This paper is dedicated to the memory of Lya Imber de Coronil. It is part of a larger research project; fieldwork in Venezuela was financed by CONICIT and supported by CENDES. Analysis and writing were supported by a grant from FUNDAYACUCHO and facilitated by the University of Chicago. An earlier version was presented at the eighth annual meeting of the Latin American Studies Association, Pittsburgh, Penn., April 1979. Our work has benefited from critical comments by Alba Alexander, Enrique Baloyra, Robert Bond, John Coatsworth, Bernard Cohn, John Comaroff, Nora Hamilton, Dan Hellinger, Jack Jacobsen, David Moberg, Philippe Schmitter, Raymond Smith, David Thomas, and Michael Wallerstein. We also express gratitude to Terence Turner and Adam Przeworski, who discussed each draft of this paper, and to Peter Katzenstein and two anonymous readers of International Organization's editorial board for their suggestions.

¹ See especially the 1969 work of Fernando Henrique Cardoso and Enzo Faletto published in English as Dependency and Development in Latin America (Berkeley: University of California Press, 1979)Google Scholar; and Sunkel, Osvaldo and Fuenzalida, Edmundo, “Transnationalization, National Disintegration and Reintegration in Contemporary Capitalism,” IDS International Working Paper no. 18 (Brighton, England, 06 1974)Google Scholar. Valuable on current thinking is Collier, David, ed., The New Authoritarianism in Latin America (Princeton: Princeton University Press, 1979).Google Scholar

² See Caporaso, James A., ed., “Dependence and Dependency in the Global System,” International Organization 32, 1 (Winter 1978).Google Scholar

³ For a discussion of liberal and dependency “ideologies,” see Cox, Robert W., “Ideologies and the New International Economic Order,” International Organization 33, 2 (Spring 1979): 257–301CrossRefGoogle Scholar. Holsti, Kal J. compares realism and dependency in “A New International Politics? Diplomacy in Complex Interdependence,” International Organization 32, 2 (Spring 1978): 513–30.CrossRefGoogle Scholar

⁴ This position appears most clearly in André Gunder Frank's work, particularly Lumpen-bourgeoisie and Lumpendevelopment: Dependence, Class and Politics in Latin America (New York: Monthly Review Press, 1972)Google Scholar.

⁵ This formulation is based on Przeworski, Adam, “Capitalism, the Last Stage of Imperialism,” mimeo., University of Chicago, 1978Google Scholar. On the consequences of this disjuncture see Lechner, Norbert, La crísis del estado en América Latina (Caracas: El Cid Editor, 1977).Google Scholar

⁶ Robert Brenner proposes this in “The Origins of Capitalist Development: A Critique of Neo-Smithian Marxism,” New Left Review no. 104 (July–August 1977): 82–87.Google Scholar

⁷ For an analysis suggesting a similarity between the export of cheap labor power and that of primary products see Chi-Keung, Ko, “Dependent Development of an Export Platform Economy: Taiwan,” M.A. thesis, University of Chicago, 1981.Google Scholar

⁸ For an application of Marx's theory of ground rent to the oil industry, see Massarratt, Mohssen, “The Energy Crisis,” in Nore, Petter and Turner, Terisa, eds., Oil and Class Struggle (London: Zed Press, 1980)Google Scholar. For a neoclassical treatment of mineral rents, see Mamalakis, Markos, “La teoría mineral del crecimiento: la experiencia latinoamericana,” El Trimestre Económico 45 (10–12 1978): 841–78.Google Scholar

⁹ Kurth, James R., “The International Politics of Postindustrial Societies: The Role of the Multinational Corporation,” in Lindberg, Leon N., Alford, Robert, Crouch, Colin, and Offe, Claus, eds., Stress and Contradiction in Modern Capitalism (Lexington, Mass.: Lexington Books, 1975), p. 387.Google Scholar

