Do activist trade and industrial policies offer developing countries a viable alternative to either neoliberal or mercantilist development regimes? We hope to answer the question by, first, distinguishing the “open economy industrial policies” in vogue today from either their “closed economy” predecessors—i.e., import-substituting industrialization—or more orthodox approaches to development policy making; second, tracing the growth of nontraditional exports from Latin America and the Caribbean to the diffusion of more active approaches in the 1990s; and, third, accounting for activism’s apparent success (...) in an otherwise inauspicious spatial and temporal context by identifying three distinct limits to rent-seeking in the open economy: infant exporter maturation; the costs of government support; and the reactions of foreign rivals. (shrink)

This manuscript departs strongly from conventional accounts that ascribe a central role to war and the threat of war in Third World state building. Similarly, it challenges the conventional wisdom that abundant exportable natural resource wealth is likely to provoke institutional atrophy. Instead, it argues that a set of logically prior conditions—the social relations that govern the principal economic sectors and the pattern or intraelite conflict or compromise—launch path-dependent processes that help determine when, and if, either strategic conflict or resource (...) wealth contribute to, or impede, institutional development. The argument is tested in the comparative analysis of the state-building process in two Andean neighbors, both of which are situated in similar strategic and natural resource environments but which produced qualitatively different outcomes in terms of state capacity or “strength.”. (shrink)