ABSTRACT
This chapter discusses the vital importance of economic networks for devel opment. Economic development can only occur through the specialization and subdivision of labor. Such specialization will generate a higher standard of living through a mechanism of exchange, which can in turn only be pro ductive through interactions in a network of functional economic relations. Such relations have an important institutional dimension, as pointed out by the New Institutional Economics paradigm, which indicates that the neo classical model of an efficient market only obtains when transactions are costless. This leaves little cognizance of peculiarities of time and place (cf. Harriss et a ly 1995). In fact, these transactions are constrained by all kinds of institutions and also by the spatial dimension. When all the transactions are mapped out, it will be seen that the nodal points in these networks coincide with the urban settlements.
