Domestic capital, civil servants and the state: Costa Rica and the Dominican Republic under globalisation

Journal of Latin American Studies

Volumn 37, Issue 4, 2005, Pages 693-726

  Ancochea, Diego Sánchez ^a  

^a UNIVERSITY OF LONDON   (United Kingdom)

Author keywords

[No Author keywords available]

Indexed keywords

CIVIL SERVICE; GLOBALIZATION; PUBLIC SECTOR;

ATLANTIC ISLANDS; ATLANTIC OCEAN; CARIBBEAN ISLANDS; CENTRAL AMERICA; COSTA RICA; DOMINICAN REPUBLIC; GREATER ANTILLES;

EID: 27844446070     PISSN: 0022216X     EISSN: 1469767X     Source Type: Journal    
DOI: 10.1017/S0022216X05009831     Document Type: Article

References (93)

1. They have also performed better in terms of economic growth from a long-term perspective. According to Maddison, between 1950 and 1998 real GDP per capita grew at an annual average rate of 2.3 per cent in the Dominican Republic and 2.1 per cent in Costa Rica, compared to 1.2 per cent in El Salvador, 0.9 per cent in Honduras, and 1.7 per cent in Latin America (44 countries) as a whole. A. Maddison, The World Economy. A Millennial Perspective (Paris, 2001). Maddison measures GDP per capita in 1990 international Geary-Khamis dollars.
2. CEPAL, Desarrollo económico y social en la República Dominicana: los últimos veinte años y perspectivas para el siglo XXI (Santo Domingo, 2001).
3. Fundación Economía y Desarrollo, 'El mito del milagro dominicano: Artículo de Cesar A. Miguel,' Listín Diario (April 2001)
4. and Howard Wiarda, 'Dominican Republic Alert: Leading the World from the Caribbean: The Dominican Republic,' Hemisphere 2000, series VII, issue 4 (1999).
5. IMF, 'The Dominican Republic: Stabilization, Reform and Growth,' Occasional Papers. International Monetary Fund, 206, 2001
6. D. Sánchez Ancochea, 'Globalization and Inequality in the Developing World: Potential Benefits with Real Costs,' CEPA Working Papers, 2003, p. 9,
7. and D. Sánchez Ancochea, '"Leading Coalitions" and Patterns of Accumulation and Distribution in Small Countries. A Comparative Study of Costa Rica and the Dominican Republic under Globalization,' unpubl. PhD diss., New School University, 2004, pp. 312 and 328.
8. For Northern Europe, see P. Katzenstein, Small States in World Markets. Industrial Policy in Europe (Cornell, 1985)
9. and the abundant literature on the models/varieties of capitalism, including D. Coates, Models of Capitalism. Growth and Stagnation in the Modern Era (Cambridge, 2000), chapter 4.
10. For East Asia, see, for example, P. Evans, Embedded Autonomy. States and Industrial Transformation (Princeton, 1995)
11. and A. Amsden, The Rise of the Rest. Challenges to the West from Late-Industrializing Economies (Oxford, 2001).
12. For a comparison of Latin America with other regions in terms of state-society relations and other key institutional variables, see E. Huber (ed.), Models of Capitalism. Lessons for Latin America (University Park, 2002).
13. See P. Heller, The Labor of Development. Workers and the Transformation of Capitalism in Kerala, India (Ithaca, NY, 1999);
14. Peter Houtzager, 'Introduction,' in P. Houtzager and M. Moore (eds), Changing Paths. International Develpment and the New Politics of Inclusion (Ann Arbor, 2003);
15. Huber, Models of Capitalism,
16. and D. Sanchez-Ancochea, "Leading Coalitions", pp. 41 and 49.
17. F. Moya Pons, Empresarios en conflicto. Políticas de industrialización y sustitución de importaciones en República Dominicana (Santo Domingo, 1992).
18. Sánchez Ancochea, 'Leading Coalitions', p. 85.
19. Sánchez Ancochea, 'Globalization and Inequality'.
20. Similar processes took place in other Latin American countries as well. For the effect of globalisation on the Central American capitalist class, see F. Colburn and F. Sánchez, Empresarios centroamericanos y apertura económica (San José, 2000).
21. For the evolution of large groups in the bigger Latin American countries, see W. Peres, Grandes empresas y grupos industriales latinoamericanos (Mexico City, 1998).
22. See Andrew Schrank, 'Ready to Wear Development? Foreign Investment, Technology Transfer, and Learning-by-Watching in the Apparel Trade,' Social Force, vol. 83 (Sept.), 2004.