¹⁰ See Bergsten, C. Fred, Horst, Thomas, and Moran, Theodore H., American Multinationals and American Interests (Washington, D.C.: Brookings, 1978), pp. 373–78Google Scholar, for the argument that important host country gains have been made in the auto industry. For the opposing view, that auto TNCs hold decisive power in renegotiations of state policy, see Bennett, Douglas and Sharpe, Kenneth, “Agenda Setting and Bargaining Power: The Mexican State vs. Transnational Corporations,” World Politics 32, 1 (10 1979): 57–89CrossRefGoogle Scholar. See also Fleet, Michael, “Host Country–Multinational Relations in the Colombian Automobile Industry,” Interamerican Economic Affairs 32, 1 (1977): 3–32.Google Scholar

¹¹ Rómulo, Betancourt, Venezuela, Oil and Politics (Boston: Houghton Mifflin, 1979), p. 27Google Scholar. See also Lieuwen, Edwin, Petroleum in Venezuela: A History (Berkeley: University of California Press, 1954), p. 22.Google Scholar

¹² Rose, Sanford, “Why the Multinational Tide is Ebbing,” Fortune, August 1977, p. 118Google Scholar. For the oil contracts, see Equipo Proceso, Político, CAP 5 Años (Caracas: Editorial Ateneo de Caracas, 1978), pp. 145–275.Google Scholar

¹³ Vernon, Raymond, Sovereignty at Bay: The Multinational Spread of U.S. Enterprises (New York: Basic Books, 1971), pp. 46–59Google Scholar. See also Bergsten, , Horst, , and Moran, , American Multinationals, pp. 130–40.Google Scholar

¹⁴ For “associated dependent development” see Cardoso, Fernando Enrique, “Associated-Dependent Development: Theoretical and Practical Implications,” in Stepan, Alfred, ed., Authoritarian Brazil: Origins, Policies and Future (New Haven: Yale University Press, 1973), pp. 142–76Google Scholar. Two works apply this concept to Brazil. In Evans, Peter, Dependent Development: The Alliance of Multinational, State and Local Capital in Brazil (Princeton: Princeton University Press, 1979)Google Scholar, each alliance member is seen as having different interests. Newfarmer, Richard F., Transnational Conglomerates and the Economics of Dependent Development (Greenwich: JAI Press, 1979), argues that government attempts at social reform are likely to be blocked by the TNCs. In our view the dominant alliance is structured by sets of conflicting and convergent interests, and is reproduced by continual shifts of these groupings.Google Scholar

¹⁵ Dependent capitalism is “truncated” because of the lack of development and articulation between the capital and consumer goods sectors (see Cardoso and Faletto, Dependency and Development), inputs and outputs (see Przeworski, “Capitalism”), and conception and execution (see Braverman, Harry, Labor and Monopoly Capitalism [New York: Monthly Review Press, 1975]).Google Scholar

¹⁶ On oil production and the transformation of the social-political system, see Franklin, Tug-well, The Politics of Oil in Venezuela (Stanford: Stanford University Press, 1975)Google Scholar; Wolfgang Hein, “Oil and the State in Venezuela,” in Nore and Turner, Oil and Class Struggle; and Esser, Klaus, Oil and Development, Venezuela (West Berlin: German Development Institute, 1976).Google Scholar

¹⁷ For extended discussion of the arguments in this section, see Coronil, Fernando, “The Industrial Bourgeoisie and the State in Venezuela,” Ph.D. diss., University of Chicago, forthcomingGoogle Scholar, and Skurski, Julie, “Industrial Structure and Bourgeois Ideology,” Ph.D. diss., University of Chicago, forthcoming.Google Scholar

¹⁸ See Izard, Manuel et al. , Político y economía en Venezuela, 1810–1976 (Caracas: Fundación John Boulton, 1976).Google Scholar

¹⁹ Tugwell, Franklin, “Petroleum Policy and the Political Process,” in Martz, John D. and Myers, David J., eds., Venezuela: The Democratic Experience (New York: Praeger, 1977), pp. 237–54Google Scholar. See also Hellinger, Dan, “Class and Politics in Venezuela: Prologue to a Theory of Representative Democracy in Dependent Nations,” mimeo., Webster College, St. Louis, Missouri, 1979.Google Scholar

²⁰ For Venezuela's “dual track” development model see Tugwell, Politics of Oil in Venezuela.

