Operationalizing Capabilities in a Segmented Society: The Role of Institutions

Sen lists five types of freedoms as integral to equipping people with necessary capabilities. He goes on to assert the importance of institutions in ensuring these five freedoms. In this paper, this emphasis on institutions as vehicles for capability-creation is re-interpreted from the perspective of a segmented society with multiple institutions. It argues that innovatively designed local level institutions (informal institutions) play a critical role in creating capabilities for livelihood generation and protective security as well as preventing erosion of that capability in the future. The latter is of the essence in sustainable development initiatives for poverty alleviation. However, limits to the scaling up of such local level institutions emerge when they enter into conflict with formal state and/or market supported institutions. Results from two in-depth studies in India (Eastern and Western India) are used to illustrate that such a confrontation often results in limiting the newly created capabilities, both present and future. In each case, natural resource management with well-crafted institutions, created conditions for enlargement of the vector of options available to rural communities. However, these institutions eventually came up against constraints created by macro-level intuitional structures – the formal institutions. The case studies demonstrate that synergy among institutions is critical if capabilities are to be provided, strengthened and protected. The challenge is in finding the conditions under which formal and informal institutions evolve simultaneously. This is done to ensure that optimal conditions are provided for the maximization of capabilities. Kanchan Chopra Institute of Economic Growth, University Enclave Delhi 110007, India Tel: (91) (11) 7667288, 7667101; E-mail:[email protected] Contact Author Anantha K. Duraiappah International Institute for Sustainable Development (IISD) 161 Portage Avenue, Winnipeg, Manitoba, Canada R3B 0Y4 Tel: (204) 958-7720; E-mail: [email protected]