Decentralization and local industrial policy in Mexico

Steven Samford

World Development, 2022, vol. 158, issue C

Abstract: Globally, local officials increasingly employ tools of industrial policy, once considered the prerogative of national governments. On one hand, some research suggests officials who are sensitive to the needs of local industry may be better able to design appropriate policy interventions. On the other, many studies of decentralization suggest that dynamics common to local discretion – including uneven capacity, capture by local elite, and narrow political motivations – may undermine effective industrial policymaking. There is little comparative scholarship that adjudicates between these potential outcomes by examining how local policymakers intervene in industrial development. Accordingly, this paper examines how state governments used discretion allowed by a business development program in Mexico (Fondo PyME) to shape their own approaches to industrial development. It examines the design of state-level interventions under the Fondo PyME and compares these interventions with effective industrial policies employed by so-called developmental states. Quantitative evidence indicates a tendency for Mexican states to use horizontal and passive interventions that address the immediate, short-term needs of local firms, rather than the targeted, risk-mitigating, conditional interventions that were historically effective for developmental states. These findings raise questions about how much local discretion will contribute to effective national industrial development policies.

Keywords: Subnational government; Decentralization; Industrial policy; Small business; Business and politics (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0305750X22001619
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:wdevel:v:158:y:2022:i:c:s0305750x22001619

DOI: 10.1016/j.worlddev.2022.105971

Access Statistics for this article

World Development is currently edited by O. T. Coomes

More articles in World Development from Elsevier
Bibliographic data for series maintained by Catherine Liu ().