1 The original framework is from Peter A. Hall and David Soskice, ‘An Introduction to Varieties of Capitalism’, in Peter A. Hall and David Soskice (eds.), Varieties of Capitalism: The Institutional Foundations of Comparative Advantage (New York, 2001), pp. 1–68. For more recent debates and extensions, see Boyer Robert, ‘How and Why Capitalisms Differ’, Economy and Society, vol. 34, no. 4 (2005), pp. 509–57; Colin Crouch, Capitalist Diversity and Change: Recombinant Governance and Institutional Entrepreneurs (Oxford, 2005); Bob Hancké, Martin Rhodes and Mark Thatcher (eds.), Beyond Varieties of Capitalism: Conflict, Contradiction and Complementarities in the European Economy (Oxford, 2007).
2 See, for example, Bruno Amable, The Diversity of Modern Capitalism (New York, 2003); Hancké et al. (eds.), Beyond Varieties of Capitalism; David Lane and Martin Myant (eds.), Varieties of Capitalism in Post-Communist Countries (New York, 2007); Andreas Nölke and Arjan Vliegenthart, ‘Enlarging the Varieties of Capitalism: The Emergence of Dependent Market Economies in East Central Europe’, World Politics (forthcoming, 2009).
3 See, for example, Lauterbach Albert, ‘Government and Development: Managerial Attitudes in Latin America’, Journal of Interamerican Studies and World Affairs, vol. 7, no. 2 (1965), pp. 201–25.
4 Peter Evans, Embedded Autonomy: States and Industrial Transformation (Princeton, 1995); Stephen Haggard and Robert Kaufman, The Political Economy of Democratic Transitions (Princeton, 1995).
5 Almost nothing like the extensive subdiscipline of business history in developed countries exists in Latin America. For an important exception, see Carlos Dávila and Rory Miller (eds.), Business History in Latin America: The Experience of Seven Countries (Liverpool, 1999).
6 María Angélica Ducci, ‘Training and Retraining in Latin America’, in Albert Berry (ed.), Labor Market Policies in Canada and Latin America (Boston, 2001).
7 Hall and Soskice, ‘An Introduction’, p. 21.
8 Elsewhere I elaborate on abstract conceptual and ideal typical distinctions among CMEs, LMEs and HMEs: Ben Ross Schneider, ‘Comparing Capitalisms: Liberal, Coordinated, Network, and Hierarchical’ (MS, 2008). In this paper the goal is more to use the varieties of capitalism framework to identify comparable empirical regularities in Latin America in corporate governance, labour relations and skills.
9 See Ben Ross Schneider, Business Politics and the State in 20th-Century Latin America (Cambridge, 2004). Nölke and Vliegenthart, in ‘Enlarging the Varieties of Capitalism’, also emphasise hierarchy as the core mechanism of allocation in the ‘dependent market economies’ they identify in Eastern Europe.
10 Bohle Dorothee and Greskovits Béla, ‘The State, Internationalization, and Capitalist Diversity in Eastern Europe’, Competition & Change, vol. 11, no. 2 (2007), pp. 89–115.
11 Schneider Ben Ross, ‘Economic Liberalization and Corporate Governance: The Resilience of Business Groups in Latin America’, Comparative Politics, vol. 40, no. 4 (2008), pp. 379–98; Ben Ross Schneider and Sebastian Karcher, ‘Labor Markets in Latin America: Inflexibility, Informality, and Other Complementarities’ (MS, 2008); see also Boyer, ‘How and Why Capitalisms Differ’. Most of the specific examples and illustrations in this paper are drawn from these countries, but much of the quantitative data and the secondary literature covers more or all countries of the region.
12 Schneider, ‘Economic Liberalization’; Schneider Ben Ross, ‘A Comparative Political Economy of Diversified Business Groups, or How States Organize Capitalism’, Review of International Political Economy, vol. 16, no. 2 (forthcoming, 2009).
13 Although different from large firms in many LMEs and CMEs, such diversified business groups are common in most of the rest of the developing world: see Khanna Tarun and Yafeh Yishay, ‘Business Groups in Emerging Markets: Paragons or Parasites?’, Journal of Economic Literature, vol. 45, no. 2 (2007), pp. 331–72; Asli Colpan, Takashi Hikino and James Lincoln (eds.), The Oxford Handbook of Business Groups (Oxford, forthcoming).
14 Celso Garrido and Wilson Peres, ‘Las grandes empresas y grupos industriales latinoamericanos en los años noventa’, in Wilson Peres (ed.), Grandes empresas y grupos industriales latinoamericanos (México DF, 1998), p. 13.
15 Francisco Durand, Incertidumbre y soledad: Reflexiones sobre los grandes empresarios de América Latina (Lima, 1996), p. 93.
16 Schneider, ‘Economic Liberalization’. Business groups fared less well in Argentina and Peru than their counterparts elsewhere, and many sold out to foreign investors. However, the foreign investors were sometimes business groups from other countries of the region, which added a regional dimension to business-group dominance of the private sector. Some reports also suggested that new business groups were emerging in Argentina in the late 2000s: Diego Cabot, ‘El repliegue de grandes grupos empresarios’, La Nación, 11 January 2009.
