communities with poorer attributes. Using community fixed effects and instrumental variables offers a significant improvement in empirical identification over previous studies. These results offer evidence that appropriate design can enable projects to succeed even in “bad” communities.

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