Social Network Analysis and Informal Trade

Abstract

The objective of this article is to show how a formal approach to social networks can be applied to better understand informal trade in developing countries, with a particular focus on Africa. The paper starts by discussing some of the fundamental concepts developed by social network analysis. Through a number of case studies, we show how social network analysis can illuminate the relevant causes of social patterns, the impact of social ties on economic performance, the diffusion of resources and information, and the exercise of power. The paper then examines some of the methodological challenges of social network analysis and how it can be combined with other approaches. The paper finally highlights some of the applications of social network analysis and their implications for trade policies.

Keywords: social networks; informal trade; development; centrality; brokerage; embeddedness; social capital

JEL Classification: D85, F14, L14, R11