Abstract
This thesis examines how business groups in Latin America crafted different bargaining strategies to overcome policy challenges coming from left-leaning administrations. Classic literature regarding economic actors explains how their structural and instrumental power have allowed them to affect the economies of countries through their capital decisions and to influence the agenda of governments. The literature also emphasises the capacity of economic elites to form and sustain a united front, and engage in collective action as a means of enhancing the success of their lobbying efforts. However, although the cohesion of conglomerates strengthens their bargaining position, they do not always manage to act jointly. In fact, according to existing studies, although businesses have varied interests that may affect their ability to collectively influence policies, this would not necessarily reduce the effectiveness of their lobbying activities.In the research, I advance this tradition by proposing that the cohesiveness of businesses stems from a calculated anticipation of selective incentives, by-products, and political and economic benefits to be received. This would suggest that when businesses consider that that they could better enhance or protect their rents individually, they will do so. However, not all capitalists have the power to separately protect their capital but business groups do. Hence, I present an approach that estimates how conglomerates with significant economic and political influence in the country would leverage their power separately, combining forces with other businesses (or even with the state), and, when necessary, against other businesses when this would maximize their private interests.
To study this dynamic framework, I look at business groups and state relations during Ecuador’s left leaning citizens’ revolution (2007-2017). During this period, President Correa promoted policy reforms aimed at reducing the concentration of wealth of conglomerates in the country, including through tax reforms, market power regulations, and even expropriations of properties when they did not abide by the law. However, in spite of Correa’s efforts, there were business groups that notably expanded their economic activities whilst others were reduced and even disappeared from the economy.
To explain the paradoxical prosperity of conglomerates in Ecuador, I combine Social Network Analysis and Analytic Narratives to trace the variations in the structural composition and in the instruments of power of business groups during Correa’s government. The analysis revealed that to overcome the left-leaning administration, business groups crafted three bargaining strategies - cooperation, opposition, and moderate opposition - based on their individual sources of structural and instrumental power. Cooperating conglomerates obtained institutional and distributional incentives in exchange for supporting the government’s economic and political agenda, while antagonist businesses suffered retaliation and economic obliteration. For Correa, forging alliances with businesses gained him an economic advantage without contradicting his anti-business discourse or affecting the support of his constituencies.
This thesis corresponds with a wider research agenda that systematically intersects business power, preferences, and resilience in contentious scenarios, and contributes to an influential body of scholarship that seeks to answer the perennial question of how businesses get what they want in the political arena.
| Date of Award | 1 Oct 2022 |
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| Original language | English |
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| Supervisor | Peter Kingstone (Supervisor) & Andres Mejia Acosta (Supervisor) |