In improving human well-being, assets generally complement each other. For
instance, human assets together with social assets
can enhance a person's "freedom to be and to do." Assets can also be
complements in the production process-that is, the productivity of one type of
asset usually rises with additional amounts of other assets.16
For instance, there is now a growing body of literature that highlights the
role of social capital (interpersonal networks, shared values, and trust)-an
asset that has arguably received little attention in the economics literature
so far-in the accumulation, preservation, and productivity of other
assets-human-made, environmental, and human:1718
Social capital can improve the management and productivity of environmental
assets. For example, the combined effect of attitudes about participation-and
the actual participation in a collective enterprise, along with human capital
(literacy)-has significantly improved the management of watersheds in
Rajasthan, India.19
Watershed management has, in turn, been crucial in raising incomes.
Trust between technicians (agricultural extension agents) and farmers can
generate increases in agricultural production. And the degree and nature of
trust between the contact groups and the other members of the community can
determine the effectiveness of the groups as catalysts for community
development.20
Social capital can enhance human capital accumulation: higher levels of trust
have been associated with higher enrollment in secondary education.21
Social capital can improve the productivity of physical capital. For example,
interfirm social contact in the form of interpersonal networks in the clothing
industry has a positive impact on learning.22
Similarly, interfirm social interactions, as well as customer network ties,have
significant effects through their impact on knowledge acquisition and on new
product development in a range of high-tech industries, including
pharmaceuticals, medical devices, and electronic instrumentation.23,
24 There
is also a clear link between interfirm trust and firm performance (through
conflict avoidance and lower negotiation costs). 25
This complementarity generally applies to other assets as well. Cleaner air and
water, for instance, improve human health and the productivity of human
capital.26
And the synergies from the complementarity of two or more assets raises overall
productivity. But social and environmental assets are underprovided or
overused.
