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Take seriously the power of networks (or just look at some COOL maps)

A few days ago, I met a guy because he was my wife’s girlfriend’s boyfriend. He turned out to be a high ranking official who had some fascinating inside stories about aid and corruption in an African country (which I won’t name to protect his privacy).

A local aid worker friend recommended an orthopedist to treat my wife’s badly injured ankle while we were in Addis Ababa. The orthopedist was able to give my wife relief (at full American prices, which went to his NGO) and then he asked if I knew that crazy aid criticizing NYU professor.

One of the best hiring decisions I ever made was to employ my friend’s wife’s neighbor’s daughter.

More and more people are discovering the power of social networks (consult the avalanche of popular books on connectedness and shrinking degrees of separation). Being well-connected to other people, who are in turn well-connected, is a powerful way to get information, to reduce search costs for employment or trade transactions, and to create strong incentives to behave well and protect your own reputation. Formal research in economics celebrates the economic payoff to social connectedness (aka social capital). Phenomena like the Hasidic diamond merchants of 47th street in Manhattan show the power of business networks based on ethnicity and family. Ethnic networks are common in Africa, like the Hausa traders in West Africa, or Luo fish merchants in Kenya.

The scorn usually shown for Nepotism and the Old Boy Network is so 20th century! The 21st century view is to respect the value of social connections wherever they come from!

OK, I’m exaggerating. You need to balance the value of social connections against accountability mechanisms, merit-valuing incentives, and ethical rules, so I don’t just hire my good-for-nothing cousin with other people’s money. Also you need to worry about people who are frozen out of networks through no fault of their own. But that is OFF MESSAGE, so I am going to ignore all that today.

Venture capitalists rely heavily on social networks to assess reputation and to make new deals. And so do social entrepreneurs. Someone tipped me off to, which is a fantastic web site for facilitating networks among social entrepreneurs: (pronounced ‘ziggy’ as in zeitgeist) is a space for making connections and gathering intelligence within the capital market that invests in good. It’s a social network, tool provider, and online platform for tracking the nature and amount of investment activity in this emerging market.

OK, I confess, what really got me to look at this site was the hyper-cool network maps that show connections between the social entrepreneurs. Check out the map for the deservedly well-connected Ashoka folks of Bill Drayton (this is a screen shot, but you have to visit the map on the xigi site to explore its cool functionality).

The point is that part of the effectiveness of Ashoka is because they are so well connected, and they make all their partners in turn more effective in turn by being connected to the well-connected Ashoka.

We could keep dreaming: social networks could be a powerful vehicle for spreading information and evaluations about existing aid projects and actors. The Internet makes this much more feasible that it used to be. is one initiative that tries to implement this idea. Oh, and I happen to know about and trust GlobalGiving because I have known the two founders ever since we worked together on Russia in the early 90s.

I had never heard of until a couple days ago. I heard about it from my wife’s girlfriend, the one who had the aid and corruption story-telling boyfriend.

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  1. Justin Kraus wrote:

    The old phrase “its not what you know but who you know that matters.” comes to mind.
    Certainly networking can be efficient. But it can also, if relied on too exclusively, promote a kind of nepotism which not only can destroy the effectiveness of many enterprises but also limits the social mobility that more meritocratic systems of employment or data-gathering bring with them.

    Posted January 26, 2010 at 3:37 am | Permalink
  2. Blaise wrote:

    After few years in an international organization in Africa I have now some problems to consider that social capital is not often nepotism.

    Posted January 26, 2010 at 6:14 am | Permalink
  3. William Easterly wrote:

    Blaise, of course there is good and bad nepotism. the key thing is what is your motivation when you hire your relative — to divert other people’s money to your own family? or to achieve high value in your own firm by hiring somebody whose strengths you already know very well and whom you know you can trust?

    Posted January 26, 2010 at 4:39 pm | Permalink
  4. Sulaiman Wasty wrote:

    End result: revolving doors. Italian/ Russian mafias know much better how to cultivate “social capital”.

    Posted January 26, 2010 at 7:11 pm | Permalink
  5. Bill Easterly wrote:


    Yes, you’re right. Bad guys can use the power of social networks as well. They can also use education, technology and other things good for development.

    Posted January 26, 2010 at 7:14 pm | Permalink
  6. Todd Riffey wrote:

    One of the things holding back the development of a globally competitive and diverse private sector in many developing countries is the small size of the business elite in each country, which limits the number of connections that each business leader can have. That is why Global Progress Specialists ( is creating a cross-border social network for the business leaders of SMEs in developing countries, to create a critical mass of peers with which these leaders can connect.

    Posted January 27, 2010 at 12:13 pm | Permalink
  7. Michael wrote:

    Hiring people that you know (or people who know people who you know) may also contribute to organizational malaise. If only like-minded people are hired, then valid criticisms may be ignored and critical self-reflection may never take place.

    Posted January 27, 2010 at 2:09 pm | Permalink
  8. Alberto Behar wrote:

    If anyone is interested in finding out whether better (from a development perspective) networks can be brokered by development agencies, they might wish to take a look at
    (More cool maps too)

    Posted February 2, 2010 at 6:11 am | Permalink
  9. Marc Maxson wrote:

    I haven’t played with Xigi before. I’d been tinkering with to achieve the same connectivity. As cool as “seeing” a reputation system as a map might seem, none of these are really -doing-centric yet. I’d like to click and drag myself around the network and fire off an email at one node, or donate money to an org at another hub, and poll every spoke of a NGO hub with these visualizers to ask something like, “have you ever collaborated with this org on teaching?”

    Or if I want to find a place to teach science at a university in Kenya, wouldn’t one of these maps be nice for figuring out who at the university is most likely to asnswer an email about opportunities? I’ve wasted dozens of hours this past year on unanswered inquiries.

    Posted February 5, 2010 at 4:20 pm | Permalink

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    The Aid Watch blog is a project of New York University's Development Research Institute (DRI). This blog is principally written by William Easterly, author of "The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics" and "The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good," and Professor of Economics at NYU. It is co-written by Laura Freschi and by occasional guest bloggers. Our work is based on the idea that more aid will reach the poor the more people are watching aid.

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