ArticlePDF Available

Institutions in a World System - Contours of a Research Program


Abstract and Figures

In this paper I sketch the contours of a research program which draws on the insights of both institutionalist theories of long term economic change and world system analysis in order to analyze the many ways in which national and global inequalities interact. While the political economy approach developed in the research program of Acemoglu and Robinson has provided important insights on the relationship between national inequalities and economic growth, world system analysis focuses on interactions and asymmetries in the global economic and political system and their effects on national trajectories. On the one hand, I propose ways to make national institutions endogenous to international economic and political interaction via the influences these may have on national inequalities. The key to this discussion is the realization that the impact of international economic interaction on domestic distribution may be changed significantly, even in sign, if rights are weakly enforced and “grabbing” type redistributive activities are ubiquitous, especially inside and by the state. On the other hand, I explore the gains from looking at the world system as an institutional system, applying ideas developed by Acemoglu and Robinson, and North, Wallis and Weingast to analyze inequalities and asymmetries in countries to the entire globe. Here, both the question of whether a global elite coalition is to be defined as a group of countries or as a network of global elites in states, business and media and the question of how the international institutional order limits access to global political and economic resources are central.
Content may be subject to copyright.
Research Network on Interdependent
Inequalities in Latin America
Working Paper Series
Working Paper No. 76, 2014
Institutions in a World System
Contours of a Research Program
Stephan Panther Working Paper Series
Published by International Research Network on Interdependent Inequalities in
Latin America
The Working Paper Series serves to disseminate rst results of ongoing research
projects in order to encourage the exchange of ideas and academic debate. Inclusion of a paper in the Working Paper Series does not constitute publication and should not limit
publication in any other venue. Copyright remains with the authors.
Copyright for this edition: Stephan Panther
Editing and Production: Barbara Göbel / Barbara Fritz / Fabian Lischkowitz / Paul Talcott
All working papers are available free of charge on our website
Panther Stephan 2014: “Institutions in a World System: Contours of a Research Program”, Working Paper Series 76, Berlin: International Research
Network on Interdependent Inequalities in Latin America.
The paper was produced by Stephan Panther during his fellowship at from
04/2013 to 07/2013. International Research Network on Interdependent Inequalities in Latin America
cannot be held responsible for errors or any consequences arising from the use of information contained
in this Working Paper; the views and opinions expressed are solely those of the author or authors and
do not necessarily reect those of
Institutions in a World System
Contours of a Research Program
Stephan Panther
In this paper I sketch the contours of a research program which draws on the insights of
both institutionalist theories of long term economic change and world system analysis
in order to analyze the many ways in which national and global inequalities interact.
While the political economy approach developed in the research program of Acemoglu
and Robinson has provided important insights on the relationship between national
inequalities and economic growth, world system analysis focuses on interactions
and asymmetries in the global economic and political system and their effects on
national trajectories. On the one hand, I propose ways to make national institutions
endogenous to international economic and political interaction via the inuences
these may have on national inequalities. The key to this discussion is the realization
that the impact of international economic interaction on domestic distribution may be
changed signicantly, even in sign, if rights are weakly enforced and “grabbing” type
redistributive activities are ubiquitous, especially inside and by the state. On the other
hand, I explore the gains from looking at the world system as an institutional system,
applying ideas developed by Acemoglu and Robinson, and North, Wallis and Weingast
to analyze inequalities and asymmetries in countries to the entire globe. Here, both the
question of whether a global elite coalition is to be dened as a group of countries or
as a network of global elites in states, business and media and the question of how the
international institutional order limits access to global political and economic resources
are central.
Keywords: center-periphery | income distribution | institutional theory
Biographical Notes
Stephan Panther studied economics and political science at Ludwig-Maximilians-
Universität in Munich, Germany where he also obtained his Ph.D. in public economics
in 1990. He received his habilitation in economics at Universität Hamburg in the year
2000 for his work on social relations and the market, which moved his research further
into sociology in general and economic sociology in particular. Since 2003 he has been
Professor for International and Institutional Economics at Europa-Universität Flensburg.
Since the 1990s, his research interests have focused on questions transgressing the
borders of economics, history, sociology and political science, such as the debates
around social capital or the inuence of culture on economies, with a special interest in
long run economic change.
1. Introduction 1
2. A Political Economy of Long Run Economic Change:
Acemoglu and Robinson 2
3. A Selective Reading of World System Analysis 5
4. Endogenizing Institutions ‒ an Interactionist Perspective 8
4.1 Trade, Distribution of Income and Institutions 9
4.1.1 Trade and Institutions in the Global South – (In)Equality of Power and
Ownership in the Case of Natural Resource Abundant Countries 10
4.1.2 “Grabbing” Extended – Trade and the “Demand” for Labor Coercion 12
4.1.3 Same but Different – Abundance in Unskilled Labor 14
4.1.4 Final Remarks 15
4.2 Migration – Institutions, Brain Drain and Brain Gain 16
4.3 Flows of Financial Capital – Increasing Inequality of Wealth and Power? 17
4.4 International Political Interaction 21
5. Towards a Gestalt Shift: An Institutional World System 23
5.1 Korzeniewicz and Moran: Blending Acemoglu and Robinson and the
World System Approach 24
5.2 Global Elite Coalitions and Organized Violence ‒ Reading North, Wallis
and Weingast Against the Grain 26
5.2.1 Two Institutional Equilibria to Control the Threat of Violence in Human
Societies 27
5.2.2 Discussion – Bringing Initial Distribution and Collective Action Back in 29
5.3 The World, a Limited Access Order? Coalitions, Units of Analysis and
Mechanisms of Exclusion 32
6. Center and Periphery: Bringing Space Back in 37
6.1 Conceptual Reections 37
6.2 The Institutional World System Revisited 40
7. Final Discussion 42
8. Bibliography 44 Working Paper Series No. 76, 2014 | 1
1. Introduction
Inequality is back on center stage in mainstream economic thinking about long run
economic development. It got there accompanied by a focus on institutions. Both got
on stage by a remarkable return of historical analysis in economic thinking about long
run economic change (cf. Nunn 2009 for a reasonably recent overview). Comparing
country experiences in search for “natural experiments” became a core method to
look for and evaluate explanations for the “great divergence”, the immense increase
of global inequality over the course of at least the last ve centuries. Differences in
national institutions and inequality of access to resources on a national level loom
large in the explanations discussed.
However, while historical analysis has experienced a remarkable comeback, the
intellectual history of debates in academic discourse itself has not, especially if these
debates were ideologically polarized. Thus, the historical turn in mainstream economic
thinking about long run economic change has taken place in complete disregard of the
debates of the 1970’s and 80’s, centering in the challenge of dependency approaches
to the received wisdom of modernization type narratives. The key idea: Rather than
domestic conditions, the workings of the international division of labor itself determine
economic change in a country over time.
While the dependency perspective has all but vanished in the social sciences, its
intellectual heritage has lived on to a considerable extent and has been developed
further in world system analysis, a research program initiated by Immanuel Wallerstein.
I think it is fair to say that mainstream economic analysis and world system analysis live
in intellectual isolation from each other, not taking notice of each other’s achievements.