²¹ Humberto Calderón, Berti, quoted in Resumen, 3 May 1981.Google Scholar

²² In the European auto industry global production dropped 15% in 1974, five of the nine major producers had large losses, and several firms required government intervention. The U.S. auto industry declined well into 1975, with auto sales down 35% over 1973 in part because of foreign car imports (Business Week, 19 June 1979).

²³ For the U.S. auto industry, see Fabar, Al, “Auto In the Eighties, Uncars and Unworkers,” Radical America 13 (1978): 31–37Google Scholar. For the European industry, see Kronish, Rich, “Crisis in the West European Motor Industry: Class Struggle in the British Motor Industry,” Review of Radical Political Economics 10 (Summer 1978): 25–42.CrossRefGoogle Scholar

²⁴ Interview, 1978.

²⁵ Business Latin America, 25 October 1978.Google Scholar

²⁶ The government's strategy and investment program were described in V Plan de la Natión, Gaceta Oficial de la República de Venezuela, no. 1860, extraordinario (Caracas: Tripografia Nacional, 1976)Google Scholar. Gene Bigler analyzes the state's institutional expansion in “State Economic Control vs. Market Expansion: The Third Sector in Venezuelan Politics, 1928–1978,” Ph.D. diss., Johns Hopkins University, 1980Google Scholar. For the V Plan, the reform of state enterprises, and the oil nationalization, see Equipo Proceso Político, CAP 5 Años. For administrative reform, see Lynn Karl, Terry, “Political Power and the Entrepreneurial State: The Reform of State Enterprises in Venezuela,” paper delivered at the eighth national meeting of the Latin American Studies Association, Pittsburgh, Penn., April 1979.Google Scholar

²⁷ O'Donnell, Guillermo A., Modernization and Bureaucratic-Authoritarianism: Studies in South American Politics (Berkeley: University of California Press, 1973).Google Scholar

²⁸ The rise of the “new groups” within the bourgeoisie is significant and poorly understood. Their political connections are analyzed by Duno, Pedro, Los doce apóstoles (Valencia: Vadell Hermanos, 1975)Google Scholar, and Américo, Martin, Los peces gordos (Valencia: Vadell Hermanos, 1976)Google Scholar. Equipo Proceso Político argues in CAP 5 años that the new groups constitute an internationalized fraction of capital. No thorough analysis of their economic basis has been made. The only analysis of the “old” groups is in the works of Domingo Alberto Rangel, especially La oligarquía del dinero (Caracas: Editorial Fuentes, 1972)Google Scholar. For the Venezuelan industrial bourgeoisie see Coronil, “The Industrial Bourgeoisie.”

²⁹ Data for this section come from reports of FAVENPA, CIVA, and the Ministry of Development. For the auto parts sector see Skurski, “Industrial Structure.”

³⁰ For automobile policy in democratic planning, see Blank, David Eugene, “Policy Making Style and Political Development: The Introduction of a System of Democratic Planning in Venezuela, 1958–1968,” Ph.D. diss., Columbia University, 1969Google Scholar, and “Political Conflict and Industrial Planning in Venezuela,” in Taylor, Philip B. Jr., ed., Venezuela, 1969, Analysis of Progress (Washington, D.C.: Johns Hopkins University, SAIS, 1971), pp. 84–106.Google Scholar

³¹ These include the Phelps, Degwitz, Planchart, Di Massi, Cisneros, Duarte, Zingg, Va-Uenilla, and Mendoza families. For the early auto dealerships see Schael, Guillermo José, El automívil en Venezuela (Caracas: Gráficas Ediciín de Arte, 1969).Google Scholar

