State-Market Synergy: Eventful, Incremental or Both? Observations from the Mexican and Brazilian Automotive and Petroleum Industries, 1970-2000

• In Event: Trade and Industrial Development in Brazil and Mexico

Abstract

Although a growing literature addresses the role of a wide range of public-private institutional arrangements (e.g. state-business consultation forums, networks) in eliciting technological learning in developing contexts (O’Rain 2000, Hausmann and Rodrik 2003, McDermott 2007, Birdsall and Fukuyama 2011, Perez-Aleman and Chaves 2017), much less has been written about the costly and uncertain processes involved in constructing and/or modifying those arrangements in the first place (Khan and Blankenburg 2009, Doner et al 2011, Whitfield and Buur 2014, Doner 2015, Scheider 2015). This paper takes up this puzzle by examining two capital-intensive industries (automotive manufacturing and petroleum) in Latin America’s two largest economies, Mexico and Brazil, during an extended time period of institutional reform and economic change (1970-2000). The longitudinal comparison of the four industries suggests that elements from behavioral organizational theory (March and Simon 1958, Cyert and March 1963) and the “systemic vulnerability” approach (Doner et al 2005 and 2011, Doner 2015) can help to better understand how large-scale events combine with local dynamics to produce long-term institutional change trajectories. Based on these insights, we develop a predictive and contextualized framework that centers on the role that distinct events (Sewell 1996), such as economic recessions, play in triggering varying intensities of reform efforts, based on how the event relates to local aspirations and “slack” resources. By showing how these industries’ divergent trajectories are best captured by these variables, this paper offers an approach to economic reform that recognizes the shaping forces of both external events and local sources of agency.

Author

• Seth Pipkin