This paper builds on the conviction that this state of affairs is detrimental to scientic
As a very rst step to change this situation of “intellectual apartheid”, in this paper
I sketch the contours of a research program which draws on the insights of both,
institutionalist theories of long term economic change and world system analysis in
order to analyze the many ways in which national and global inequalities interact. More
specically, convinced that the institutionalism turned political economy developed in
the research program of Acemoglu and Robinson has provided important insights on
the relationship between national inequalities and economic growth, I on the one hand
propose ways to make national institutions endogenous to international economic and
political interaction via the inuences these may have on national inequalities. On the
other hand I explore the gains from looking at the world system as an institutional
Panther - Institutions in a World System | 2
system, applying ideas developed to analyze inequalities in countries to the entire
I start by introducing the research program of Acemoglu and Robinson which most
clearly relates inequality in the access to political and economic resources to issues of
national economic performance in Section 2. This I contrast by an interpretive sketch
of Wallerstein’s world system approach in Section 3. In Section 4 I explore different
ideas for endogenizing national institutions via the inuence of international economic
interaction in trade, migration and nance as well as via political/military interaction. In
Section 5 institutions meet the world system: consequences of considering the world
system as an institutional world system are explored, drawing on ideas developed in
the analysis of countries. Section 6 takes a step back before returning to the issues
raised in Section 5. It offers some conceptual consideration about geographical space
– which had been neglected previously – and points out some initial ideas owing out
of this exercise. Finally, Section 7 provides a summary of key ideas, directions pointed
to, and discusses some omissions.
2. A Political Economy of Long Run Economic Change:
Acemoglu and Robinson
Starting with the publication of their seminal paper (Acemoglu et al. 2002) Acemoglu
and Robinson, initially in close collaboration with Simon Johnson from MIT, over the
last decade have extended the institutionalist explanation of economic performance
into a political economy of long term economic change. In their chapter in the 2005
edition of the Handbook of Economic Growth (Acemoglu et al. 2005a) they summarize
their general approach. Acemoglu and Robinson (2012) is a book length treatment for
a wider audience.
By making the economic performance at any point in time depend on the institutions
regulating the economic sphere, Acemoglu and Robinson reafrm the prevailing
institutionalist orthodoxy which has been established over the last two decades. By
emphasizing distributional preconditions and consequences, they transform it into a
political economy approach.
Acemoglu and Robinson (2005a) dene “economic institutions” as those rules of society
which have a direct impact on the rewards from economic activities and thus shape
the incentives economic actors have, especially the incentives to invest in physical and
human capital, the incentives inuencing the organization of production and technology,
and the incentives to innovate, both technologically and organizationally. They have a Working Paper Series No. 76, 2014 | 3
decisive inuence on economic performance. Acemoglu and Robinson do not deny
that there are a multitude of other factors inuencing the economic performance of an
economy at any point in time. Some of them are temporary, such as external events,
some are relatively enduring, such as geographical conditions and culture. However,
economic institutions are central (Acemoglu et al. 2005a: 389).
Any economic outcome implies a certain distribution of income and wealth. The
distribution of material resources, in turn, is a key determinant of the distribution of
political power between different groups in a society. This “de facto political power”
of social groups, as Acemoglu and Robinson call it, is one key variable determining
economic and political institutions. The second key determinant is the ability of a group
to overcome the collective action problem (Acemoglu et al 2005a: 392). While the latter
ability is a kind of shift parameter for their analysis, the distribution of resources is a
Acemoglu and Robinson recognize the – partial – autonomy of the political sphere,
the sphere of collective decision-making about the rules of the game: Political power
of social groups is determined also by the rules for collective decision-making of a
society – “political institutions” in Acemoglu and Robinson parlance – resulting in “de
jure political power” (Acemoglu et al. 2005a: 392).
Actors use their de jure and de facto political power to inuence decisions about both,
economic institutions on the one hand and the rules of future rulemaking – that is,
political institutions – on the other hand.
Thus, while the proximate causes of economic outcomes are economic institutions,
political power, determined both by the formal rules of the political game and the
distribution of resources and whatever else may determine de facto political power,
determines economic institutions.1
1 While this essential inuence of the distribution of economic resources on both political and economic
institutions is natural in many intellectual traditions, in mainstream economics Acemoglu and
Robinson have to fend off an objection: Why should political strife about economic distribution stop
interest groups from trying to make the “cake” to be divided as large as possible? This objection is
based on the Coase theorem (Coase 1937). It shows the independence of efciency from distribution
in the economic sphere in the absence of transactions costs even if property rights are not perfectly
dened and enforced. Acemoglu and Robinson emphasize the failure of a political Coase theorem
due to the inability of political parties to commit not to use a major shift in de facto political power
implied by a change in economic institutions to change the political institutions in their favor. Political
transactions costs – usually much higher than transaction costs in markets – add to this. Under these
conditions, distributional issues may adversely affect efciency and therefore growth (Acemoglu et al
Panther - Institutions in a World System | 4
Conicts between the efcient use of resources and the maintenance of a political
regime based on the political and economic privileges of a – comparatively – narrow
elite may arise. In other words: Certain technological or economic changes leading to
an increased national income may threaten the economic or political position (or both)
of the dominant group, which then has the choice between having a large share of a
small pie or a smaller share of a larger pie – and may well go for the former. In other
words: wherever a highly unequal income distribution is based on a systematically
unequal distribution of political and economic resources inequality may be a stumbling
block for economic growth.
The system is recursive and dynamic. Exogenous events as well as endogenous forces
of change as a consequence of economic growth and technological change make it a
spiral through time rather than a closed system.
In the context of economic neoinstitutionalism the approach of Acemoglu and
Robinson incorporates the early traditions of the “New Economic Institutionalism” by
Douglass North and others on the importance of economic institutions on economic
performance. It bypasses the second generation approaches which have emphasized
the importance of informal norms, frequently under the heading of “social capital”. It
does so by focusing on the political process and the role of formal institutions. To some
extent this is a limitation, because these second generation approaches are likely to
be complementary to the Acemoglu and Robinson framework (e.g. Acemoglu et al
2005a). Especially the social capital approaches have an important relationship to de
facto political power by theorizing the collective action capability of social groups in an
interesting fashion, a line of inquiry certainly worthwhile pursuing within an extended
Acemoglu/Robinson perspective (e.g. Acemoglu et al 2005a).
On the other hand, Acemoglu and Robinson (2005a) were able to reopen the inquiry
into the role of the distribution of economic resources and political power in the context
of mainstream economics only by downgrading issues of collective action to a shift
parameter some four decades after Mancur Olson had redirected intellectual efforts
in the economic mainstream. Having done so in a highly successful and paradigmatic
fashion amounts to a revolution in the way mainstream economists think about political
economy and institutions.
However, in another central point of departure, Acemoglu and Robinson (Acemoglu et
al 2005a) remain tied to the tacit assumptions of economic neoinstitutionalism: They
focus on the distribution of economic resources and institutions on a national (and Working Paper Series No. 76, 2014 | 5
sometimes regional) level. International interaction of any kind is secondary at best,2
international institutions are not considered. It is as if each country were sitting in its
own little box and only internal conditions were decisive for the course it follows in
history. This I consider a central weakness, to some extent astonishing in an age talking
about globalization so much, a weakness only explainable by the neat separation of
intellectual traditions from each other both synchronically and diachronically. The next
section will discuss another intellectual tradition, sitting at the opposite end of the
national vs. global continuum.