17 Lefort Fernando, ‘Ownership Structure and Market Valuation of Family Groups in Chile’, Corporate Governance, vol. 5, no. 1 (2005), pp. 7–13.
18 Qué Pasa, 5 November 2005, p. 22.
19 See Institute of Developing Economies/Japan External Trade Organization, Family Business in Developing Countries (Tokyo, 2004).
20 Schneider, ‘Economic Liberalization’; see also Porta Rafael La, López-de-Silanes Florencio and Shleifer Andrei, ‘Corporate Ownership around the World’, Journal of Finance, vol. 54, no. 2 (1999), pp. 492, 494.
21 Susan Cunningham, ‘Multinationals and Restructuring in Latin America’, in Chris J. Dixon, David William Drakakis-Smith and H. D. Watts (eds.), Multinational Corporations and the Third World (London, 1986), p. 46.
22 Mauro Guillén, The Limits of Convergence: Globalization and Organizational Change in Argentina, South Korea, and Spain (Princeton, 2001), p. 126.
23 Economic Commission for Latin America and the Caribbean (ECLAC), Foreign Investment in Latin America and the Caribbean, 2005 (Santiago, 2006), p. 11.
24 Petras James and Veltmeyer Henry, ‘Latin America at the End of the Millennium’, Monthly Review, vol. 51, no. 3 (1999), pp. 31–52; Zeile William, ‘US Intrafirm Trade in Goods’, Survey of Current Business, vol. 77, no. 2 (1997), pp. 23–38.
25 Gereffi Gary, Humphrey John and Sturgeon Timothy, ‘The Governance of Global Value Chains’, Review of International Political Economy, vol. 12, no. 1 (2005), pp. 78–104.
26 See Barbara Stallings, Finance for Development: Latin America in Comparative Perspective (Washington DC, 2006).
27 This figure exaggerates the proportion of GDP controlled by these 63 firms, because it includes foreign sales. At the same time it underestimates the degree of concentration, because some of these 63 firms belong to an even smaller number of business groups: América Economía, 9 July 2007, p. 67.
28 This discussion of labour markets draws heavily on my joint work with Sebastian Karcher: Schneider and Karcher, ‘Labor Markets in Latin America’. This work analyses separately and in greater depth the several components that comprise atomistic labour relations. For a recent comprehensive overview, as well as more coverage on variations across the region, see Maria Cook, Politics of Labor Reform in Latin America: Between Flexibility and Rights (College Park PA, 2007). Labour markets in Latin America are segmented, and only a minority of workers have stable jobs with full legal protections and union representation. The focus here is more on median trends that characterise better the experiences of the majority of workers.
29 Evelyne Huber, ‘Conclusion: Actors, Institutions, and Policies’, in Evelyne Huber (ed.), Models of Capitalism: Lessons for Latin America (University Park PA, 2002), pp. 458–9.
30 Argentina is an outlier, as collective bargaining experienced a surprising and broad-based revival in the 2000s, to the point where a large majority of formal sector workers were covered: Etchemendy Sebastián and Collier Ruth Berins, ‘Down but Not Out: Union Resurgence and Segmented Neocorporatism in Argentina (2003–2007)’, Politics and Society, vol. 35, no. 3 (2007), pp. 363–401. Given recent volatility, it is hard to know if this trend will last.
31 See, for example, Janine Berg, Miracle for Whom? Chilean Workers Under Free Trade (New York, 2005).
32 Cook, Politics of Labor Reform.
33 Adriana Marshall, ‘Labor Market Regulation, Wages and Workers’ Behavior – Latin America in the 1990s', paper presented to XXII Congress of the Latin American Studies Association, Miami, 2000, p. 12. By another calculation (as a percentage of the total workforce) union membership declined from an average of 25 per cent to 16 per cent in Latin America (and from 40 to 31 per cent in industrial countries) from the 1980s to the 1990s: Inter-American Development Bank (IDB), Competitiveness: The Business of Growth (Washington DC, 2001), p. 117.
34 See Paul G. Buchanan, State, Labor, Capital: Democratizing Class Relations in the Southern Cone (Pittsburgh, 1995); John French, Drowning in Laws: Labor Law and Brazilian Political Culture (Chapel Hill NC, 2004).
35 Berg, Miracle for Whom?; Kirsten Sehnbruch, The Chilean Labor Market: A Key to Understanding Latin American Labor Markets (New York, 2006); Louise Haagh, Citizenship, Labour Markets, and Democratization: Chile and the Modern Sequence (New York, 2002).
36 Robert Barro and Jong-Wha Lee, ‘International Data on Educational Attainment: Updates and Implications’, National Bureau of Economic Research, Working Paper 7911 (Cambridge MA, 2000), pp. 29–30.
37 IDB, Economic and Social Progress in Latin America: 2004 Report. Good Jobs Wanted: Labour Markets in Latin America (Washington DC, 2005), p. 282.