³² See Blank, , “Policy Making Style.”Google Scholar

³³ For “agenda setting” see Bennett and Sharpe, “Agenda Setting and Bargaining Power.” Despite their careful empirical work, by criticizing certain shortcomings rather than the basic assumptions of the balance-of-bargaining-power approach they reproduce its limitations. The issue is not to complement Kindleberger's economic theory of bargaining with political science theories of power, but to transcend limiting assumptions common to both disciplines. Nations and TNCs cannot be viewed as “parties” or “actors” of the same order, nor should a country's “social benefits” and a corporation's “earnings” be regarded as equivalent analytical categories (see Bennett, and Sharpe, , “Agenda Setting and Bargaining Power,” p. 58)Google Scholar. This analytical weakness has empirical consequences: they do not analyze why or how the Mexican local content goal was set at 60% and fail to note that in measuring local content in terms of direct cost local productive inefficiency is computed as value incorporated.

³⁴ Untitled confidential memorandum, Ministry of Development, 1974; interviews with members of the draft commission.

³⁵ Both José Ignacio Casals and Constantino Quero Morales became ministers of development under Pérez; Aura Celina Casanova headed the state's Industrial Bank. Their “Estudio sobre la industria automotriz venezolana y sus perspectivas de desarrollo” (Caracas: ECODESA, 1969)Google Scholar, was commissioned by the Venezuelan Development Corporation (CVF) from their private consulting firm.

³⁶ See Blank, David Eugene, “The Politics of Industrial Planning in Venezuela, 1958–1974: Variations on the Theme of ‘Democratic Planning,’” paper delivered at the fifth national meeting of the Latin American Studies Association, San Francisco, Calif., 14–16 November 1974.Google Scholar

³⁷ “Normas para el desarrollo de la industria automotriz, Resolución no. 5457, August 28, 1975,” Gaceta Oficial no. 1772, 16 September 1975.

³⁸ Grupo Andino, no. 69.

³⁹ According to a former técnico from the Development Ministry, it would be feasible to use body stamping to achieve model reduction in the intermediate stage of the industry's growth. The “freezing” of models would strike directly at the local industry's commercial dependence on the foreign companies and at the local market's replication of U.S. consumption patterns (interview, 1978). For a discussion of economies of scale see Baranson, Jack, Automotive Industries in Developing Nations (Washington, D.C.: International Bank for Reconstruction and Development, 1969)Google Scholar; Jenkins, Rhys Owen, Dependent Industrialization in Latin America: The Automobile Industry in Argentina, Chile and Mexico (New York: Praeger, 1977)Google Scholar; White, Lawurence, The Automobile Industry since 1945 (Cambridge: Harvard University Press, 1971).CrossRefGoogle Scholar

⁴⁰ For the gap between policy formulation and implementation in the Third World see Grindle, Merilee S., ed., Politics and Policy Implementation in the Third World (Princeton: Princeton University Press, 1980).CrossRefGoogle Scholar

⁴¹ Interviews with executives of GM, Ford, and Chrysler, and with officers of CIVA and FAVENPA.

⁴² The exception was a bid by PLAMOANCA, a company formed by GM and SIVENSA. Only industrialists from the major economic groups were willing to undertake investments of this magnitude and slow maturation.

⁴³ Between 1974 and 1976 the GNP grew at a rate of 6.13%, but demand expanded at a rate of 9.6%. Imports made up the difference and rose at a rate of 36.9%. Industrial output expanded 11%, but the rate of private investment in industry declined, and only in 1976 reached the 1972 level. In 1977 industrial output increased only 4%, while commerce expanded 34%. Central, Banco, Informe Econímico (Caracas: Editorial Arte, 1979).Google Scholar

⁴⁴ “Ante una locura, planteen otra locura.” Confidential interviews with government employees.

⁴⁵ These negotiations and the bid evaluations were carried out in secrecy. There has been no public information on the bid contents. Data here were obtained in interviews with numerous industrialists and tecnicos.

⁴⁶ According to local officers of the firm, VW's home office decided against bidding because of its large new investments in Brazil and Mexico.

