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Faculty of Economics

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Munshi, K.

Community networks and the process of development

Journal of Economic Perspectives

Abstract: My objective in this paper is to lay the groundwork for a new network-based theory of economic development. The first step is to establish that community-based networks are active throughout the developing world. Plenty of anecdotal and descriptive evidence supports this claim. However, showing that these networks improve the economic outcomes of their members is more of a challenge. Over the course of the paper, I will present multiple strategies that have been employed to directly or indirectly identify network effects. The second step is to look beyond a static role for community networks, one of overcoming market failures and improving the outcomes of their members in the short-run, to examine how these informal institutions can support group mobility. A voluminous literature documents the involvement of communities in internal and international migration, both historically and in the contemporary economy. As with the static analysis, the challenge here is to show statistically that community networks directly support the movement of groups of individuals. I will show how predictions from the theory can be used to infer a link between networks and migration in very different contexts.

JEL Codes: D85, R23, Z13

Author links: Kaivan Munshi  

Publisher's Link: http://dx.doi.org/10.1257/jep.28.4.49

Open Data link: https://www.aeaweb.org/jep/data/2804/28040049_data.zip



Cambridge Working Paper in Economics Version of Paper: Community Networks and the Process of Development, Munshi, K., (2015)

Papers and Publications



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Carvalho, V. M. and Grassi, B. Large Firm Dynamics and the Business Cycle American Economic Review [2019]

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