Investigating the ‘Elite Capture' Hypothesis: The Effect of Wealth and Civic Capital on Elected Local Bodies' Implementation of Community Development

Background and purpose: The problem of ‘elite capture' stymies poverty alleviation interventions in international social work - persistent poverty among the poor due to community elites capturing development benefits. Though studies suggest that elite capture is prevented when elected community bodies implement development interventions, most of the evidence is based on case studies, is anecdotal or does not establish causal effects. To remedy this gap, I use a structural equation modeling research design to examine the effect of a) wealth and b) civic capital on elected bodies' distributional decisions in watershed development, a program delivering seeds, fertilizers, micro credit and wage employment to rural households in India.

Method: The study was undertaken in Mahipura village in western India. Households were administered surveys measuring wealth, civic capital and watershed development benefits (N=122). The structural equation model consisted of three latent variables (wealth, civic capital and watershed development benefits) and seven observed variables. Wealth comprised well ownership, irrigation motor ownership and livestock ownership; civic capital comprised association with the elected village body called panchayat and dairy cooperative linked to the panchayat; and watershed development benefits comprised micro-credit and wage employment.

Results: Civic capital had a significant, positive, direct effect on watershed development benefits (.69). Wealth had a non-significant direct effect on watershed development benefits. Wealth had a significant, positive, indirect effect on watershed development benefits through civic capital (.55).

Mahipura's social groups comprised Kolis (N=101) and Adivasis (N=17). The Kolis regarded themselves as hierarchically superior to Adivasis and were economically dominant, with higher mean well ownership, motor ownership and livestock ownership. The panchayat leader was Koli, and two elected ward members (the village was divided into wards for elections) comprised one Koli and one Adivasi; i.e. Kolis dominated the panchayat.

Chi-square tests of difference revealed no difference between Kolis and Adivasis in the distribution of wage employment. However, there was a significant difference between Kolis and Adivasis in the distribution of micro-credit.

Implications: By institutionalizing rules of territorial representation, political competition and periodic elections; democratic decentralization prevents elite capture by making elected representatives' future success contingent on broad-based distribution, as shown by equity in distribution of wage employment between Kolis and Adivasis. However, as micro-credit findings show, elected bodies may not improve distributional equity of high-value benefits in favor of the least well-off households if they are a numerical minority and cannot influence electoral outcomes. Democratic decentralization in the form of implementation by elected bodies must be combined with explicit pro-poor policy provisions to ensure that development benefits reach the least well-off households in a community. Additionally, the study demonstrates the value of mixed-method research.