Economic development and the decline of rural and urban community-based networks

This paper studies how traditional networks in rural and urban India have responded to economic development. In rural areas, the impact of the Green Revolution on within-network inequality has resulted in defection by the wealthiest members of caste-based social insurance networks. In Bombay, the most able members of the caste-based labour market networks are exiting from the traditional occupations to participate in new occupations in which individual rather than group ability is rewarded. In both cases, the weakest members of the community are left in networks that now have lowered capacity to provide services. Copyright (c) The European Bank for Reconstruction and Development, 2005.