⁴⁷ Mack, Cummins, Ferrostaal, and Steward & Stevenson did not meet minimum bid requirements.

⁴⁸ President Pérez was known to have a good relationship with FIAT's President Agnelli, whom he visited during his official trip to Italy.

⁴⁹ Some técnicos stated privately that the government's decision to specify the engine's number of cylinders rather than technical performance was politically motivated. Ford lacked a suitable six-cylinder engine.

⁵⁰ FAVENPA objected that the new delay created further uncertainty for investors in new parts production, and that it reinforced violations by the assembly firms of the local content requirements. The deficit in parts purchases in 1976 was $12.8 million; by 1977 it was $42.3 million, and by 1978, $64.4 million. Data obtained from the Ministry of Development.

⁵¹ Latin American Economic Report, 13 April 1979Google Scholar. For a critical view see Resumen, 17 June and 9 December 1979Google Scholar. See also the Monthly Report, September 1979, November 1979, March 1980, April 1980Google Scholar. In relation to the Pegaso selection, expresident Pérez stated privately “There was a tremendous reaction in the U.S. In Venezuela millions and millions have been invested in bribes and in all kinds of activities in an attempt to destroy this negotiation. There were even attempts to say that Pegaso was my business deal, so as to discredit our decision.” Interview, September 1980.

⁵² Confidential interviews. See “Resoluciín no. 4970, 9 de septiembre 1977,” Gaceta Oficial, 12 September 1977.Google Scholar

⁵³ “Concerted planning” is a system of policy consultation involving the state, the private sector, and labor.

⁵⁴ El Universal, 18 September 1977Google Scholar. According to informed sources, GM and Ford each offered to lobby the U.S. Congress to include Venezuela and Ecuador in the preferential trade system of the U.S. Foreign Trade Law (which had excluded OPEC nations) if they won the engine bids. Venezuela's exclusion from the law affected a few key sectors, such as the petrochemicals industry.

⁵⁵ Domínguez, Luis Alvarez, quoted in the Daily Journal, 19 October 1978.Google Scholar

⁵⁶ On the local entrenchment of auto manufacturing companies lessening the bargaining power of the host government see Bennett, and Sharpe, , “Agenda Setting and Bargaining Power,” p. 87.Google Scholar

⁵⁷ France reportedly offered military technology with the Renault engine. The unexpected presence of the Defense Minister at a Gabinete Econímico meeting supports this information. In contrast, Ford's representative reportedly gave an ultimatum to Minister Alvarez Dominguez: either accept Ford's engine bid or Ford leaves the country.

⁵⁸ As the electoral consequences of poor administration and widespread corruption were recognized, AD chose a Betancourt-supported candidate, Luis Pinerúa, who promised honesty in the public administration.

⁵⁹ Zeta, 15 August 1978.Google Scholar

⁶⁰ El Universal, 11 July 1978.Google Scholar

⁶¹ They added the following requirements: the manufacture of transmissions for export outside the Andean Pact (100,000 automatic transmissions per year from Venezuela, 75,000 manual transmissions per year from Ecuador); the elimination of royalty payments for engine plant technology; and the establishment of an automotive training center for workers. El Universal, 22 August 1978.Google Scholar

⁶² El Universal, 19 August 1978.Google Scholar

⁶³ The Ministry of Development has generally been more accessible to private sector influence than has ICE. But during the Perez administration the Minister of Development acted as a direct representative of the president, and Ford found more support from ICE's Figueredo Planchart. There was no disagreement on technical grounds between the técnicos of the two institutions, who shared the auto policy's assumptions and goals.

⁶⁴ A group of local journalists toured Ford's North American facilities during the company's August celebration of its fiftieth anniversary, and reciprocated with laudatory press articles.

⁶⁵ Confidential interview.