3. A Selective Reading of World System Analysis
World system analysis is an intellectually vibrant descendant of intellectual debates
centered on international inequality and development in the 1970’s. In that decade,
the appearance of the rst volume of Immanuel Wallerstein’s monumental work
(Wallerstein 1974) was part and parcel of a wider intellectual movement countering
modernization type of narratives with a critical account. The main takeaway point: Not
the internal conditions of a country determine its path in the world economy, but its
position in the world division of labor. Once the country has entered the capitalist world
system as a periphery, whether by voluntary interaction or forced by colonialism, it was
destined to stay there for a long time unless the working of the world economy would
change fundamentally. More specically, according to Wallerstein, the capitalist world
economy depends on the existence of center and periphery (and semiperiphery, an
intermediate category). The mix of countries belonging to each club may change once
in while over time, but in this approach the distinct types of countries are an essential
part of any capitalist world economy (Wallerstein 1974).
In the following I will explore these ideas somewhat more in detail. Far from being a
survey, this is a selective perspective, based on my reading of Wallerstein’s (2004)
own introduction into his approach.
One central tenet of Wallerstein’s (2004) approach is the idea that the characteristics
of economic activities determine center and periphery. In other words, there are center-
like economic activities and there are periphery-like economic activities.
2 It is important to emphasize here that external inuences are not absent in the work of Acemoglu
and Robinson. Indeed some of the central arguments in Section 4, especially in Section 4.1 on
trade, are derived from work either by the two authors themselves or by authors following similar
approaches. The key issue here is that their research program (Acemoglu et al. 2005a) has not
explored the interaction between the international division of labor and institutional lock-in or change
in a systematic fashion.
Panther - Institutions in a World System | 6
Center-like activities are innovative, quasi-monopolistic industries producing goods the
quality of which is difcult to ascertain. In order to function well, they need a set of
complementary state policies: patents, subsidies, standard setting, the demand of the
state as a purchaser of their goods, e.g. military procurement. In order to be able to
invest with a long time horizon in large scale industrial structures, R&D (Research and
Development) and the like, center like activities also need relative political stability and
internal peace, a state approaching the Weberian ideal of a monopolist of legitimate
violence. Tax burdens result in the production of these complementary conditions. Tax
evasion is relatively low (Wallerstein 2004).
Periphery-like activities are highly competitive and produce standard goods of easily
veried quality. Their demands on state policies are reduced, sometimes massively.
Price competition abounds. Prots are low. Using state power to redistribute wealth
becomes an irresistible temptation. State control becomes highly contested, internal
security suffers. Taxes are seen as burdens, and tax evasion is endemic (Wallerstein
Center-like activities create well-governed states. Their citizens benet from the rule
of law and effective bureaucracies based on meritocratic access to ofce as well as
other institutional and policy features seen to be favorable if not essential for modern
complex economies (Wallerstein 2004).
Periphery-like activities create badly governed states or more precisely, they create
states suffering from structural cleavages where the benets of good governance
are concentrated in those few areas, geographical and functional, where they deem
appropriate – not for the general public (Wallerstein 2004).
Trade between the center and periphery suffers from unequal exchange. Due to
differing levels of monopoly, surplus is transferred to the center.
The relationship between center and periphery has an interesting dynamic generated
by long waves of technological change, the so-called Kondratieff cycles. Early on in
the cycle more production activities are innovative and complex, the technological-gap
between center and periphery widens, the center becomes stronger. Late in the cycle,
technological diffusion has outpaced innovation: The technological gap between center
and periphery becomes smaller, the center becomes relatively weaker (Wallerstein
2004). Working Paper Series No. 76, 2014 | 7
In the eld of politics the capitalist world system thrives on the “interstate system” of
sovereign states. Capitalism depends crucially on the absence of a “world empire”.
Only under this condition can the historical domination of production and exchange by
state forces be avoided. In the European center, the system of a balance of military
power rst created this condition. It was the result of competition between the major
states for capital and technology in order to bring about military advantage (Wallerstein
Competition between states of different strength creates room for strong states to
intervene in the internal affairs of weak states. This may take different forms. Strong
states may force weak states to open up economically in areas of interest to strong
states while refusing to reciprocate. Strong states may pressure weak states to side
with them in international conicts. Strong states may install governments of their liking
in weak states (Wallerstein 2004).
Historically, the strongest form of interference of strong states was colonialism.
Colonialism occurred when strong states did not nd internal bureaucracies capable of
implementing the conditions for the expansion of the world system locally. They then
took control and implemented the conditions for rms from the strong state to work
protably in the colony. Decisions were taken in the interest of the colonizing powers.
Access of other strong states was usually prevented, at least restricted (Wallerstein
In the realm of culture the capitalist world system manifests itself as a “geoculture”.
Its central tenet: ever since the US and French revolutions there is the recognition in
social thought that social change is inevitable. Already early on in the process, three
reactions to this recognition – novel in world historical terms – developed: Conservatism,
attempting to slow down change, liberalism, attempting to direct change and radicalism
attempting to accelerate change. Historically, liberalism became dominant (Wallerstein
Over time, radical anti-systemic movements helped to stabilize the system, by providing
the necessary political self-correction to self-destructive dynamics in the system. This
is also the case for the tendency towards different types of ideologies prevalent at
different levels of the social pyramid. At the top, universalistic ideas provide the support
for global economic interactions. At the bottom diverse “divide and rule” ideologies
legitimize the inequalities in the world system: sexism, racism, nationalism (Wallerstein
Panther - Institutions in a World System | 8
As stated above, this is no more than a sketch of a very elaborate theoretical and
empirical edice which again is but a cornerstone of a paradigm of social enquiry.
However, this should sufce to see how distinct this perspective is from the previously
presented one. It is thoroughly relational. What happens in any part of the system
cannot be understood without looking at the system as a whole, both in terms of the
relations between center and periphery as well as in terms of the relations between
“economy”, “politics” and “culture.”
By way of contrast, as summarized at the end of Section 2, while Acemoglu and
Robinson (Acemoglu et al. 2005a) present a theoretical perspective connecting politics
and economics in a fundamental and insightful fashion, they leave their countries in
boxes, their destiny depending fundamentally on internal conditions. I am convinced
that this is hardly plausible even if one does not go along with every tenet of world
system analysis. Global inequality and interaction do impact on the destiny of any
place in the world interacting with internal conditions, and I hypothesize that they do so
in an essential way.
Building on this, in the rest of the paper I will sketch two perspectives on how the two
approaches outlined so far can be made to relate to each other in fruitful ways, focusing
on the role of institutions. In this way I hope to contribute to an end of the intellectual
apartheid which has characterized the relationship between approaches centering on
global interaction and approaches focused on internal conditions in recent decades, as
outlined in the introduction.
4. Endogenizing Institutions ‒ an Interactionist Perspective
In what I call an interactionist perspective, countries are taken as units of analysis.
However, the focus of attention lies in the relations (interactions) between different
types of countries, between peripheral and central (and semi-peripheral) states. More
specically, causal sequences will be proposed where international interaction has the
potential to lock a periphery into its peripheral status via an institutional channel (and
conversely, lock states in the center into their advantageous position).