23. A limitation of this analysis that should be acknowledged comes from the fact that many firms that were listed in the stock market in the late 1980s did not appear in 2002. There are complete series from 1986 to 2002 for only six firms, which were already among the largest in 1986: Florida Ice and Farm, Industria Nacional de Cemento (currently Holcim), Atlas Eléctrica, Durman Esquivel, Corporación Abonos Superior and Cormar. Table 1 concentrates on the period 1986 to 2000 in order to incorporate four more firms. The belief that capital was increasingly concentrated was shared by most of the academics and business managers that I interviewed in the summer of 2002. See also Carlos Sojo, 'En el nombre del padre: Patrimonialismo y democracia en Costa Rica,' in C. Sojo and M. Rojas, El malestar con la política (San José, 1995). The disappearance of some firms from the list in recent times does not mean that they have gone out of business; it may just signal a change in their financing strategy.
24. Interview with one manager from each firm, San José, Costa Rica, September and October 2002. Unless otherwise stated the information for the following paragraphs come from these interviews.
25. Cormar's growth has not only benefited the founders of the firms, which are still the largest individual investors, but many other large Costa Rican capitalists. This is so because many of the large clients of firms such as Florida Ice and Farm also have significant stakes in Cormar, to a greater or lesser degree.
26. These dates must be treated with caution, as there are significant methodological short-comings in the household survey data, especially for measuring the process of capital concentration at the top. Juan Diego Trejos, one of the most prominent Costa Rican researchers on income distribution and the use of the household income surveys, drew my attention to their deficiencies for measuring non-labour income (interview in San José, Costa Rica, August 2001).
27. Durman's interactions with TNCs have been limited to licensing agreements. The main one has been an alliance with the US company ADS Worldwide to produce the large PVC tubes Rib Loc in Latin America.
28. El Financiero, various issues, Actualidad Económica, various issues, Diario La Nación (Jan. 4 1999), Diario El Siglo (20 Dec. 1999) and information from the Más X Menos web page.
29. In El Salvador and the Dominican Republic Más X Menos decided to close its supermarkets after only three years of operation. Apparently, the company was unable to adapt to the cultural particularities of the Dominican Republic and compete with the efficient and aggressive domestic counterparts (El Financiero, no. 296, 22-28, Jan. 2001).
30. According to a prominent Dominican economist and former government official who has done research on the subject (interview, Santo Domingo, Dominican Republic, June 2002) there were nine large economic groups in the Dominican Republic during the 1990s: Grupo Corripio, Grupo Popular, Grupo Baninter, Grupo Financiero Nacional, Grupo Vichini, Grupo Leon Jimenes, Grupo BHD, Grupo La Romana and Grupo Mercasid (the Bonetti, Vitienes and Armenteros families). Most names in the list coincide with those offered by other observers I interviewed and with some lists published in the Dominican economic press. Revista Mercado, for example, drew up a list in 1997 of the ten most powerful Dominican entrepreneurs, based on a poll of 154 executives. The list includes all the names mentioned above with the exception of Grupo BHD, Grupo Vichini and Grupo la Romans. Revista Mercado adds the construction group Grupo Moya (headed by Diego de Moya) to the list. See 'Los Diez Grandes,' Revista Mercado, (July 1997).
31. Around this large ring of powerful groups lies another broader group of smaller large investors. Among them we find Grupo M and other large groups within the Free Trade Zones, which are becoming an increasingly influential segment within the Dominican capitalist class. Information from interview with a well-known Dominican economist and former government official (Santo Domingo, Dominican Republic, June 2002). See also Diego Sánchez Ancochea, 'Developing through Manufacturing Exports? Limitation of the New External Specialization of Small Latin American Countries in the Global Economy,' paper presented at the 2004 meeting of the Latin American Studies Association, Los Vegas, Nevada, 7-9 October 2004, p. 22. I thank Ayacx Mercedes for pointing this out in the context of the current discussion.
32. Interview in Santo Domingo (Dominican Republic), June 2002.
33. Diario Hoy (April 13, 2003). Unless otherwise stated, information from Baninter comes from various issues of Diario El Caribe and Listín Diario.
34. Unless otherwise stated the information on MercaSID in this section comes from Revista Mercado (various issues) and MercaSID's webpage at www.mercasid.com.do.
35. Quoted in 'El magnate dominicano,' Estrategia y Negocios (July 2003). Unless otherwise stated, the information about the Grupo Corripio in this section comes from that article as well as several issues of the monthly Revista Mercado.
