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Summer 2018
ISSN 0890-913X
Volume 33, Number 2

The Perils of Buying Social Capital Locally

Ryan H. Murphy, Southern Methodist University
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/index.php?action=ajax&rs=GDMgetPage&rsargs[]=2018 Journal of Private Enterprise Vol 33 No 2 Summer parte5.pdf&rsargs[]=0
TheJournalofPrivateEnterprise33(2),2018,6781ThePerilsofBuyingSocialCapitalLocallyRyanH.MurphySouthernMethodistUniversity______________________________________________________AbstractAmongtheargumentsputforwardbyproponentsofbuyinglocalisthatitfacilitatestheaccumulationofsocialcapital.However,someresearchhassuggestedthatsocialcapitalmaynotalwaysconfereconomicbenefits.Bythis,Imeanthattoomuchsocialcapitalmayleadtoadverseoutcomesintermsofeconomicefficiencyandthequalityofthesupportinginstitutionalenvironment.Thispaperexplorespotentiallyproblematicaspectsofsocialcapital,especiallyastheypertaintothebuylocalmovement.______________________________________________________JELCodes:R11,Z10Keywords:buylocal,socialcapital,informalinstitutions,trustI.IntroductionAdvocatesofbuyinglocalarguethatdoingsoisbeneficialforinstrumentalreasons.First,forwhatcanbecharacterizedasamercantilerationale,theyarguethatkeepingmoneyinthelocaleconomycanmakeeveryonericher,anargumentthatdoesnotwithstandthescrutinyofbasiceconomicanalysis(LuskandNorwood2011;Gibson2015).Advocatesalsoclaimthatbuyinglocalhasenvironmentalbenefitsviaasmallerenvironmentalfootprint,anargumentthatappearsnottobetrueempirically(McWilliams2009;Sexton2009).Thispaperexploresathirdinstrumentalreason:thatbuyinglocalcauseslocalitiestoaccumulatesocialcapital,definedasthestrengthofsocialnetworksandthenormsandtrustthatgoalongwiththem.1Itsimportance,championedifnotpioneeredbyFukuyama(1996)andPutnam(2000),istodayalmosttakenforgranted.However,recentresearch(especiallySatayanath,Voigtlaender,andVoth2017andAcemoglu,Reed,andRobinson2014)suggeststhatindicatorsweassociatewithsocialcapitalmayoftenhavenegativeeffects.Whileacademicallythefocushasbeenonthebenefitsofsocialcapital,1Itisnoteasytoidentifyanagreed-upondefinitionofsocialcapital.SeeFukuyama(2002)andBjornskovandSonderskov(2013);cf.Woolcock(1998).
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