Benedikte Alkjærsig Bjerge: Essays on Social Network Formation in Sub-Saharan Africa

The main focus of this thesis is social network formation in a development economic context. The main objective is to achieve a better understanding of how networks are formed and why they might have certain characteristics. These related objectives are addressed empirically from different angles using different methodological approaches. Three of the chapters investigate social network formation based on strategic network formation theory, while a fourth chapter takes a random graph approach using exponential random graph models.

Based on a unique social network dataset consisting of households in rural Gambia, the first two chapters investigate mechanisms underlying inter-household land transactions. The first chapter documents the importance of pre-existing social networks in terms of social and geographical proximity, and show that only geographical proximity has an additional impact on allocative efficiency. The second chapter documents that land is allocated in a pro-poor way consistent with the presence of the norm-based access rule to vital resources. However, land allocation come with an obligation to reciprocate in the labor market, and poor households are only allocated land in relatively less population dense and more ethnic homogenous villages. The third chapter is based on the same dataset from rural Gambia, but examines how the network of land, labor and agricultural input transactions is formed. Findings suggest that structural mechanisms in the form of reciprocity and transitivity explain network formation to a greater extent than standard household attributes. The chapter further demonstrates that inability to account for structural mechanisms leads to upward biased parameter estimates of household attributes and dyad-specific characteristics. The fourth chapter is based on a different dataset concerned with micro, small and medium sized enterprises in Mozambique. The chapter establishes presence of positive assortative matching on co-membership in a business association, and find limited evidence supporting diffusion of business practices between co-members. This finding is consistent with the large heterogeneity across firms and slow convergence of productivity observed both across and within sectors in sub-Saharan Africa