During 1993 several workshops on social capital and economic development were held in Cambridge, Massachusetts, at the American Academy of Art and Sciences with support from the Rockefeller and Carnegie Foundations and at Harvard's Center for International Affairs with support from the World Bank. Many of the definitional and conceptual issues that have subsequently preoccupied this rapidly growing field of study were at the center of the agenda of those initial conferences:

• What does “social capital” mean, and is the analogy to other forms of capital useful?

• How can we distinguish between the “good” and “bad” effects of social capital?

• Through what mechanisms might social capital affect development?

• How might social capital be influenced by, or interact with, public policy?

The pioneering workshops revealed little consensus on any of these issues. In the ensuing decade “social capital” has become one of the hottest concepts in social science globally. Although conceptual battles continue, much progress has been made. Some of the progress has reflected theoretical refinements. For example, experts in the field are now converging toward a “lean and mean” definition of social capital, focused on social networks and the associated norms of reciprocity and trust. All sides now understand that (like other forms of capital) social capital can be put to both good and bad purposes.

As economics and other social sciences improved their analytical apparatus throughout the twentieth century, it became increasingly clear that, despite major technical refinements, their tools were not able to account entirely for observed variations in cross-country levels of economic development. Indeed, these tools – in particular as used in neoclassical growth theory – were not fully successful at explaining why countries with similar endowments of natural and physical capital experienced vastly different rates of growth and levels of per capita income. At the same time, development practitioners in the field were observing variations in project performance that could not be fully explained by differences in the quality and quantity of the inputs. Equally surprising was the observation that apparently similar communities exhibited very different track records in managing common resources or organizing for the common good.

By the mid-1960s researchers and practitioners had come to recognize that the quality of the labor factor of production was as critical as its quantity in assessing the impact of human input on growth and development (see Becker 1962, Schultz 1963). Although the subsequent search for a scientifically satisfying definition and measure of “human capital” was only partly successful, the concept has since been largely accepted by the academic, practitioner, and policymaking communities.

The addition of this new construct to the social scientists' toolkit only partly filled the conceptual and empirical gap in the understanding of the sources of growth and differences in project success.

The notion that social relations, networks, norms, and values matter in the functioning and development of society has long been present in the economics, sociology, anthropology, and political science literature. Only in the past ten years or so, however, has the idea of social capital been put forth as a unifying concept embodying these multidisciplinary views. The concept has been greatly stimulated by the writings of scholars such as James Coleman (1988, 1990) and Robert Putnam (1993). They, and many other writers, have attempted to define social capital rigorously and to identify conceptually sound and practically useful bounds of the concept (see the reviews in Grootaert 1997, Portes 1998, Woolcock 1998, Narayan 1999, Serageldin and Grootaert 2000, and Woolcock and Narayan 2000). The success of these efforts has been limited. While some progress has been made toward achieving consensus on the bounds of social capital, diversity of definitions across authors remains large. A general framework for thinking about social capital and for relating it to development has emerged, however (see Introduction and overview, p. 2).

In parallel with these conceptual endeavors, a growing number of efforts have been made to measure social capital and its impact on development and on various dimensions of well-being. These efforts have been hindered by the lack of consensus on how to define the concept. Researchers engaged in measurement exercises have therefore taken a pragmatic position on how to define and delineate social capital in order to facilitate its measurement.