This paper evaluates the effectiveness of a participatory institutional development approach for better primary schooling in bangladesh. We conduct a qualitative investigation and find that, despite some limitations, the two key instruments of the participatory approach, school catchment area mapping and school planning, are highly effective in achieving enhanced primary school enrollment, higher retention, reduced dropout and overall better learning. These participatory school management approaches employ social capital by involving communities to attain better learning achievement. Since basic primary education significantly contributes to human capital accumulation in bangladesh, we argue that our findings reinforce the hypothesis that social capital fosters human capital. Copyright 2006 john wiley & sons, ltd.