Networks and Economic Development: A New Agenda

How do economic networks matter for economic development? Early work suggested country-specific forms can be simultaneously efficacious for economic development (Biggart and Guillen 1999; Hamilton and Biggart 1988). Granovetter’s now canonical intervention shifted attention to a particular model of “embedded” economic networks, where trust, reciprocity and mutual obligations produce mutually beneficial economic outcomes (Granovetter 1985). More recent research under various headings—global value chains, commodity chains and production networks (GVC/GCC/GPN)—focuses upon globally organized networks with organizational forms that (often) depart in significant ways from the formulations proposed by both the early development scholars and Granovetter. These globally organized networks have been cast as both the harbingers of developmental success and the reinvention of dependency (e.g. Bair and Gereffi 2003; Gereffi 1999; Schrank 2004). I argue that these widely varying understandings of how economic networks impact development arise from insufficient attention to the problem of inter-firm power. I then articulate an exchange-theoretic conceptualization of economic networks with three goals. First, it focuses our attention on distributional concerns as a key explanandum—we should seek to understand not only how networked Southern actors fair in some absolute sense, but also relative to the leading Northern actors that organize their networks. Second, it proposes that variation in inter-firm power differentials is the key explanans. Where these differentials are lower, we should expect developmental outcomes akin to the panacea advocated by Granovetter and some portion of the GVC/GCC/GPN group. Where these differentials are greater, we should expect something less desirable. Because these differentials vary proximately by industry, the exchange theoretic conceptualization also proposes a new unit of analysis: the meso-level of global industries.