In other words, rather than taking the quality of institutions in a country as exogenous,
I want to outline avenues of thought which make them endogenous to a countries
position in the international division of labor. Or put in yet another way: I look for
potential vicious (and virtuous) circles driven by a country’s position in the international
division of labor in which institutions play an important role. Working Paper Series No. 76, 2014 | 9
To do so, hypotheses about institutional change are needed in order think about how
international interaction will impact national institutions. The Acemoglu and Robinson
approach (Acemoglu et al. 2005a) of course already offers such a perspective focusing
on inequality of income, wealth and political power as a deep determinant of institutions
and institutional change. When focusing on the interaction between a peripheral nation
and a nation in the center, national inequality therefore is looked at in terms of its
entanglement with global inequality.
How would economic interactions like trade, migration, or nancial ows interact
with the framework by Acemoglu and Robinson (Acemoglu et al. 2005a) described
in Section 2? Since national institutions are determined by the distribution of political
power, the impact of international economic interaction on the latter has to be looked
at. The main focus will be on “de facto political power”, the inuence of international
interaction on the distribution of resources between social groups.
Analytically, two separate effects can be distinguished, even though they are more
or less intertwined in real life. First, international interaction may change the rewards
from activities undertaken in a country and thereby alter the distribution of resources
resulting in changes in de facto political power. This will be the perspective used below
when looking at trade. Second, international interaction may provide an additional
outside source of resources for social groups in a differentiated way – but may also
create an additional demand on domestic resources. This perspective will be brought
to bear on issues of migration and nance.
Political interaction will also be looked at even though very close to the global
perspective opened up in Section 5. Here again the perspective of selective access to
additional outside resources or selective drain to domestic resources is relevant from
an Acemoglu/Robinson perspective. One historically very important form of interaction,
the direct domination of the countries of the Global South by the Global North in the
form of colonization – a direct inuence on the “de jure political power” in a country –
will not be considered here, since it is not the main channel of inuence today.
4.1 Trade, Distribution of Income and Institutions
The best starting point to discuss distributive issues related to trade is the international
(or more recently, global) political economy literature. Here we nd a well-established
line of inquiry asking how international trade (indeed, to some extent, how all economic
interaction) inuences the distribution of income of different social groups and hereby
Panther - Institutions in a World System | 10
the policy stances of those very groups concerning trade policy (see Hiscox 2014 for
an overview).
One of the well-established starting points of the literature is based on the Heckscher-
Ohlin model of international trade.3 Named after two Scandinavian economists who
developed it in the early 20th century, it remains a working horse of mainstream
international trade theory. It predicts that after trade, returns to the factors of production
relatively abundant in a country (relative to the world at large) will rise, while returns to
the relatively scarce factors of production will decrease. Interest groups representing
those most affected by these shifts will try to inuence policy accordingly.
Little is usually said about the effect these changes in the returns to factors of production
have on the personal distribution of income, so central in the political economy of
Acemoglu and Robinson (Acemoglu et al. 2005a). Here, however, we can identify
certain interesting effects.
Take for example the effect of globalization. Globalization translates into the world of
trade as trade liberalization. The abundant factors in the countries of the Global North,
capital and skilled labor, have proted from globalization. Ownership of capital at least
is highly concentrated even in the relative egalitarian countries of the North, while
access to education tends to be more egalitarian. Nevertheless, we should expect
globalization to have contributed signicantly to greater inequality of personal income
in the North resulting in the greater political power of established classes frequently
diagnosed. Thus, in the Global North trade can be expected to have contributed to
undermine the “class compromise” present after World War Two – not the virtuous
circle we were looking for.
4.1.1 Trade and Institutions in the Global South – (In)Equality of Power and
Ownership in the Case of Natural Resource Abundant Countries
How about in the Global South, the global periphery? In the logic of the above, we
should distinguish between countries where natural resources are the abundant factor,
as in most of Latin America and Africa, and countries where unskilled labor is the
abundant factor, as in most of East and South Asia.
Ownership of natural resources can be very different from country to country and
from resource to resource. Agrarian resources especially might be concentrated in
3 See Feenstra (2004) for a good recent up-to date exposition, and Helpman (2011), sections 2.2 and
3 for an introduction for a wider readership written by a leading scholar. Working Paper Series No. 76, 2014 | 11
the hands of a few (or few powerful processing companies may effectively carve up a
market of dependent smallholder suppliers between them) or distributed in the hands
of many (who managed to gain market power by organizing processing cooperatively).
Consequences of trade on the personal income distribution will very much depend
on how history has settled this issue. In countries with a latifundista structure, trade
will strengthen the power of an established elite; in countries with more egalitarian
agrarian structures, it may actually support a more egalitarian political power structure.
This is very much in line with the results of a research project in the tradition of
dependency theory by Dieter Senghaas and Ulrich Menzel in the 1980s, well
summarized by Lars Mjøset (Mjøset 2007; Senghaas 1982 and Menzel 1988 are
important publications which grew out of this project). In a series of case studies
starting from a very different theoretical framework, they also concluded that agrarian
egalitarianism, if followed by early modernization of the agrarian sector, was central to
prevent “peripherization pressure” from generating peripheries. The main mechanism
was the type of political history: more egalitarian agrarian structures led to more
democratic structures while less egalitarian agrarian structures were more conductive
to autocratic structures. Both would tend to open to trade and in both cases the
existing power balance will be supported by trade.
In the recent stream of literature on the resource curse (Venables 2009), attention
has been drawn to yet another issue, absent in the international political economy
discussion of the inuence of trade on income distribution. In that discussion, in whatever
way resources are distributed, property rights over those resources are well dened
and enforced. In the weak institutional orders in many peripheral countries, however,
exactly this is not the case: redistributive, “grabbing-type” activities by powerful private
actors or the state are a central feature of these weak institutional orders – could this
change the impact of trade?
It seems likely to do so: Under secure property rights, increased rewards for an
economic activity are a chance to become rich. Under insecure property rights, they
are a potential threat to become a target for redistributive, “grabbing” type, activities,
in the extreme case violent ones (a good summary of the argument is in Robinson
and Torvik 2011). This is a theme well represented in the resource curse literature (a
much cited article being Mehlum et al. 2006), however with a clear emphasis on oil and
other mineral resources. In Marxist-inspired literature this theme is echoed by work on
the reappearance of primitive accumulation as a consequence of globalization (see
e.g. Harvey 2005). However, no consensus has yet emerged concerning the relevant
processes and causes.
Panther - Institutions in a World System | 12
What is clear, however, is that here we have a mechanism potentially driving a
vicious circle: Peripheral countries with a comparative advantage in natural resources
and relatively weak institutions at the outset are driven down a slippery slope of
deteriorating institutions, with “grabbing” becoming more protable, approaching civil
war or Hobbesian anarchy at the extreme, while core countries with strong institutions
can channel the benets of trade in natural resources into growth.
A very interesting inquiry along these lines is Acemoglu et al. (2005b). The authors
argue that economic windfall gains to be harvested from the opening of the Atlantic
trade for Western European nations had different effects in different countries, very
much depending on institutional conditions. The greater the power of parliament
(nobility and traders) against the central power of the king, the more benecial the
opening up of Atlantic trade became, but where the king could appropriate the gains
from trade by monopolizing, by forcing credits, defaulting on debt, etc., no positive
effects on growth appeared. Britain and the Netherlands forged ahead, while Spain
and France failed to capitalize on the opportunity. The empowerment of the merchants
and the nobility in the rst case and the central power in the latter quite possibly led to
a decrease in the quality of institutions in the latter case and to an improved protection
of rights in the former.
