Introduction

Social capital cannot be adequately understood without also analysing institutions. Mainstream institutional thinking, as I noted in chapter 1, is predominantly based on the economic model of institutions. Neo-institutional economists argue that the success of contractual relations lies in robust institutional designs, and that social relations and organisations are regarded as mediating institutions which enable and constrain human behaviours (North 1990). This institutional approach tends to focus on conscious construction of groups and rules to achieve intended outcomes. Based on the assumption that individuals are opportunistic and self-interested, it considers the use of sanctions as a necessary enforcement mechanism to govern networks of co-operation.

This economic theory of institution has, however, received severe criticisms. It tends to focus on the macro level of institutional framework (e.g., DFID 2006), and pays insufficient attention to the meso and micro levels which shape the day-to-day access to resources for the poor. In this section, I will highlight the processes that newly arrived migrants draw upon in a variety of institutions to secure livelihoods and how they negotiate within and around these institutions. I will also examine how formalised organisations interact with the intricate web of livelihood networks of poor people.

The structure of this chapter is as follows: It begins by examining the economic institutional analysis in the mainstream social capital thinking and the concept of socially embedded institutions. It then explores institutional complexity and diversity by considering institutions as multi-purpose and negotiable, but at the same time, intermittent and fragile. The third section links institutions to migrants’ complex webs of livelihood networks and explores the role of agency in institutions. And finally we will consider the temporality and spatiality of social identities and the roles assumed by migrants during their lifetimes.

Economic theory of institutions

To be fair, the institutional approach does contribute by putting social relations back onto the agenda of development thinking and it also brings social embeddedness to the forefront. Its efforts to establish order and increase the predictability of social outcomes are appreciated. It also acknowledges the double-edged nature of institutions: that rules both authorise and constrain individual actions. Unlike the first generation of collective action theory, it offers a more optimistic view of social co-operation and argues that material incentives are not necessarily indispensable if a self-enforcing contractual mechanism is effectively constructed.