Abstract
This book is the result of a remarkable endeavor by a group of scholars that took up the task of testing empirically the now canonic claim of neo-institutionalism that institutions matter. These scholars established a theoretical framework, selected three organizations that were considered relevant to national development, and then chose three countries to empirically analyze their role. The group leaders traveled to the selected countries and formed teams, with one researcher investigating each institution in each country. With the outcome of this assignment, they published a book in Spanish by Siglo XXI in 2009. In a second phase, they broadened the group of institutions and countries to five, which meant considerably increasing the number of individual participants in the undertaking. The results of that broader research plan, discussed in ad hoc seminars by senior specialists in the social sciences, are presented by country in this volume, together with two useful initial chapters that provide the theoretical framework for the entire project and justify the particular selection of institutions and countries made. The institutions chosen were the postal system, the civil aeronautics authority, the national stock exchange, the public health service, and the national tax authority, the last two being part of the extended project. As for the countries, the initial set of three was made of Mexico, Chile, and Colombia, to which the Dominican Republic and Argentina were later added.
In Chapter 1, Alejandro Portes draws attention to the lack of communication between the social sciences that explains why economists claim to have ‘discovered’ that institutions matter, something that sociologists of development have been saying for decades. Even if the ‘institutional turn’ in economics is considered a welcome addition to the neoclassical view, sociologists regret the absence of a solid theoretical framework in the different versions of new institutionalism offered by economists. The author provides some key elements of such a framework by adding to the realm of culture, that of the social structure, incorporating to the analysis central concepts like role, power, and the class structure, and setting the differences between pairs of concepts – like values/norms, and institutions/organizations – that have often been used as synonyms in institutional analysis.
Portes gives examples of how a poor conceptual framework common in a ‘thin’ version of institutionalism has led to failed experiments or inadequate assessments. An example of the first problem is what Evans has called ‘institutional monocropping’, or the attempt to transplant institutional forms of successful developed societies into the less developed world, under the assumption that they would produce a similar outcome in the recipient country. Far from that, the experiment has often failed as a result of the resistance coming from the realm of values and the realm of power.
A ‘thicker’ institutionalism is also necessary to better understand the determinants of institutional change. As is well known, the two major forces identified by institutionalism are path dependence and diffusion. By accounting for different levels of culture and the social structure, it is possible to recognize other sources of change, as scientific/technological innovation, charismatic prophecy, and inter-elite and class struggles. As these forces act at different levels of society, their potential for institutional change varies accordingly.
In Chapter 2, Portes and Smith describe the characteristics of their research project, presenting the type of sources employed, the objectives pursued, and the hypotheses guiding the investigation. They set six conditions for an organization to be considered developmental, or conducive to development, three internal (meritocratic recruitment and promotion, immunity from corruption, and absence of ‘islands of power’) and three external (proactivity ‘or the ability of the organization to involve itself with … relevant actors in its institutional environment’ (p. 32), technological flexibility, and countervailing power against particularistic interests). All research teams were asked to first evaluate the ability of each organization to fulfill its goals, and second, assess the extent to which each of them held those characteristics and was able to contribute to development within its particular institutional sphere.
As can be imagined, handling such a big team of researchers working in five different countries is a bit harder than hoarding cats. The next five chapters, being all high quality and appealing, are uneven with respect to the aims and methodology established. Two of them stick to the guidelines and do it all, analyzing each organization’s performance and contribution to development, and then making a detailed assessment of the institutional determinants that explain the developmental outcomes of each one (Argentina, Mexico). Another one focuses on the study of the targeted organizations in order to assess their ability to fulfill their goals and to play a developmental role within their societies according to the internal and external conditions (Dominican Republic). One more provides a much broader institutional context but deals only briefly and secondarily with the organizations, and the double assessment of adequacy and contribution to development (Chile). Still another does not deal at all with each organism separately, but addresses ‘horizontally’ the analytical parameters, commenting on the extent to which this or that organization meet the internal and external conditions for success (Colombia).
Having said that, there is no doubt that all the essays provide interesting narratives of their study case. For Argentina, Grimson, Castellani, and Roig find the coexistence of three types of institutions: developmental (the tax authority), predatory (civil aviation), and in-betweens. Among the latter, the more common case is represented by those institutions that fulfill their roles and even contribute to development without meeting the internal conditions of meritocratic hiring or immunity to corruption – features that are common to many Latin American institutions.
The study of Chile begins with the 1973 military coup as a breaking point that, according to Wormald and Brieba, fostered drastic institutional changes imposed from above in the direction of a market economy within a neoliberal model. The authors identify several stages in this development, in which the changes originally established by force were, in a second moment, institutionalized, and once legitimated by their economic success, gained support from the population. Democratization in the early 1990s provided the model with a more social democratic orientation amid basic continuity in its main economic traits. The overall transformation pushed the particular institutions under analysis along a modernization path even though historical, social, and cultural specificities generated different and uneven outcomes among them.
Rodriguez-Garavito opens his argument on Colombia with a puzzling paradox, namely, the coexistence of stable institutions, on the one hand, and the persistence of violence and territorial fragmentation, on the other. The author classifies the targeted institutions into three types. Two of them (civil aviation and the stock exchange) underwent rapid institutional and technological change fostered by external pressures; two more (the postal service and the public health system) disappeared after being in liquidation, and one (the tax authority) faced contradictory pressures. The main conclusion is that even though in general these institutions fulfilled their stated goals, none of them contributed to national development, mainly due to the absence of some of the internal or external criteria and to the clientelistic character of Colombian institutional equilibrium.
Wilfredo Lozano offers an interesting narrative on the case of the Dominican Republic, where institutional change was a result of the pressures generated by economic opening and liberalization since the 1990s, with uneven results. While the tax authority and the civil aviation exhibit a good adequacy and contribute to national development, the public health system and the tax authority lack most of the necessary conditions for that, from meritocratic capacities and immunity to corruption to proactivity and the capability to attain external allies. At the origin of these imbalances, the author finds a differential stance from the state toward each of these organisms and the lack of leadership provoked by conflicting interests within some of them.
Jose Luis Velasco portrays a contrasting situation in Mexico, in which economic growth and stable political institutions have not eliminated extreme poverty and inequality nor created conditions for sustained, autonomous development in the long term. Within this context, institutional modernization fostered by economic liberalization and a competitive political system has been significant but rather uneven, with the stock exchange, the tax authority, and the health system (more specifically, the general hospital operating in Mexico City) ranking high despite some limitations in terms of their adequacy and contribution to development, whereas civil aviation and the postal service appear low in every respect.
In the conclusions, Portes and Smith resort to qualitative comparative analysis (QCA) methodology to systematize the outcomes at the two levels of analysis. They identify a divide between economic institutions and those focused on services, the former ranking higher and showing stronger capabilities at institutional and technological modernization than the latter. They also emphasize the role of discontinuity, generally provoked by the shift from state-led models of development toward market economies increasingly globalized, as one of the most important engines of change in the institutional setting. This shift was at times accompanied by changes in the government, which affected institutions in contrasting ways, sometimes improving their quality, but at other times provoking structural weaknesses or their disappearance, as a result of contradictory policies or privatization. In any event, common patterns do not conceal important differences brought about by history and culture, making general prescriptions doomed to failure.