The Role of Community in Economic Development

Yujiro Hayami and Yoshihisa Godo

in Development Economics

Third edition

Published in print February 2005 | ISBN: 9780199272709
Published online October 2005 | e-ISBN: 9780191602870 | DOI:
 The Role of Community in Economic Development

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The community is considered the third pillar of the economic system in addition to the market and the state. The market is an organization coordinating competition among people seeking profits by impersonal means of prices, and the state intervenes in matters of resource allocations through the use of coercive power. In contrast, the community organizes collective actions based on mutual trust within a small group characterized by intensive interactions. The community's role in conserving and improving common-property resources is well known. In addition, its role in supporting market development by its power to enforce trade contracts among transacting parties belonging to the community network is emphasized. This role is especially important in the early development stage.

Keywords: common-property resources; community; community failure; community norm; contract enforcement; peasant; plantation; social capital

Chapter.  16299 words.  Illustrated.

Subjects: Economic Development and Growth

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