36. 'Las 75 empresas más admiradas de América Latina y República Dominicana', in Estrategia y Negocios (Sept. 2000).
37. Interview with a manager from Durman Esquivel, San José (Costa Rica), Oct. 2002.
38. Statement by Arturo Pellerano, president of the telecommunications company Tricom and son of the founder of the group Maximo Pellerano, in Revista Mercado, 1996. Unless otherwise stated the information on the Grupo Financiero Nacional and its subsidiaries comes from Revista Mercado (various issues), Bancredito's Annual Financial Statement, 2002 and Tricom's webpage at www.tricom.com.do.
39. Rates of growth calculated from original data collected in CEPAL, Desarrollo económico y social en la República Dominicana: Los últimos veinte años y perspectivas para el siglo XXI. Tomo II (Compendio Estadístico), (Santo Domingo, 2001), p. 411.
40. Interview with a manager from Durman Esquivel in San José (Costa Rica), Oct. 2002.
41. For a review of these arguments within the development literature, see Diego Sánchez Ancochea, 'The Role of the State in Structural Change: An Institutional Approach,' Transregional Center for Democratic Studies Working Papers, Dec. 1999, particularly pp. 10-14 and 19.
42. Evans, Embedded Autononmy,
43. and P. Evans and J. Rauch, 'Bureaucracy and Growth: A Cross-National Analysis of the Effects of "Weberian" State Structures on Economic Growth,' American Sociological Review, vol. 64 (1999), pp. 748-65.
44. In Costa Rica, for example, in the mid-1970s an estimated 43% of public sector employees were unionised, as opposed to only 5 per cent of private sector workers. See S. Rottemberg (ed.), The Political Economy of Poverty, Equity and Growth. Costa Rica and Uruguay (Oxford, 1993).
45. E. Lizano, Ajuste y crecimiento en la economía de Costa Rica, 1982-1994 (San José, 1999), p. 1.
46. The freeze in public employment was also promoted by USAID, which was a fundamental force in favor of market-friendly reforms and the reduction in the political influence of the state and its trade unions. See, for example, W. Robinson, Transnational Conflicts.
47. The impact of the freezing of public employment on the strength of the trade unions was highlighted by a leading member of the trade union confederation 'Confederación de Trabajadores Rerum Novarum' (interview in San José, Costa Rica, Aug. 2002).
48. Juan Manuel Villasuso, 'Economía política de las reformas estructurales en Costa Rica,' Simposio Internacional del Proyecto de Investigación Reforma Económica y Cambio Social en América Latina y el Caribe, Cali, 1999.
49. Interviews with two leading members of the Confederación de Trabajadores Rerum Novarum (San José, Costa Rica, Aug. 2002) and of the trade union confederation 'Central Del Movimiento de Trabajadores Costarricenses' (San José, Costa Rica, Sept. 2002).
50. Interviews with Miguel Gutiérrez Saxe (San José, Costa Rica, Sep. 2002), Guillermo Lee Chin (San José, Costa Rica, Oct. 2002), Juan Manuel Villasuso (San José, Costa Rica, Sep. 2002), Mario Mora, chief advisor of the PLN in the National Assembly at that time and former vice-minister of Planning in the Figueres Administration, 1994-98 (San José, Costa Rica, Aug. 2001), and Juan Diego Trejos, professor of economics at the University of Costa Rica (UCR) and research fellow in the Instituto de Investigacion en Ciencias Económicas, UCR (San José, Costa Rica, Aug. 2001).
51. Interview in San José, Costa Rica, Oct. 2002.
52. Interview with Miguel Gutiérrez Saxe (San José, Costa Rica, Sept. 2002).
53. Interview with Juan Manuel Villasuso (San José, Costa Rica, Sept. 2002).
54. Several of my interviewees also pointed to the increase in the number of public employees working with temporary contracts in Costa Rica. However, the lack of a census of the public sector in Costa Rica makes this shared impression difficult to verify.
55. Estado de la Nación, Séptimo informe del Estado de la Nación en Desarrollo Sostenible (San José, 2001), chapter 1.
56. Interview with Juan Manuel Villasuso (San José, Costa Rica, Sep. 2002).
57. Interview with Guillermo Lee Chin (San José, Costa Rica, Oct. 2002).
58. Interview with Miguel Gutiérrez Saxe (San José, Costa Rica, Sept. 2002).
59. Interviews with Leonardo Garnier, former Minister of Planning and currently Professor of Economics, UCR (San José, Costa Rica, Aug. 2001 and 2002).
60. Interview with Juan Diego Trejos (San José, Costa Rica, Aug. 2001).
61. M. Blanco, Los compromisos del gobierno de Costa Rica en materia de libertad sindical (San José, 1993).
