Networks in economic development

This chapter surveys the implications of some studies in network economics research for economic development. We focus on information flow and risk-sharing-two topics where work in theory, empirics, and policy analysis have been especially intensive and complementary. In analysing information, we distinguish models of information diffusion and aggregation, highlight how different models imply very different guidance regarding the right way to seed information. In discussing risk-sharing, we look at the key frictions that impede efficient informal insurance, and some potential unintended consequences when policymakers intervene to help. Throughout, we stress practical insights that can be used with limited measurement of the details of networks.