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Egypt’s Social Capital and Arab Economic Integrationpositive sign that elections have now beenallowed in the Bar Association, and arelikely to be allowed in other associations.Delays in the adoption of a law ofassociations, acceptable to the leaders andmembers of these associations, is causinguncertainty as to the future of many of them,particularly those that deal with humanrights issues.Social Capital and DevelopmentSocial capital, as defined above, isconducive to development. In economicterms, social capital reduces the ‘cost oftransaction’ because of the reduced need forbureaucratic regulation or for supervisorybodies to ensure honesty and good faith inall types of transaction. Non-economicinteractions are also less costly in thepresence of a good stock of social capital.Social capital fosters strong norms ofgeneralized reciprocity, which allows moreefficiency than that allowed in a“mistrustful” society, for the same reasonsthat money is more efficient than barter.A rich base of social capital facilitates therise of networks of civic engagement.These, in turn, contribute to intercommunitylinkages, provide coordinationand communication channels betweenvarious social actors and promote positivevalues such as cooperation and socialaltruism. Moreover, successful networks ofcivic engagement demonstrate theeffectiveness of collaborative effort, serveas a model for civil society participation,and help build a strong sense of civicresponsibility and national identity.Social capital is also useful for theformation of other types of capital. Theefficient accumulation of a stock of physicalcapital requires the cooperation of largenumbers of people; otherwise, the volumeof physical capital stock may not come intobeing or would need to be obtained throughcoercion. Coercion is a costly means ofbuilding physical capital, as it requires thepresence of an enforcing agent and couldsubsequently provide an outcome that maynot be of good quality. Social capital is alsonecessary for the accumulation of financialcapital. The mobilization of savings, smallor large, is impossible without those involvedtrusting each other sufficiently, or trustingthe institution which enables them to savetogether.However, not all types of social capital areconducive to development. Social scientistsdistinguish three types of network:1. Those that bridge horizontal ties that linkgroups on an equal footing, such as tradeunion federations, or coalitions ofpolitical parties. Horizontal networks canfacilitate interaction, unless they aredivided along conflictive ethnic lines.Strong intra-association social capital canbecome a hindrance to overall societalintegration.2. Those that have ties of a vertical natureare often founded on paternalisticrelationships, with one group at thecenter dominating other groups, eitherbecause it has more resources, oldertraditions or because it provides otherorganizations with different types ofassistance. Vertical networks can reducethe autonomy of their individualmembers, with the dependent groupsacting on the orders of the dominantgroup. Clandestine organizations andorganized crime gangs are examples ofthis type of negative social capital.3. Those that have a mixture of horizontaland vertical ties among groups, whichgives rise to a system-changing network.This is typical of ‘social movements’.It is important to remember that thetrickle-down effect of social capital is afunction of solidarity. The goal served byties of solidarity should be compatible withcollective societal interests, as defined bythe society itself, or by its legitimaterepresentatives.In Egypt, the traditional stock of socialcapital may be shrinking, but theaccumulation of social capital through themodern forms it now takes leaves much tobe desired, as indicated earlier. New growththeories emphasize the contribution ofsocial capital to development, but if theeconomic, social and political developmentprocess in Egypt is moving more slowlythan desired, existing stock of effectivesocial capital in the country could be one ofthe reasons for this. The negative impact ofSocial capital, isconducive todevelopment.A rich base of socialcapital facilitates therise of networks ofcivic engagement.Egypt Human Development Report 2000/2001 - 107