Successful industrial policies without state capacities?: The "impossible" case of the province of San Luis in Argentina

Abstract

This article shows how a state without a qualified bureaucracy or embeddedness in the private sector achieves the transformation of its productive structure by means of a bureaucratic bypass. This consists of the informal delegation of bureaucratic competencies to a non-institutionalized agent in order to perform tasks that the state apparatus does not have the capacity to carry out and, in this way, promote the arrival of investments in its territory. Since tax relief policies and tax advantages for the relocation of companies are a constant throughout the world, the use of these extra-bureaucratic tools can be used as a way to promote economic development in disadvantaged territories. In the case of Argentina, these policies were channeled through a regional industrial promotion regime that granted subsidies to relocate firms in economically depressed provinces. To test the argument, we show, by means of process tracing, how the government of a peripheral province transformed its productive structure in a period of ten years (1982-1992), by locating a huge number of industries in its territory through a bypass to its public administration.