State Capacity, Finance, and Development in the Global South
Paper Session
Sunday, Jan. 3, 2027 8:00 AM - 10:00 AM (EST)
- Chair: Thomas Lambert, University of Louisville
Technological Dependency in Mexican Manufacturing
Abstract
This paper analyzes Mexico’s manufacturing integration into global value chains as a form of dependent modernization shaped by institutional asymmetries in trade, technology, and control over strategic infrastructures. Although Mexico exports medium- and high-technology manufactures at large scale, this performance rests on narrow market diversification, heavy reliance on imported intermediate inputs, and growing payments for intellectual property, digital services, and technical support. We argue that this pattern is not simply a technological gap, but an institutionalized form of techno-financial dependency in which productive dynamism coexists with limited domestic value capture and restricted upgrading opportunities. Methodologically, the paper combines four perspectives: a modified Strategic Sectors Index to rank manufacturing divisions; a qualitative analysis of imports of Industry 4.0 technologies at the HS6 level; a Labor-Productive Concentration Index to assess upgrading potential; and a macroeconomic examination of balance-of-payments items associated with technological rents. The evidence shows that Mexico’s most dynamic export sectors remain strongly dependent on imported capital goods, critical components, digital infrastructures, and knowledge-intensive services. The paper contributes to institutional economics by interpreting contemporary manufacturing not only as material transformation but also as a process organized through property rights, standards, infrastructure control, and recurrent rent extraction. Nearshoring and regional integration under the USMCA may deepen Mexico’s role as an efficient manufacturing platform while reinforcing lock-in, external control over strategic assets, and structural vulnerability. The key challenge for industrial policy is not import substitution per se, but creating mechanisms that transform imported knowledge and technology into endogenous capabilities and domestic value capture.Innovation, State and Development in Guinea-Bissau: Building a National Innovation System in a Context of Institutional Fragility
Abstract
This paper analyzes the relationship between innovation, the State, and economic development in Guinea-Bissau, with a focus on building a National Innovation System (NIS) in a context of institutional fragility. Grounded in the institutionalist approach and the literature on national innovation systems, the study adopts a qualitative strategy that combines a structural analysis of the economy and institutions with a comparative perspective based on the experiences of Cabo Verde, Angola, and Mozambique. The results highlight the presence of significant structural constraints, including limited state capacity, low levels of human capital qualification, weak scientific and technological infrastructure, and persistent dependence on primary exports. On the other hand, the study identifies opportunities related to demographic dynamism, resource diversity, and, above all, the role of the diaspora in the circulation of knowledge, technology, and investment. It is argued that the construction of a NIS in Guinea-Bissau fundamentally depends on strengthening the State’s institutional capacities and its ability to coordinate interactions among universities, the productive sector, and public institutions. The paper concludes that, in contexts of institutional fragility, innovation should be understood as a collective and institutionally embedded process, in which the State plays a central role in articulating actors, reducing uncertainties, and enabling sustainable trajectories of structural transformation. The article contributes by demonstrating that, in peripheral economies, innovation must be understood as a collective and institutionally grounded process, in which the State acts as a key agent of structural transformation.Rare Earths and Sustainable Development in Latin America: Neo-structural Perspectives on the Case of Brazil
Abstract
Rare earth elements (REEs) have gained strategic importance in the global transition to low-carbon energy systems and advanced manufacturing, raising renewed interest in their developmental potential in Latin America. This paper examines whether REEs can serve not merely as an export opportunity, but as a basis for sustainable development in Brazil. Drawing on neo-structuralist perspectives, it argues that the developmental significance of REEs depends less on resource endowment alone than on the capacity to convert mineral wealth into productive diversification, technological learning, and stronger domestic linkages. The paper situates Brazil within broader Latin American debates on extractivism, industrial policy, and structural change. It suggests that REEs will contribute to development only if they are embedded in a broader national strategy capable of reducing persistent productivity gaps, expanding value-added activities, and promoting more balanced regional development. Otherwise, REEs risk reproducing an enclave model of extraction with limited spillovers for innovation, employment, or social inclusion. Brazil is a particularly important case because, among Latin American countries, it arguably has the most developed strategic vision for linking critical minerals to industrial upgrading and long-term national development. Yet major challenges remain in governance, infrastructure, technological capability, environmental regulation, and policy coordination. The Brazilian case therefore illustrates both the promise and the limits of rare earths as a pathway to sustainable development, and highlights the importance of an active state in shaping how green-resource opportunities are translated into broader structural transformation.Re-examining the Instituted Process of China’s Belt and Road Initiative and Its Changing Power in the Global South and Beyond
Abstract
Since the Chinese government launched the Belt and Road Initiative (BRI) project in 2013 primarily but not exclusively as an alternative path of development for the Global South countries, the BRI has gained affirmative recognition worldwide. The number of participating countries has increased from around 70 in 2015 to around 150 in 2026. During the process, however, geopolitical and social conflicts in different parts of the world have also risen. In this article, I amalgamate and extend the arguments of Karl Polanyi (1944; 1957) on the evolution of the market and instituted process, and John Kenneth Galbraith (1967; 1983) on corporate power to re-examine an early study of mine (Siu, 2019) on the BRI. Accordingly, I analyze and reveal how the Chinese government and its corporations strengthen their power through the process of pursuing the BRI in the global economy in the 2020s. Apart from the increasing international influence of the Chinese government, the power of Chinese-based multi-national corporations (MNCs) is also increasing in the global markets. Nevertheless, evidence shows that their increasing power also gives rise to social and economic conflicts like labor disputes and trade imbalances across different countries. To this, I argue that to realize a more just global society, the Chinese government must take positive actions to balance its international interests and contain the power of its MNCs. Otherwise, Polanyi’s argument on the double movement in history will be manifested in different ways which would inhibit the real contributions of the BRI to the world.JEL Classifications
- O1 - Economic Development
- F6 - Economic Impacts of Globalization