Latin American Politics & Society 46.2 (2004) 181-187
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Alfred P. Montero, Shifting States in Global Markets: Subnational Industrial Policy in Contemporary Brazil and Spain. University Park: Penn State University Press, 2002. Maps, figures, tables, notes, bibliography, index, 253 pp; hardcover $45, paperback $24.95.
This is an important book. Using extensive research on Brazil's and Spain's subnational governments from the 1970s to the 1990s, Alfred Montero develops a number of relevant contributions to the field of comparative political economy, not to mention to the knowledge of those countries' recent politicoeconomic trajectories. [End Page 181]
Relying on the understanding that the study of national governments should be counterweighted by the subnational level as a crucial unit of analysis, the author compares the industrial policies of four of those countries' subnational governments. Inserting these concerns into the context of the rent-seeking, social capital, and other approaches, he adds an insightful concept of "horizontal embeddedness" and ends up with a convincing argument as to why some subnational governments generate more "productivity-enhancing synergy" than others.
Actually, this concept is one of Montero's interesting points from the beginning. Instead of defining the dependent variable as development, growth, or a similar phenomenon, he stresses that he is concerned with the conditions for the generation of "productivity-enhancing synergy." Along with frontline development theorists (such as Evans and Ostrom), he points out that this is a peculiar type of public-private interaction that could perhaps be seen as "conducive" to growth, as it is characterized by reduced transaction costs through the rooting of developmental agencies and the empowerment of socioeconomic agents.
The study's point of departure can be placed in the 1980s crises of Brazil's and Spain's state-led development and the opportunities they opened for more active subnational governments. Indeed, this was perhaps the only common outcome of the changes both countries underwent as a way to overcome the problems of their longstanding state-centered economies. After pointing out that these difficulties were largely conditioned by the international crisis of the same decade, Montero recalls that the domestic economic crises took place at the same time as the countries' respective transitions from authoritarian regimes. As widely understood in the literature on "dual transitions," policymaking in these circumstances can be quite problematic, given the immersion of the economic challenges into the democratic opening, with its naturally broadened space for political disputes.
This was indeed the case in Brazil and Spain, as Montero shows in chapter 2. Brazil's economic crisis followed a wave of state-led growth fed by foreign indebtedness. It was not easy to disengage from this economic orientation, and the country faced dramatic balance of payments crises and skyrocketing inflation. In such a critical situation, exacerbated by widespread demands for democratization, most proposals for reforms in Brazil "were hamstrung by the weakness of the reform efforts in Congress, the anemia of political parties and the widespread particularism of business, labor and other political interests" (p. 42). As a result, Brazil underwent a stop-and-go process of political and economic reform, ending up with meager and unsustainable economic results, at least by the mid-1990s.
Spain, on the other hand, was able to conduct most of its economic reforms so successfully that it could combine orthodox monetary policies [End Page 182] with employment policies, having managed to get a socialist ruling party backed by the voting majority from 1982 to 1997. Actually, the Spanish Socialist Party (PSOE) had the advantage of not having had to bear the costs of the first steps of negotiating the rules of the new democratic game, not to mention that it also inherited a state-centered economy already being reformed. Spain, moreover, not only faced a less dramatic economic situation in the 1980s than did Brazil, but later it also could count on significant economic support from the European Union, which allowed it to conduct valuable policies of industrial reconversion.
Given, however, the different regional impacts that accompanied those countries' economic and political...