Note that hidden in this type of argument are always more or less unequal balances
of political, economic and military power. Only if this power is sufciently unequal,
“grabbing” becomes worthwhile.
4.1.2 “Grabbing” Extended – Trade and the “Demand” for Labor Coercion
Let us go back to resource-rich peripheral countries and their characteristics. Extending
the distinction made earlier, it is probably fair to say that they are relatively resource-
abundant because they are not relatively abundant in low skilled labor – peripheral
countries not being rich in capital and high skilled labor by denition. This means,
however, that in resource-rich peripheral countries, unskilled workers are relatively
scarce. Wages should be – relatively – high. They frequently are not. Why? Again a
historical excursion may be illuminating.
The Black Death and its consequences turned out to be a formative experience in
European history also institutionally. The pandemic of the 1340s wiped out one-third
to one-half of the population in almost all European countries. According to economic
logic, this should have made labor scarce, at the latest when economic and social
life gained momentum again in the decades after the catastrophic events. And it did, Working Paper Series No. 76, 2014 | 13
but the consequences varied greatly between center and periphery in Europe. In the
economic center of Europe, in the West, on or close to the areas of high population
density and urbanization running from South Eastern England up the Rhine valley into
northern Italy, we can observe the consequences one might have predicted: wages
rose and feudal ties were loosened. In the East, the periphery, by way of contrast,
feudal landholders managed to tighten their grip on rural labor – the so-called second
serfdom began.
In other words: the same economic impulse ‒ labor scarcity ‒ inuenced institutions in
a strikingly different fashion. When theorizing the reasons, one account emphasizes
how an initial difference is magnied by an economic impulse. Cities in the East were
smaller and the city network less dense than in the West. Thus the “outside option” for
agricultural laborers leaving the countryside for the city was less attractive in the
periphery compared to the center of the continent making it easier for the landed nobility
to maintain their power even after the demographic shock of the Black Death: coercive
measures or their threat were more likely to succeed when the alternative was less
attractive. To sharpen the statement: Initial differences in economic and political power
of the nobility were exacerbated by the negative demographic shock (see Acemoglu
and Robinson (2012: 96-101) for a popular account and Acemoglu and Wolitzky (2011)
for a more theoretical account).
What does this tell us about resource-rich countries? Where initial inequalities in
economic resources, especially land ownership, political and military power among
actors in an economy are sufciently large, coercive labor relations in the form of
slavery, serfdom or more modern forms possibly in need of identication are likely to
prevail. Interpreting the above account using a frame of labor abundance vs. resource
abundance, it looks as if these conditions are more likely to prevail in resource
abundant conditions. Western Europe was more densely populated than the East, also
in the countryside, and did have the denser city network. Relatively speaking, the East
was less capital- and labor-abundant and more abundant in agricultural resources,
particularly arable land. And it is there that labor scarcity generated more coercive
labor arrangements.
To wrap up the argument developed so far, once coercive labor relations have been
established, the increase of demand for the nal goods produced by this sector makes
coercion even more worthwhile (cf. Acemoglu and Wolitzky 2011). Thus, if the potential
export sector of a resource rich economy is characterized by coercive labor relations,
integrating into the world economy makes coercion more attractive. Integrating into the
Panther - Institutions in a World System | 14
world economy under these conditions will therefore increase economic inequality and
reinforce exploitative institutions.
This story can also be told with a macroeconomic twist. The more important foreign
markets are to the prots of industry, the less important the macroeconomic link between
high wages and high demand becomes, potentially limiting attempts to lower wages
in an economy. In small open peripheries, the single rm logic, in which low wages
always mean high prots, may then actually become the country logic, again making it
more protable to use repression to lower wages. Countries become so-called banana
republics, basically run for private prot, frequently in the interest of foreign-owned
rms (see also Section 4.3).
And nally: One modern form of “coercion” could be unequal access to education. If
lack of education makes people insecure in alien environments and immobile, both
geographically and between economic occupations, then blocking the access to
education has similar effects as the threat of violence: it makes outside options less
4.1.3 Same but Different – Abundance in Unskilled Labor
What is different in peripheral economies relatively abundant in unskilled labor?
Little work has been done on this issue. Extending the discussion above, two lines
of argument seem to support the hypothesis that we should nd coercive labor
arrangements less frequently here. First, coercion is less attractive in labor abundant
countries – labor is cheap anyway. Second, coercion possibly is harder; more workers
also mean potentially more resistance capability to coercive attempts. Of course,
nothing in principle prevents ingenious divide-and-rule systems to be installed, as for
example the Hindu caste system. Nevertheless, overall coercive labor seems less
likely in labor abundant conditions.
What has been said above about the impact of trade on institutions does also apply
here, mutatis mutandis. In labor-rich economies a rise in demand for labor intensive
products should lead to a rise in wages – this however under weak institutional
conditions makes it more attractive to actually use coercion against labor to avoid
wage increases. Repression becomes more attractive. Thus, given a sufciently strong
international demand and a sufciently large potential for repression, international
trade may actually lead to repression where none had been before. Working Paper Series No. 76, 2014 | 15
4.1.4 Final Remarks
As to the effects of trade on distribution, we have so far relied on Heckscher-Ohlin
theory. However, this framework clearly has its weaknesses. In a Heckscher-Ohlin world
where markets are perfect and externalities and increasing returns to scale absent,
trade is a great equalizer as developed in various theorems in international economics.
As the so-called new economic geography has shown, allowing for agglomeration
externalities may change this considerably. This will be discussed in a global, systemic
perspective in Section 5.3.
I am convinced that the applying this matrix of abundance of natural resources or
labor, equality or inequality of economic and political resources, ease or difculty
of “grabbing”, as well as decreasing or increasing returns sectors of productions
will provide a rich eld of inquiry. It has already been shown that the notion of the
development of underdevelopment – the notion of a vicious circle of peripherization
pressure – can be fueled with analytical arguments from the eld thus described. The
discussion so far is summed up in Table 1.
Table 1: Trade and the Periphery (based on Heckscher-Ohlin Theory)
Abundant natural resources Abundant
unskilled labor
of rights
income inequality
→ Increased
of power
→ Decreased
of power
→ Rising wages
→ Decreased
of income and
political power
Strong grabbing
• Grabbing becomes more protable
• Increased demand for labor coercion
→ Increased
of income and
political power
Ambiguous situation: movement
possible towards both increased
concentration of income and power as
well as better enforcement of rights
Source: Own elaboration
Panther - Institutions in a World System | 16
4.2 Migration – Institutions, Brain Drain and Brain Gain
In a Heckscher-Ohlin world, for the country of origin, emigration has distributional
effects equivalent to exports of products using the migrating factor intensively. Thus
emigration of high-skilled workers should increase their wages at home, and thereby
usually increasing inequality, while emigration of low skilled workers should increase
the wages of low-skilled workers and decrease inequality.
There exists a long tradition challenging this prediction: Emigration from the Global
South is a locus classicus of interaction between center and periphery which may lead
to reinforcing or cumulative effects, virtuous or vicious circles. The critique of the brain
drain has long argued that the best and most mobile people, those who are highly
educated and entrepreneurial, are those who tend to leave the Global South.
The highly educated may become more productive in the North due to a classic
agglomeration effect central to the new economic geography approach (Venables
2009). If people belonging to the so-called creative class are more productive when
in an environment with others of the same type and these externalities are national in
scope, then by free international movement of labor the key advantage of the center in
science and technology will in fact be reinforced.
