Local institutions, poverty and household welfare in Bolivia

This paper combines quantitative and qualitative data to estimate empirically the impact of social capital on household welfare in Bolivia. Social capital measured by memberships in agrarian syndicates and other associations is found to increase household welfare and reduce poverty. As an asset, social capital matters more for the poor than the nonpoor and has greater effect on household welfare than investment in primary education. The paper elaborates on the relation of complementarity and substitution between informal and formal institutions. The relationship between social capital and welfare is modified by the nature and presence of regional organizations that have federated upward from communities. (C) 2004 Elsevier Ltd. All rights reserved.