I would like to think that in development we are witnessing a context shift, a change in institutional frameworks that has been facilitated both by new technologies and innovative new organizations. This transition is being realized through individualized, cogent approaches that, ultimately, enable human interaction. As development organizations alter their strategies, and utilize new technologies, how will this transition alter the dominant institutions, and the institutional framework through which development has occurred?
The use of technology within development organizations emphasizes two keys to successful development: bridging boundaries and reducing transaction costs. While individual entrepreneurs such as Greg Mortensen (yes, controversially) have illustrated how these concepts can be used for success, ultimately, it us up to organizations, and a building of social capital through which these ideas will be realized. As Narayan, in Bonds and Bridges notes, “cross-cutting ties between groups open up economic opportunities to those belonging to less powerful or excluded groups” (Narayan, 1). By identifying the marginalized, organizations can work to build social capital and create ties. An important point North makes to distinguish institutions from organizations is that: “institutions, together with the standard constraints of economic theory, determine the opportunities in a society. Organizations are created to take advantage of those opportunities, and, as the organizations evolve, they alter the institutions” (North, 7).
One of these such organizations that helps structure
interactions out of the context of the institution is Kiva.org. By enabling individuals to effectively deal one on one with loan recipients, that middle men and barriers of the institution have been broken down. Will the popularity of organizations such as this alter the institutional framework in which development occurs and strategies are created? Through the prominence of transnational activists who navigate systems, and organizations that bridge boundaries, there is a reduction in transaction costs. Defined by North as such, “transaction costs are the most observable dimension of the institutional framework that underlies the constraints in exchange” (68). For Kiva, the reduction in transaction costs is facilitated by technology, and leads to greater human interaction, and the building of social capital transnationally.
Another use of innovative technology with an organization, is the Urgent Evoke online interactive game designed by Jane McGonigal and initiated by the World Bank, with the tag line “A Crash Course in Changing the World”. It was designed to engage South African youths with the World Bank’s message and goals. After playing the ten week course on line, the winners were brought together by the World Bank for a workshop here in Washington DC. This event strongly situated the World Bank among followers of the game as an innovative organization. From this example we witness a bridging of boundaries, establishment of cross-cultural ties, and new technologies in practice. What is now the challenge, is using this shared experience and mobilizing the social capital. The World Bank has continued to engage the users with both a Global Giving Challenge, and the World Banks Apps for Development Challenge.
For development, harnessing the power or social capital is important, yet I was struck by the differentiation that Putnam makes between horizontal and vertical networks, where he notes “a vertical network – no matter how dense and no matter how important to its participants, cannot sustain social trust and cooperation” (Putnam, 174). Kiva.org operates within the space of a horizontal network, and “the more horizontally structured an organization, the more it should foster institutional success in the broad community” (Putnam, 175). Kiva levels the playing field between donor and recipient through the structure of its organization, and by utilizing the internet. Urgent Evoke and Kiva showcase how the use of innovative technologies can build bridges, create social capital, and ultimately – one hopes – affects the institutional framework so that it can adapt and promote change.
Featured Image: Licensed by Creative Commons, flickr user missy & the universe
Douglass North (1990) Institution, Institutional Change, and Economic Performance.
Narayan, Deepa. “Bonds and Bridges: Social Capital and Poverty,” Policy Research Working Paper 2167, World Bank, August 1999.
Putnam, Robert. Making Democracy Work. “Social Capital and Institutional Success,”