Similarly, those entrepreneurial enough to emigrate, whether highly educated or not, do
not use their skills inside the Global South, but eventually, after a period of adaptation,
contribute in the North. Even if we do not assume increasing returns to entrepreneurial
skills, it is unlikely that this is a case of neo-classical diminishing returns. Only in this
latter case will emigration be an equalizer of wage rates between North and South, like
trade in the Heckscher-Ohlin case.
As to income distribution: in both a so-called “new geography” world driven by
knowledge externalities and a Heckscher-Ohlin world, income distribution in the
North may become more unequal. In the rst case due to an increasing productivity
difference between the creative class and the rest, in the Heckscher-Ohlin world due
to a decreasing wage level, if immigration is unskilled. Whether this might eventually
destabilize the low inequality political economy present in the North remains an open
In both of the above cases, income distribution in the South should improve, thus
also improving the political economy. However, the conceptual matrix introduced in the
above paragraph also makes interaction more complex in the case of emigration. Working Paper Series No. 76, 2014 | 17
An interesting issue in the case of a brain drain is that due to the diminishing size
of the creative class network the return to education is reduced in the South. This
results in a self-reinforcing effect of emigration of the best brains. With the option to
become rich by educating oneself and creating technological advance in effect being
exported by emigrating, education back home may at most be used to capture a good
job in the relevant network of power. It thus may become easier to maintain a political
regime guaranteeing high incomes by special privileges based on political power and
restrictive access to education.
This hypothesis does not seem to be too much off the mark. Historically, repressive
regimes frequently have used emigration as a “safety valve” to stabilize their regimes,
be it Wilhelmine Germany or Castro’s Cuba. Again there seems to be an effect of
weak institutions. If emigration is an easy outside option for those likely to oppose
repressive/grabbing type arrangements, these very arrangements may actually
become entrenched by the possibility of emigration.
Keeping institutions in mind, it can be seen that effects running in the opposite direction
are also plausible. If outmigration is temporary or if emigrant communities remain in
some type of contact with the population at home, they may well be the source of
social and political ideas which eventually contribute to a change away from a regime
benetting only a narrow elite. The brain drain would then turn into a brain gain
eventually. Note however that in all likelihood this would entail a temporal dimension
with the brain gain setting in after a considerable time lag. This time lag would to some
extent be absent if we look at technological and other types of operational knowledge
which might be channeled to the country of origin by emigrants.
A nal issue discussed in the literature in recent years is the issue of remittances by
emigrants into their country of origin. Here we enter the eld of nancial ows which is
the topic of the next section.
4.3 Flows of Financial Capital – Increasing Inequality of Wealth and Power?
Discussion concerning the integration of countries into the international capital market
has been quite heated. From the point of view of the present section, the key issue is
once again to confront institutionalist narratives with the hypothesis of endogeneity,
with a key interest in cumulative causation, i.e. vicious and virtuous circles.
Let us rst return to the point at which international interactions inuence institutions
in the Acemoglu/Robinson framework – their inuence on de facto political power via
Panther - Institutions in a World System | 18
the distribution of resources. Generally speaking, all foreign nancial inows represent
a new reservoir for resources in the political game of a country. Foreign players
become involved; sometimes via anonymous market forces when decision powers
are dispersed, sometimes in an organized form, sometimes directly as players in the
domestic game, sometimes indirectly as sources of power for domestic groups. As
long as access to foreign nancial resources is distributed unequally between domestic
players, the domestic balance of de facto political power is inuenced.
The distributional effect of nancial openness is not discussed as frequently as the
distributional effect of trade. However, it is not unfair to say that in general capital
markets favor the well to do by enlarging their set of opportunities. This is clear in the
case of bank credit, given the role collateral plays. In the case of stock and security
markets, the key argument is based on transaction costs. As long as these have a large
xed component direct monetary costs, xed costs of obtaining knowledge about
capital markets, or xed costs of selling and buying those bringing large nancial
resources to the capital market have an advantage over those who do not. Overall we
should expect access to capital markets to sharpen distributional differences working
in favor of the already well-off. The strength of the inuence of access to international
vs. national capital markets, however, remains an open question.
So far, this narrative based on clearly dened and well-enforced property rights applies
to both the Global North and South equally. However, given higher inequality in the
South, it might as well push inequality beyond a critical value, making Acemoglu/
Robinson growth traps ‒ growth reducing policies supported by narrow elites ‒ more
When trying to come to grips with the impact of access to international capital markets
on peripheral countries, however, it again seems promising to move the analysis into
the world of weakly enforced rights where grabbing is easier. In order to do so, let us
look at a narrative which comes across very much as an institutional trap perspective,
a narrative Carmen Reinhart and Kenneth Rogoff developed in the early 2000’s in
several publications (Reinhart et al. 2003; Reinhart and Rogoff 2004, 2009) centering
on serial default and debt intolerance.
The story again is developed against the background hypothesis that access to capital
markets is benecial to countries. Reinhart and Rogoff observe that the critical level
of foreign indebtedness (measured in debt to GDP ratios), at which foreign creditors
become nervous and nancial crises are likely, is a lot lower in peripheral countries in
the Global South than in the countries of the North. They furthermore observe that once Working Paper Series No. 76, 2014 | 19
countries have defaulted once, they are much more likely to default again (Reinhart et
al. 2003; Reinhart and Rogoff 2004, 2009).
This might be explained in part by poor information on the part of international investors
leading to very strong reputation effects – assuming that a country which has defaulted
in recent history is likely to default again – leading to high interest rates and to default
in a kind of self-fullling hypothesis.
However, in the present context, another narrative leads to a vicious circle fuelled
by external nance. In this story, access to international capital markets opens up a
new form of grabbing: While international credits to peripheral governments benet
the narrow elites disproportionately, they are paid back disproportionately by the
disadvantaged poor: Financial crises tend to redistribute in reverse, from the poor to
the rich. International credits then to some extent work like contracts at the expense of
third parties – the non-elite sections of peripheral countries. They make political power
more attractive and may draw more talent and effort into a reverse-redistributive state
While this story is far from complete – it e.g. does not explain why the credit ceiling
in the Global South is systematically lower than the credit ceiling in the Global North
– it formulates a hypothesis why under what I call “grabbing conditions” international
nancial openness may actually be harmful for peripheral countries, entrenching re-
verse-redistributive and repressive regimes (see Rodrik 1999 for a related but distinct
Somewhat along the same lines, one can discuss foreign aid, especially in contexts
where it is effectively the only access to international nance. Also in this case the
foreign source of nancial inow may lead to an increase in grabbing activities, usually
similar to the features described when discussing the natural resource curse ideas
above (see e.g. Robinson and Torvik 2011). This may well be a non-intended effect.
However, aid may also be willingly used as an instrument to support authoritarian
When nally looking at foreign direct investment (FDI), the activities of multinational
enterprises in the Global South introduce a new sort of player into the domestic
struggle for de facto political power. It may be useful to distinguish horizontal FDI
interested in selling goods in the country of investment from vertical FDI interested
in producing goods for export. In the latter case, the interests of multinational rms in
coercive labor arrangements are very similar to the ones described for national elites in
Panther - Institutions in a World System | 20
Section 4.1. If foreign interests become very dominant, regimes may actually become
extremely negligent of the needs of their own populations because the sources of de
facto political power are almost entirely foreign. Banana republics may be a case in
point. The only limitation to repression is the assured ow of the natural and human
resources needed.
