Boosting Competitiveness Through Decentralization

Subnational Comparison of Local Development in Mexico

Aylin Topal

• Publisher: Routledge
• Year: 2016
• Print ISBN:
  9781138268623
• eBook ISBN:
  9781317173229
• Topic: Politics & International Relations
• Subtopic: Globalisation
• Index: Politics & International Relations

Decentralization is accepted as one of the defining features of the third wave of democratic transitions in Latin America and commonly understood as an index and an agent of democratization. This rather optimistic perspective is inherent in the literature which is dominated by two theories. The liberal-individualist approach, especially as advocated by the World Bank, promotes decentralization policies on the premise of their efficiency, equity, and responsiveness to local demands. Similarly, the statist approach claims that decentralization can be the route to greater accountability, transparency and participation in governance; they add that this path should be guided by political elites and institutions. These dominant views nevertheless understate the extent to which certain decentralization policies have been implemented in lockstep with neoliberalization. This book examines the relationship between global economic processes and decentralization. It argues that through decentralization policies, the imperatives of neoliberal rules of competitiveness have been diffused into local governments and economies, generating different local development models. Whether decentralization produces democratic opening at the local level is contingent on how the local economy is integrated into global economic processes, and which social and economic groups are empowered, and disempowered, in that transition.

Chapter 1 Introduction

DOI: 10.4324/9781315569703-1

In the midst of the severe economic crisis of the 1970s in the advanced industrialized countries of the West as well as the developing world, free-market ideology of the classical economic liberalism found itself a receptive audience. Incarnation of century-old ideas as ‘neoliberalism’ constrained the policy priorities first in the UK and the US then spread, through different mechanism and agencies, to other advanced and developing countries. Although it is impossible to clearly define the neoliberal policy framework, neoliberalization share a common logic of process: further integration of the national economies into the world economy for enhanced capitalist competition, capital accumulation and profit maximization.

Meanwhile, decentralization policies have been an important aspect of the transformations of the territorial structure and functioning of the state. Various studies show that central governments around the world have transferred a broad array of resources, responsibilities and authorities to subnational governments.¹ These transfers have rendered the subnational level an important part of the policy-making process, especially of funding, delivery and management of various public services including education, health, transportation and poverty alleviation.

1 For studies on decentralization in various countries, see Bardhan and Mookherjee (eds) (2006), Bosch and Duran (eds) (2008), Cheema and Rondinelli (eds) (1983), Crook and Manor (1998), Falletti (2010), Montero and Samuels (eds) (2004), Oxhorn, Tulchin and Selee (eds) (2004), Pickvance and Pretecielle (eds) (1991), Ribot (2004), Tulchin and Selee (eds) (2004).

Observing this policy shift, decentralization has become a subject of widespread academic interest. Students of state theories, democratization and development studies have begun to pay scholarly attention to these policies. These scholars agree that decentralization has been an important aspect of the transformations of the territorial structure and functioning of the state with important implications for development. While state theorists problematize the transformation of statehood in the process of decentralization, students of democratization and development studies focus on the impact of decentralization on local participation patterns, political party systems and development policies.² The current research agenda of these scholars is primarily concerned with uncovering the dynamics that help explain the impact of decentralization policies on local, national and global political economic relations and on social regulation.

2 For state theories, see Brenner (2004), Jessop (2002: 172–216), Peck (2001), Smith (1993), Taylor (1996), and Treisman (2007); for development studies and democratization, see Adib et al. (eds) (2008), Canel (2010), Chávez and Goldfrank (eds) (2004), Connerly, Eaton and Smoke (eds) (2010), Fung and Wright (eds) (2003), Goldfrank (2011), Grindle (2009), McNulty (2011), Mullen (2011), Sellers (2002), Selee (2011), Smith (1984), Stohr et al. (eds) (2001).

Two theoretical approaches dominate the debate regarding the sources and impact of decentralization policies: liberal-individualist and statist approaches. The liberal-individualist approach, especially advocated by the World Bank, promotes decentralization policies on the premises of efficiency, equity and responsiveness to local demands. Advocates of this approach claim that decentralization is the key to implementing the deregulation mechanisms of the state and democratization; decentralization policies open new channels for ethnic minorities and social groups to participate in the policy-making process.³

3 See World Bank (1994a, 1994b, 2004); see also Adib et al. (eds) (2008), Blair (2000), Bulki, Perry and Dillenger (1999), Campbell (1997, 2003), Guigale and Webb (eds) (2000), Parker and Serrano (2000), Peterson (1997), Ribot (2004), UN-Habitat 2007.

