Farfán-Mares, Gabriel
(2010)
Non-embedded autonomy: the political economy of Mexico’s rentier state, 1970–2010.
PhD thesis, London School of Economics and Political Science.
Abstract
Due to its competitive political system and strong non-oil export capacity, Mexico is not considered an oil Rentier State. Yet, the consistent and intensive use of crude oil has fundamentally altered the trajectory of its political economy. State institutions, which had consistently relied on oil rents to finance their operations, tend to preserve social stability and political consensus rather than promote development.
The central bureaucracy’s need to control oil rent strengthens and reinforces the role of budgetary institutions within politics and administration. Budget institutions provide the government with an inordinate degree of discretion to allocate the budget, a capacity that supports the State’s political legitimation and helps to overcome economic turmoil. Paradoxically, oil produces a policy curse that reinforces the State’s socio-political embeddedness at the expense of its economic leverage. Thus, undermining the incentives for public officials to tax and deliver expenditure quality, thereby deepening the State’s detachment from normal economic behaviour.
Oil rent maximization serves to increase the size and cost of public employment and the magnitude of transfers and subsidies at the expense of gross fixed public investment, the maturation of a merit-based bureaucracy, and the Legislature’s role in controlling the Executive. In addition, rents short-term logic is inimical to the country’s long-term strategic planning because they do not provide public and sectoral policies with a sound financial basis. Rentier behaviour is enforced within the State apparatus by a structure of incentives where budgeteers and elected officials are largely exempted, given budgetary secrecy and discretion, to make enforceable and accountable commitments.
In order to provide for valid causal inferences and increase explanatory leverage, research findings are supported by a comprehensive use of quantitative and qualitative primary sources (period 1970-2010) as well as pertinent comparative observations from other oil endowed States. Finally, by considering Mexico an outlier, this research refines some of the theoretical and methodological insights of the available literature on rentier States.
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