ABSTRACT
Economists and the public media often highlight individual skills as key factors for success, but in fact individuals do not depend only on their own skills for their achievements and well-being, but also on their social contacts and associations. For instance, it is often not a matter of what individuals know, but rather who they know which gives rise to employment options (Woolcock and Narayan 2000). While it is necessary to promote human agency, especially for the poor, through the attendance of basic needs and expenditure in basic shelter, education and health services, on their own these measures are insufficient if people cannot access social networks that empower them, or if the structure of the socio-economic systems reproduces inequalities as a result of very unequal access to information and power over the information flow. Consequently it is unrealistic for economic approaches to assume that people are rational individuals merely interacting with each other for the sake of profit maximization and not consider the social embeddedness of economic actions (Granovetter 1985). The network of social contacts affects the capabilities and choices of people, as it also affects the learning and innovation patterns and directions of structural economic change.