Horizontal FDI, by contrast, has an interest in domestic purchasing power. However,
nothing prevents a situation in which the market for which a multinational rm is
producing is based on the purchasing power of the privileged elite and middle classes,
while still being interested in cheap labor for its production. In this case, FDI may fuel a
divided society where a – sizable – minority uses repressive means against a majority
which serves as cheap labor. Brazil in the 1970s may well be a good example for this
kind of situation.
If we conclude that horizontal FDI in the Global North has no divisive effect, in some
ways FDI may serve as an amplier for a preexisting social and political matrix,
enlarging whatever differences there might have been. However, with globalization,
classical horizontal FDI has withered away considerably. More and more production is
for the global market, wherever it might be located. The temptation for multinationals
to press for lower wages has increased. Working Paper Series No. 76, 2014 | 21
Table 2: Financial Globalization and the Global South
Credit Market and
Portfolio Investment
Foreign Direct Investment
Horizontal Vertical
of rights
Improved exit option
of the well-to-do
→ Increased concentration
of income and power
Interest in
cheap labor
limited by the
interest in
selling output
Interest in
cheap labor
limited by legal
Strong grabbing
Boom-bust cycles with
serial default as a form
of dispossession of the
poor by the well-to-do
(sovereign debt becomes
a contract at the expense
of third parties)
→ Increased concentration
of income and power
interest in
cheap labor
leading in
the extreme
to “Banana
Republics” (a
form of social
contract at the
expense of
third parties)
Source: Own elaboration.
4.4 International Political Interaction
The discussion on aid and foreign direct investment has brought us close to the
discussion in the present section focusing on political interaction between a peripheral
and a core country. Like in the case of aid and FDI, in political interaction, foreign
resources available in the domestic struggle for de facto political power are controlled
by organized entities. They can and have to be negotiated about. Indeed, the direction
of foreign aid is frequently politically controlled and the interests of large multinationals
inuence the politics of the countries they originate from: The discussions above are
also relevant here.
Surely international political interaction encompasses not only nancial aid and FDI.
Adding political interaction extends the analysis productively. Fortunately, David Lake
(Lake 2011) has initiated (or at least popularized and focused) a research program very
compatible with the perspective of this paper. The main focus of his framework is an
Panther - Institutions in a World System | 22
analysis of what he calls international hierarchy, a state of affairs where a dominating
country exercises authority over another, subordinate country. Authority is dened as
the expectation that the subordinate country takes actions according to the wishes of
the dominating country in certain policy areas if so desired by the dominating country.
If the subordinated country does not comply, it is considered legitimate by both that
the dominant country enforces compliance. In this way, subordinate states delegate
sovereignty partially to dominant states (Lake 2011).
The benet for the subordinate country is the provision of an “international order” by
the dominant country. This order as such, understood as a set of rules in various policy
areas, is quite plausibly a benet for the subordinate country if compared with a state of
international anarchy. Moreover, the dominant country bears a disproportionate share
in the maintenance of that order, under which the subordinate country saves especially
military expenses. They have to trade this off however both with the obedience they
owe the dominant country and the fact that the dominant country will shape the rules
of the international order so that they are particularly favorable to itself and not the
subordinate countries. This ability to bend the rules in ones favor is an additional benet
of the dominant country (Lake 2011).
This general framework becomes particularly relevant to this paper when Lake looks at
the inuence of international hierarchy on domestic distribution of power and resources
and its dynamics in a recent paper (Lake 2012). His most relevant nding concerns
the compatibility of foreign domination with democracy; in his case, domination by
the US, but the argument is more general in character. The hypothesis he discusses:
The larger the benet from domination for the subordinate country and the closer the
preference of the median voter in the subordinate country to the preferences of the
dominant country, the more compatible is democracy with foreign domination. The
smaller the gains, and the more distant the preferences of the median voter from the
preferences of the dominant state, the more likely it is that foreign domination is only
compatible with an autocracy (Lake 2012).
Let us discuss the argument for a given level of gains from subordination. As the
preference distance of the median voter increases from complete coincidence with
the dominant state, at rst he/she still is in favor of subordination. As preference
distance increases, eventually the median voter will start to prefer full sovereignty to
subordination. For some range she/he still can be compensated by those who gain from
subordination, but eventually the only way to realize subordination is to disenfranchise
those voters who object to subordination most. Authoritarian government therefore
enters the picture. More generally, in Lake’s argument, subordination always becomes Working Paper Series No. 76, 2014 | 23
cheaper if a smaller part of the population has to be compensated for the loss of
sovereignty (Lake 2012).
Lake remains agnostic about causation, arguing both that an authoritarian government,
whose interest coincides broadly with the interests of the dominant state, will be more
likely to seek the help of a dominant state and submerge itself into its hierarchy, as well
as that foreign domination may create autocracies where none had been before (Lake
The approach of David Lake (2011, 2012) is highly compatible with the discussion
up to this point and efforts to combine it with previous arguments could prove to be
extremely fruitful. Indeed, Lake himself does relate some of the arguments made
above on the winners and losers of trade under perfectly enforced property rights to
his approach (Lake 2012: 18-19). Against a Heckscher-Ohlin background and arguing
that the US-dominated global economic order favors free trade, he hypothesizes that
the owners of abundant factors of production will be more in favor of US dominance
than the owners of scarce factors of production (Lake 2012). This for example could
contribute to an explanation of US dominance in Latin America. In Latin America the
abundant factor is land and – autocratic – landowning elites are the historical allies of
the US in that region.
When combining Lake’s framework with the above, two desiderata stand out. First:
The median voter theorem is an overly reductionist framework for policymaking even
in western representative democracies. Integrating interest group politics, e.g., would
be most desirable. Second: When considering center-periphery relationships we have
seen that integrating weak institutional arrangements, where grabbing activities are
highly relevant, adds considerably to the analysis leading sometimes to conclusions
contradicting the ones reached when rights are perfectly enforced.
5. Towards a Gestalt Shift: An Institutional World System
So far I have explored an interactionist perspective of relating the political economy
of Acemoglu and Robinson to a world system perspective, opening up the possibility
that institutions, far from being exogenous, are decisively inuenced by interactions
between an economic and political center and a periphery.
In the present section I will explore a completely different perspective. Essentially the
idea is to view the entire world as a single institutional system, applying the insights
gained from looking at national economies and societies to the world at large. Of
Panther - Institutions in a World System | 24
course, there exists no world state, and despite globalization social and economic
interaction is still hampered by national borders. Nevertheless the following pages
attempt to show that viewing the world system as an institutional system can provide a
second original perspective relating the two paradigms in focus in this paper in a fertile
fashion resulting in new perspectives on how national and international inequalities are
5.1 Korzeniewicz and Moran: Blending Acemoglu and Robinson and the
World System Approach
The idea of viewing the entire globe as an institutional system has been pioneered
by Korzeniewicz and Moran (Korzeniewicz and Moran 2009). In Chapter 2 of their
monograph, they base their approach on a critical reading and reinterpretation of the
analyses of Acemoglu and Robinson (Acemoglu et al. 2005a) as well as Engerman
and Sokoloff (2000). For the purpose of this paper, their key insight is the classication
of national institutional equilibria into two categories: High Inequality Equilibria and
Low Inequality Equilibria (Korzeniewicz and Moran 2009).