38 IDB, Competitiveness, p. 105.
39 Hall and Soskice, ‘An Introduction’, p. 17.
40 In one recent survey of Latin America, ‘the most striking result [was] the low level of R&D conducted by firms’: David de Ferranti et al., Closing the Gap in Education and Technology (Washington DC, 2003), p. 5.
41 For instance, the directors of Banamex, a very diversified bank and the largest in Mexico until its nationalisation in 1982, were on the boards of most of the important business associations, so any partner of Banamex would automatically gain crucial representation: see Schneider, Business Politics and the State.
42 Generally on financial markets, see Stallings, Finance for Development.
43 Rafael La Porta et al., ‘Investor Protection and Corporate Governance’, Journal of Financial Economics, vol. 58, no. 1 (2000), pp. 3–27.
44 Schneider, Business Politics and the State.
45 Margarita Estevez-Abe, Torben Iversen and David Soskice, ‘Social Protection and the Formation of Skills: A Reinterpretation of the Welfare State’, in Hall and Soskice (eds.), Varieties of Capitalism, pp. 145–83.
46 Peter Gourevitch and James Shinn, Political Power and Corporate Control: The New Global Politics of Corporate Governance (Princeton, 2005), p. 10; Hall and Soskice, ‘An Introduction’.
47 See Janine Berg, Christoph Ernst and Peter Auer, Meeting the Employment Challenge: Argentina, Brazil, and Mexico in the Global Economy (Boulder CO, 2006); Koji Miyamoto, ‘Human Capital Formation and Foreign Direct Investment in Developing Countries’, OECD Development Centre, Working Paper 211, 2003, available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=668505.
48 In Brazil, for example, domestic commodity firms were split between capital-intensive sectors like steel and cellulose that had mostly skilled workers, although not many employees overall, and labour-intensive firms in sectors like meat processing with large numbers of unskilled workers: see Ben Ross Schneider, ‘Big Business in Brazil: Leveraging Natural Endowments and State Support for International Expansion’, in Leonardo Martinez-Diaz (ed.), Brazil as an Emerging Economic Superpower (Washington DC, 2009).
49 Katz Jorge, ‘Structural Reforms and Technological Behaviour: The Sources and Nature of Technological Change in Latin America in the 1990s’, Research Policy, vol. 30, no. 4 (2001), p. 4.
50 IDB, Competitiveness, p. 37.
51 Berg, Miracle for Whom?
52 ECLAC, Foreign Investment in Latin America and the Caribbean, 2007 (Santiago, 2008).
53 ECLAC, Foreign Investment in Latin America and the Caribbean, 2004 (Santiago, 2005), p. 17.
54 Alison Booth and Dennis Snower, Acquiring Skills: Market Failures, Their Symptoms and Policy Responses (New York, 1996).
55 Schneider and Karcher, ‘Labor Markets in Latin America’.
56 Sehnbruch, The Chilean Labor Market, p. 127.
57 IDB, Good Jobs Wanted, p. 188.
58 See Alice Amsden, Asia's Next Giant: South Korea and Late Industrialization (New York, 1989).
59 Hall and Soskice, ‘An Introduction’, p. 18.
61 Schneider, ‘A Comparative Political Economy’.
62 IDB, Good Jobs Wanted, p. 133.
64 Schneider, ‘A Comparative Political Economy’.
65 Guillermo E. Perry, J. Humberto Lopez, William F. Maloney, Omar Arias and Luis Serven, Virtuous Circles of Poverty Reduction and Growth (Washington DC, 2005). In terms of ‘shared expectations’, long-standing historical patterns (including slavery and forced labour) and cultural norms could be invoked to explain the lasting resilience of hierarchy. For the most part, however, the incentives are more immediate, although social acceptance of hierarchy may ease its imposition as new opportunities arise.
66 Chilean training programmes provide an apt illustration. The government offers firms tax write-offs for spending on training and an additional deduction if the firm negotiates a training plan with its workers. But even firms that have created labour-management training councils choose to forgo the additional subsidy and make unilateral decisions on training: Sehnbruch, The Chilean Labor Market, pp. 181, 185.
67 Finegold David and Soskice David, ‘The Failure of Training in Britain: Analysis and Prescription’, Oxford Review of Economic Policy, vol. 4, no. 3 (1988), pp. 21–53.
68 Terry Karl, The Paradox of Plenty: Oil Booms and Petro-States (Berkeley, 1997).
69 América Economia, 14 July 2006, p. 53.
70 Alexander Segovia, Integración real y grupos de poder económico en América Central: Implicaciones para el desarrollo y la democracia de la región (San José, Costa Rica, 2005).
71 Stallings, Finance for Development.
72 Alice Amsden, The Rise of ‘The Rest’: Challenges to the West from Late-Industrializing Economies (Oxford, 2001), p. 209.
73 Schneider, ‘A Comparative Political Economy’.
74 Schneider, ‘Comparing Capitalisms’.
75 Sehnbruch, The Chilean Labor Market, p. 92.
76 See Hancké et al., Beyond Varieties of Capitalism.