The second theoretical approach to decentralization became eminent especially in the early 1990s. The experiences of the Asian Tigers such as Taiwan and South Korea attracted attention on state institutions, suggesting that particular state institutions could have significant impact on socioeconomic development. The official launch and public manifesto of this approach can be traced back to 1983 and 1985 when Social Research Planning Committee on States and Social Structures was set up under the Social Science Research Council (SSRC) and Bringing the States Back In was published. This edited book by Evans, Rueschemeyer and Skocpol lays out the main principles of this new statist approach. Skocpol, in her introduction to the book, declares the emergence of the analytical approach that proposes ‘to bring the state back in to its proper central place in explanations of social change and politics’ (Skocpol 1985: 28). Following the development of the literature viewing the state ‘as social actors and society-shaping structures’ (ibid: 6), the main focus of the decentralization literature moved towards state institutions and the political agenda of elites. Protagonists of this perspective are widespread, including governments and the international institutions such as the World Bank, Interamerican Bank and United Nations.⁴ Similar to the liberalindividualist approach, the statist approach accepts that decentralization can be the route to greater accountability, transparency and participation in governance; it adds that this path should be guided by political elites and institutions. It argues that if local governments have strong institutions with the capacity to assume the newly received functions, decentralization policies could produce efficient governance at the local level; if not, however, decentralization may lead to local authoritarian regimes due to the survival strategies of the political elite.

4 See Bardhan and Mookherjee (eds) (2006), Boone (2003), Dickovick (2007), Eaton, (2003, 2004), Grindle (2009), Interamerican Development Bank (1994), Montero and Samuels (eds) (2004a), O'Neill (2003, 2005), Rodden, Eskeland and Litvack (2003), Rodríguez (1997), Shotton and Winter ( 2007), Willis, Garman and Haggard (1999), World Bank (2000).

The analyses informed by these two theories are unable to come to terms of dynamics of social transformation in the course of the 1970s and thus fail to explain ‘policy change’ towards decentralization in many developing as well as developed countries in the particular context of evolving international economic order. These two theories focus mainly on the political transformations that decentralization policies brought about at the local level and understate the extent to which decentralization policies have been implemented lockstep with neoliberalization of national economies. Although these studies provide some insights into the potential effect of decentralization on local political regime (democratization or authoritarianism), they do not explain satisfactorily how the outcome of these policies change social relations and forms of state intervention into the economy at the local level. Thus existing studies leave us without a framework for explaining (1) the relations between decentralization policies and changing class strategies in the face of economic and/or political crises of the late 1970s and (2) various local development patterns have replaced the national development agenda that was disintegrated by decentralization policies. This book therefore distinguishes these two explananda that requires further explanation and suggests that an alternative theoretical approach which gives social class an explanatory primacy could fill this gap by providing conceptual and analytic tools.

This book aims to explain policy change towards decentralization in Mexico by examining different class strategies in the face of ‘hegemony crisis’ in the course of the 1970s. It shows that strategies of northern factions of Mexican bourgeoisie and dominated masses especially in the southern states shaped the particular extent and content of decentralization. The analyses put an emphasis on how and why these class strategies were framed by the specific stage and phase of capitalism. For example the role of International Monetary Fund (IMF) and the World Bank cannot be overlooked in understanding this policy shift towards decentralization. Evolving international economic order privileged certain factions of capital vis-à-vis others and states selectively filter the various class strategies and at a particular conjuncture certain class strategies become more decisive in shaping policy change. Thus transition to neoliberalization may not necessarily imply decentralization yet carries a strong structural tendency towards decentralization. Through a subnational comparison of local development policies in three states of Mexico, this book makes the case that outcome of the decentralization policies is dissemination of ‘politics of global competitiveness’ (Cammack 2006, 2010) into local level, generating different local development patterns.

