Social Capital and Large-Scale Agricultural Investments: An Experimental Investigation

Following the 2007-2008 global food crisis international agricultural producers have invested in large tracts of land in developing countries. We investigate how the new arrival of large-scale market-oriented farms changes social capital in traditional subsistence-oriented villages. Specifically, we employ a lab-in-the-field and a natural field experiment to elicit cooperativeness in villages that lie near large-scale farms and compare them to villages at a distance. Our data reveal greater social capital in near villages. Smallholders who worked on large farms also show greater cooperativeness. These results are likely to be driven by increased exposure to market-oriented forms of agriculture.