Does placing links to related sites improve rankings?

As google says that their motive is to provide better information to people, I think they give weightage to links to related sites as well.

For example many pages in wikipedia have links to .gov or .edu sites like say 20 links per page. This is because wikipedia tries to provide more info to people. And the pages rank well.

Has this something to do with the .edu or .gov links on the pages? I know that wikipedia has many back links but I still wonder if the .edu or .gov links have something to do with it.

No. This is a common myth but is untrue.

No. This is another common myth that is untrue.

If you read Matt Cutts' blog he explains both of these.

I used to hear both of those a lot a couple of years ago, but I haven't recently. I'm not sure whether the fad just died down, or Google changed their algorithm, or it was just myth to begin with.

Well...

Lets say Im selling widgets... Do I want to link to my competition? Naaaaaaa

I believe that any search engine gives weightage to links from the related sites. I do have a site with PR0, its because of the links from only PR0 sites.

In is a fact, and common knowledge, that incoming links play an important role in search engine algorithms.

But this thread is about linking to related sites. Big difference.

I think the most important thing you can do with on-page SEO is make everything grow naturally. Don't do anything if the only reason you're doing it is because you think it will help your rankings.

I think a higher pr site link may carry more weight than the related sites.

However, related site with pr will definately carry the most weight.