This book demonstrates that the nature of the state-economy relationship prevalent with the local social formation is an important explanans ⁵ in making sense of the variations in the impact of decentralization policies on local politics in Mexico. It shows that decentralization led to ‘restructuring and strategic reorientation of state intervention’ (Jessop 2002: 177–8) to build local competitiveness for facilitating the articulation of the local economy with the world economy. Local level becomes an important space of competitiveness (Brenner 2000: 321). The market relations and rules of neoliberal competition begin to constrain the strategies and alliance of the actors. The mode of articulation of a local economy with the world economy with its external ties, needs, strengths and weaknesses determines the interests, aspirations, and strategies of policy makers and social classes which in turn shape local development patterns.

5 In the positivist methodology, this is commonly referred to as ‘independent variable’. See footnote 8 of this chapter for ontological and epistemological reasons behind this concept preference.

This book has three overarching goals. First, by showing that decentralization policies have the effects of diffusing neoliberal rules of competition down to local governments and economies, it challenges optimistic democratization expectations rooted in liberal-individualist and statist approaches. Second, it provides a framework for explaining different local development patterns evolved in the process of decentralization. Finally, it develops a new research agenda for political economy: the study of local development in the process of decentralization.

Subnational Comparison

The book focuses on Mexico – a country where decentralization policies have been implemented gradually since 1983 and produced a range of outcomes in different states. The Mexican state has been described as one of the most centralized in all Latin America. The Revolution (1910–17) represents a turning point in the country's history which brought about new forms of domination and subordination. The goals of the Revolution were articulated in the Constitution of 1917 outlining the essential features of the Mexican state. The centralization of national political power in the federal government culminated in the establishment of a single government party, the Revolutionary National Party (Partido Nacional Revolucionario – PNR), in 1929, which eventually became the Institutional Revolutionary Party (Partido Revolucionario Institucional – PRI) in 1946 and ruled the country until 2000 when the National Action Party (Partido Acción Nacional – PAN) gained the presidency and kept the post in the 2006 elections.⁶ Since the early 1980s, decentralization policies appear to be the key elements of the significant changes in the centralized institutional setting. These policies transferred an array of administrative, political and economic responsibilities to state and municipality governments. Concomitantly, the main opposition parties, the PAN and the Party of the Democratic Revolution (Partido de la Revolución Democrática – PRD) have started to challenge the PRI in the local as well as the national elections.

6 According to the official results of the 2006 presidential elections, the PAN beat the center left opposition party, the Party of the Democratic Revolution (Partido de la Revolución Democrática – PRD) by only 0,58 per cent with over fourth million turnout. For the 2012 elections, the PRD is running with the same candidate, Andrés Manuel López Obrador to whom some polls are giving a big lead.

The book employs a subnational comparative method which proves to be effective in examining the spatially uneven nature of major processes of political and economic transformation (cf. Snyder 2001a) such as the impact of decentralization in different regions of a country. I examine the effects of the Municipal Reform of 1984 and New Federalism Reform of 1994 in three Mexican states: Chihuahua, Guerrero and Tabasco.

The research for this book draws upon the realist methodology which postulates the social world as independent of our thoughts about it – hard and concrete. The realist ontology is based on stratification of distinguished levels of abstraction. Real, actual and empirical constitute three domains of reality. The real refers to structures and mechanism with causal powers which may or may not produce regularities. The actual refers to events which occur when/if the powers of the real structures and mechanisms are activated. The empirical refers to the observed and experienced phenomena, whereas neither real nor actual are necessarily observable. The existence of ...

Table of contents

• Cover Page
• Half-Title Page
• Title Page
• Copyright Page
• Table of Contents
• Abbreviations and Acronyms
• Acknowledgments
• 1 Introduction
• 2 Toward a Political Economy Approach to Decentralization
• 3 Decentralization Policies in Mexico: Reshaping Forms of Interest Representation and State Intervention
• 4 Public–Private Partnership Leads Local Development: Entrepreneurialism in Chihuahua
• 5 Oil Production as the Dominant Force: Authoritarian State-Led Local Development in Tabasco
• 6 When Business Class Allies with a Strong Indigenous Peasant Movement: Contested Local Development in Guerrero
• 7 Conclusion
• Appendix
• Bibliography
• Index