⁶⁶ Daily Journal, 19 October 1978.Google Scholar

⁶⁷ For discussion of the complex “Carmona Case” scandal (in which the president was implicated), involving the bribery of public officials and assassinations by the federal police, see Resúmen, , October 1978 through December 1979.Google Scholar

⁶⁸ Sweeney, John, Daily Journal, 19 10 1978.Google Scholar

⁶⁹ The suspension did not apply to selections covered by international coproduction agreements, i.e., to GM. The government invited new companies, GM and Cummins, to bid for the diesel engines. Mack had challenged the legal claim of Pegaso to the B4 engine, and had constructed an assembly plant for diesel engines to export outside the Andean region. FIAT was in violation of its two signed engine contracts, for it had not begun construction on either.

⁷⁰ As an interim measure, the government allowed the assemblers to import 15,000 small, low-priced, “popular cars” until October 1981. This move defied the Andean Pact's Sectoral Program.

⁷¹ Ford suggested in its new engine bid that the Andean countries only assemble vehicles (and engines) until their market volume justified actual production. They could compensate by exporting autoparts from the region, e.g., aluminum dies from Venezuela. See Número, 15 February 1981.Google Scholar

⁷² Interview, September 1980.

⁷³ Business Week, 20 November 1978.Google Scholar

⁷⁴ Business Week, 1 December 1980.Google Scholar

⁷⁵ Interview with Rodrigo Arcaya. Interviews with local industrialists confirmed this view.

⁷⁶ KNOT1FAVENPA, June 1978.Google Scholar

⁷⁷ For the Mexican and Argentinian auto industries, see Jenkins, Dependent Development, as well as Kronish, Rich and Mericle, Ken, “The Political Economy of the Latin American Motor Vehicle Industry,” paper delivered at the eighth national meeting of the Latin American Studies Association,Pittsburgh, Penn.,5–7 April 1979Google Scholar. For the shift from import-substitution to export-promotion policies in Mexico, see Bennett, Douglas and Sharpe, Kenneth E., “Transnational Corporations and the Political Economy of Export Promotion: The Case of the Mexican Automobile Industry,” International Organization 33, 2 (Spring 1979): 177–201.CrossRefGoogle Scholar

⁷⁸ Daily Journal, 31 January 1978.

⁷⁹ Interview, September 1980.

⁸⁰ Interview, September 1980.

⁸¹ Interview, September 1980.

⁸² Confidential interview, September 1980.

⁸³ Interview, September 1980.

⁸⁴ By “domiciliated bourgeoisie” we mean the sector of foreign capital that becomes rooted socially and politically in the host nation. For the “doctrine of domicile,” see Sklar, Richard L., Corporate Power in an African State: The Political Impact of Multinational Mining Companies in Zambia (Berkeley: University of California Press, 1975), p. 186.Google Scholar

⁸⁵ On this concept, see Brenner, , “Origins of Capitalist Development,” pp. 41–53.Google Scholar

⁸⁶ Between 1973 and 1975, “the purchasing power of the revenues spent on major industrial projects (which make up more than 40% of the Fifth Plan), declined by approximately 57% ….” Moran, Theodore, Oil Prices and the Future of OPEC (Washington, D.C.: Resources for the Future, 1978), p. 46Google Scholar. This decline in purchasing power brought increased borrowing. “Publicly announced foreign debt has risen ten-fold to $7.7 billion since 1974, and the new government says it is uncovering a bewildering maze of unaudited borrowing by government agencies that could almost double the foreign debt figures.” Business Week, 7 May 1979.Google Scholar

⁸⁷ Recent work on the relation between state and society in advanced capitalist nations emphasizes the need to analyze the totality of capitalist relations. Nevertheless, Parsonian and Poulantzian schemes predominate in the analysis of dependent societies, where there is even less basis for isolating separate analytical “systems” or “instances.” For an illuminating discussion, see Holloway, John and Picciotto, Sol, State and Capital. A Marxist Debate (Austin: University of Texas Press, 1978).Google Scholar

⁸⁸ Marx, Karl, Capital (New York: International Publishers, 1967), 3:328Google Scholar. See also Brenner, , “Origins of Capitalist Development,” p. 51.Google Scholar