Crowding out and clawing back: Local institutions and sustainable livelihoods in North-East Thailand

Abstract

The 'crowding out hypothesis' (e.g., Cox and Jimenez, 1993; Roberts, 1984; Warr, 1983) contends that state-driven efforts to strengthen social safety nets may have the effect of displacing or duplicating established private mechanisms and institutions that operate at the local level to help people cope with periodic shocks, stresses and challenges. In such circumstances state support may be both inefficient, if it replicates systems that are already in place and working effectively, and counterproductive, if it substitutes external dependence for local self-reliance. Alternatively, it may ease the financial burden on the poor where the 'moral economy' involves transfers from the poor or nearly poor to the poor. It is also unclear what happens to local coping mechanisms and social institutions as a result of the process of 'crowding out': do they wither and evaporate in the heat of state social policy, or is there space and scope for informal safety nets to survive and continue to play a role in helping pe...