Social Capital And Rural Economic Development In Ethiopia: The Case Of Jeldu District, West Shewa Zone, Oromia Region

Abstract

The existence of social capital is very important for economic growth and rural development. The overall objective of this study was to look at the relationship between social capital stock and rural economic development in Jeldu District, west shoa zone, Oromia Region. To address the objective of the study, the research employed mixed research approaches which address the combined use of quantitative and qualitative methods and Data were collected at two levels: household and sub-location and 120 respondent household heads were selected. The data were collected using interview schedule; focus group discussion and key informant interview; and analyzed using descriptive statistics (mean, standard deviation and percentages) and narration. Parametric and non-parametric methods were employed in quantitative analysis. Initially, weighted answers to certain questions were used to generate non-parametric indices for social capital and rural economic development results. The ordinary least squares approach was then used to analyze the data. The determinants of social capital were analyzed using a linear regression model, and the links between social capital and the three sub-outcomes of economic development, as well as the overall outcome of economic development, were examined using long linear regression models. The results show that household social capital was determined by ethnocentrism (clannishness), witchcraft beliefs, sub-location social capital, social interaction and community group activity. Positive elasticity’s with regard to household social capital were produced by the household economic development process’s individual outputs as well as its overall result. This implies that social capital was an important input in the rural economic development process. The link between social capital indicators and economic development is also limited, with all indicators impacting labor productivity and, in turn, affecting economic development. Therefore, public policy must be directed towards improving social capital through cooperation, trust, and shared mission, as well as human capital to enhance its quality, and to grow per capita output and consumption. The study concludes that critical research is needed to investigate the impact of neglecting social capital on economic development in Ethiopia.