62. J. A. Bonifacio and G. Falivene, Las relaciones laborales en el nuevo contexto de las reformas administrativas, 2002: http://www.clad.org.ve/siare/innotend/laboral/laboral.html.
63. The decision of the Constitutional Court did allow collective bargaining agreements for the public employees not subject to 'the regime of public employment' (Ibid). This has allowed workers in many autonomous institutions to obtain higher wage increases than other public employees and has contributed to further erode the legitimacy of the bureaucracy.
64. M. Castro, Violación de disposiciones laborales por el gobierno de Costa Rica (San José, 2001): http://www.aseprola.org/documentos/ denuncia_libertad_sindical/denuncia_libertad_sind1.htm.
65. Ibid. section 3.4. The same idea was expressed by two of the trade union leaders I interviewed.
66. Interview in Santo Domingo, Dominican Republic, July 2002.
67. Introduction of Law 14-91 of the Civil Service and Administrative Careers.
68. Interview in Santo Domingo, Dominican Republic, July 2002.
69. Interview with a high ranking public official in Santo Domingo (Dominican Republic), May 2002.
70. ONE, Censo del sector público de la República Dominicana, 1997 (Santo Domingo, 1997).
71. Interview in Santo Domingo, Dominican Republic, June 2002.
72. For a complete discussion of the proposals see the original plan in A. Dauhajre et al., El Programa. Programa macroeconómico de mediano plazo para la República Dominicana, 1996-2000 (Santo Domingo, 1996).
73. Interview with Leonardo Garnier (San José, Costa Rica, Aug. 2002).
74. The following discussion on the process of national concertation is mainly based on Estado de la Nación, Quinto Informe del Estado de la Nacion en Desarrollo Sostenible (San José, 1999), Estado de la Nación, Sexto Informe del Estado de la Nación en Desarrollo Sostenible (San José, 2000),
75. and M. Gutiérrez Saxe and J. Vargas Cullell, 'Conversaciones sobre la experiencia y desafíos de la concertación nacional de 1998 en Costa Rica,' San José, unpublished manuscript, 1999, as well as on an interview with Gutiérrez Saxe (San José, Costa Rica, Sept. 2002).
76. Estado de la Nación, Sexto informe, chapter 5.
77. Estado de la Nación, Quinto Informe, box 5.4.
78. Estado de la Nación. Séptimo Informe
79. and Manuel Solís, 'Entre el cambio y la tradición: El fracaso de la privatización de la energía y las telecomunicaciones en Costa Rica,' Revista de Ciencias Sociales, vol. 95, 2002, pp. 33-47.
80. Interview with Marco Vinicio Ruiz, San José (Costa Rica), Aug. 2002.
81. The survey can be found at http://www.nacion.com/ln_ee/encuestas/unimer/ 6-2000/encuesta.htm.
82. Interview with a leading figure of the trade union confederation 'Confederación de Trabajadores Rerum Novarum,' San José (Costa Rica), Aug. 2002.
83. Information from an internal document provided to me by the trade union confederation Rerum Novarum in August 2002.
84. For a description of the scandals and the different explanations of their causes and effects, see Central American Politics, vol. 31, issues 38, 40, 41, 45 and 47.
85. In addition to the largest groups, large capitalists in the tourist sector and the free trade zones also benefited significantly from the expansion of the 1990s and the state promotion of both sectors. Meanwhile, although real wages and social spending increased, the rate of growth of real wages was significantly lower than that of GDP and public social spending remained extremely low by regional standards.
86. Jaime Aristy, 'Liberalización de la balanza de pagos. Efectos sobre el crecimiento, el empleo, y la productividad. El caso de la República Dominicana,' in E. Ganuza et al. (eds.), Liberalización, desigualdad y pobreza: América Latina y el Caribe en los 90 (Buenos Aires, 2001), p. 945.
87. Interview with a manager from Durman Esquivel, San José (Costa Rica), Oct. 2002.
88. See Listín Diario, to June 2002.
89. See Diario Hoy, 9 April 2003.
90. Information on Baninter after its crisis has been quite extensive. The following section is based on various articles from the Dominican newspapers El Caribe and Diario Hoy and from the US newspapers The Miami Herald and the Wall Street Journal. It is also based on web reports from JP Morgan and from a briefing that was handed to the press by officials from the Central Bank when the government announced the fraud.
91. 'El magnate dominicano,' Estrategia y Negocios, July 2003.
92. Information from an Op-Ed by Bernando Vega in the daily newspaper El Caribe on 23 Nov. 2003.
93. Preliminary data based on statistics from the Annual Report 2004 of the Central Bank (in 1970 pesos).