Institutional capital, urban poverty and household wealth in Cape Town

This article identifies factors that explain urban poverty by focusing on the relationship between institutional capital and household wealth in Cape Town. Data from a survey (n = 1396) among the extreme and relatively poor is utilized. Factor analysis is employed to identify factors that compose institutional capital. Principal Components Analysis (PCA) is used to develop the household wealth variable from a list of household assets. Multiple regression analysis is utilized to predict the effect of extracted factors on household wealth. Results show that institutional capital comprises reliance on (1) the rule of law, (2) public service provision and economic institutions, and (3) political leadership, and is distinct from social capital. Greater reliance on the rule of law and on public service provision and economic institutions predicts higher household wealth, while counterintuitively, greater reliance on political leadership predicts lower household wealth.