ELUSIVE ALLIANCES: LOCAL GOVERNMENTS, TRANSNATIONAL CAPITAL, AND REGIONAL DEVELOPMENT IN POST-REFORM MEXICO
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This dissertation seeks to explain the economic performance of Mexican states during and after the implementation of political and economic reforms by the central government beginning in the 1980s. Existing studies have addressed this question through statistical and econometric analysis that identify proximate growth determinants. By contrast, I focus on how distinct state-level institutions for managing relations among government, business, and labor emerged out of Mexico’s market reforms, democratization, and policy decentralization. These divergent institutions reflected differences in the pre-existing organization of social groups, in particular organized business. Through a paired comparison of two states in central Mexico, Puebla and Querétaro, I show how the active participation of large, modernizing national and transnational manufacturing firms in Querétaro’s local business associations beginning in the 1960s imbued local business with a developmentalist orientation. In Puebla, the lack of incorporation of large firms meant that local business associations continued to be dominated by an insular local business elite with a strong, conservative political identity. Faced with these differences, local politicians pursued divergent strategies in response to reforms at the national level. Governors in Querétaro constructed institutions for cooperation with organized business and labor, which included regular, economy-wide policy coordination; the inclusion of technocratic business leaders in top posts in the state bureaucracy; and informal norms of conciliation and compromise. In Puebla, by contrast, successive governors opted for cooptation and conflict with organized business, which they viewed as a political rival rather than potential developmental partner. Attempts at economy-wide coordination routinely fell victim to partisan fighting, and governments in Puebla prioritized firm- and sector-specific development policies—in particular with Volkswagen, the state’s dominant firm. These institutional differences largely explain the marked divergence in economic performance of the two states after 1985. While Querétaro achieved sustained fast growth, structural transformation, and upgrading over the course of more than two decades, Puebla’s economy was characterized by volatile growth, the absence of upgrading, and the continued dominance of the automotive cluster surrounding Volkswagen.