High Inequality Equilibria (HIE) are characterized by highly unequal access to the means
of production based largely on ascriptive characteristics, frequently based on descent
(“race”). The selective exclusion (Korzeniewicz and Moran 2009: 26) of large sectors
of the population from political and educational opportunities as well as from the more
protable employment opportunities is the key to understanding these congurations.
In the center of HIE are institutions establishing various forms of coercive labor. In the
eyes of Korzeniewicz and Moran (2009), they are institutional innovations, varieties of
capitalist economies, serving well the interests of the privileged few and the colonial
powers they in turn serve.
Low Inequality Equilibria (LIE) historically had been marginal areas, abundant in land,
where population was scarce. Access to resources had been more equally distributed
even initially, a result reinforced by slow and uneven processes of democratization
over the last two centuries. In these slow, uneven and conictual processes, more and
more positions and resources have come to be assigned by achievement rather than
by ascription. Today these are the (original) OECD countries which have outperformed
the countries characterized by high inequality equilibria in terms of per capita income
by far, over the last two centuries as well as today. Working Paper Series No. 76, 2014 | 25
Korzeniewicz and Moran (2009) see these two congurations as dynamic historical
equilibria. Forces are at work which reproduce their high or low inequality characteristics
even as social, economic and technological circumstances change.
Based on this dichotomous characterization of national institutional congurations
which imply two easily distinguishable inequality regimes, from the point of view of this
section the decisive intellectual step is presented in Chapter 4 of Korzeniewicz and
Moran (2009): Now the world system is interpreted as being a HIE. The main criteria of
exclusion on a worldwide scale is seen in a modern ascriptive criterion, citizenship, and
the main mechanism of exclusion today are the immigration policies in place, which
only allow for selective access to the privileged conditions of the HIE countries. Thus,
according to Korzeniewicz and Moran, the same processes which reduce competition
within the HIE countries enhance competitive pressures in the LIE to the detriment of
the excluded (Korzeniewicz and Moran 2009: 78).
Beyond pioneering this highly original fusion of institutional and world system
approaches into something they call a world-historical perspective, Korzeniewicz and
Moran impress with extensive empirical material on the world income distribution at
several points in time, carefully blending national and world inequality into one overall
Their study of migration regimes is another strength of their analysis. While this is
an important exclusionary mechanism in place, I would argue that it should not be
considered as the main mechanism (although Korzeniewicz and Moran 2009: 82 seem
to imply this). Selective protectionism by the countries of the center against the import
of labor intensive products of the periphery is for example equivalent to restrictive
migration policies: trade is a substitute for factor migration under Heckscher-Ohlin
conditions. A complete picture of the relevant exclusion mechanisms should cover all
the types of interaction looked at in Section 4.
Another problem with their analysis is that the core of their analysis suffers from the
same macro-regional bias as the literature Korzeniewicz and Moran (2009) cite: They
all take their inspiration very much from the two Americas, and to a considerable but
lesser extent from Sub-Saharan Africa. Historically, while the mechanisms described
were very important in these contexts, they had a considerably lesser impact in the
Middle East or Asia. Thus a more differentiated analysis of the Global South, or indeed
much more specic national or sub-national case studies would be of great interest.
Panther - Institutions in a World System | 26
Furthermore, the role of competition is ambivalent. While considering the coercive labor
arrangements created by European colonial powers as institutional Schumpeterian
innovations, competition in itself seems to be largely seen as an element adverse to
a high income, and arrangements limiting competition as essential for achieving high
income. Competition appears to be limited to competition over a cake of a given size,
while the wealth-creating elements of competition are overlooked. Here again a more
differentiated and systematic account may add to the strength of the analysis.
Also an analogous issue stressed by Acemoglu and Robinson (Acemoglu et al.
2005a), the development trap caused by unequal distribution, is not developed by
Korzeniewicz and Moran (2009) when interpreting the world as a HIE. Applying it leads
to the hypotheses that high worldwide inequality creates a global development trap in
which the global center may actually try to block development in the periphery due to
the fear of obtaining too little of the enlarged share created in a more egalitarian and
richer world.
Especially when looking at this last hypothesis, conceptualizing the center as a
unitary actor, as the transfer of the Acemoglu and Robinson political economy implies,
appears to be seriously limiting. To some extent this is remedied by yet another new
institutionalist account of world development to which we now turn.
5.2 Global Elite Coalitions and Organized Violence ‒ Reading North, Wallis
and Weingast Against the Grain
“Violence and Social Orders” (North et al. 2009) can be considered a conservative
answer to the vision provided by the research program of Acemoglu and Robinson
(e.g. Acemoglu et al. 2005a). Just as the latter, it has had considerable impact, the
monograph having been translated into Chinese, French, German, Italian, Japanese
and Russian. It has entered the academic discussion on economic development and
has entered into World Bank discourse (see North et al. 2013).
Like Acemoglu and Robinson (Acemoglu et al. 2005a), it focusses on inequality of
resources, adding resources of organized violence to the political and the economic.
Even more than the Acemoglu and Robinson approach, it concentrates almost entirely
on a comparative institutional exercise. It is illuminating in its own right, both for its
achievements and for the issues it does not tackle. It is also instructive to view the
entire globe from the point of view of this perspective just as Korzeniewicz and Moran
(2009) have done based on the Acemoglu and Robinson approach. Working Paper Series No. 76, 2014 | 27
5.2.1 Two Institutional Equilibria to Control the Threat of Violence in Human
Just like for Korzeniewicz and Moran (2009), the fundamental conceptual framework
of North, Wallis and Weingast is dichotomous. It is presented as two distinct social
orders which have developed over historical time. The central task of these social
orders: limiting the incidence of violence in human societies. Throughout most of
human history ever since the initial appearance of cities, this has been attempted by
what North, Wallis and Weingast (2009) originally call the natural state. More recently
they have shifted to the term limited access order (LAO). Only during the course of
the last two centuries, a few countries, the original OECD countries, have managed
to transform their institutional setup into open access orders (OAO) (North, Wallis and
Weingast 2009). Let us briey look at the two in turn.
The key mechanism by which violence is contained in a LAO is very similar to an
efciency wage mechanism. The rents generated through the cooperation by those
who control the resources for violence exceed any expected gains from using violence.
Thus natural states are controlled by elite coalitions of actors able to exert considerable
command over violence. Their immediate “profession” might be military, but also
economic, political or indeed ideological/cultural (educators, holders of religious ofce).
Ultimately however the effective power of a grouping is based on its command of
organized violence: directly, by nancing it, by legitimizing it, or by negotiating deals
with the threat of violence in the background.
Peace among those at the top of these groups controlling organized violence, so the
argument of North, Wallis and Weingast (2009), allows them to carve up their world,
limiting access to key economic and political resources by their command of organized
violence. The same instruments of violence serving as a threat in the bargain against
other members of the elite coalition are used to extract resources from the followers
of one’s own grouping, by threat or by use. In the slowly growing societies of most of
human history, indeed this has been the central key to economic inequality (North,
Wallis and Weingast 2009).
This then is the key mechanism: unequal command over organized violence requires
unequal distribution of income and economic resources. The internal peace dividend
of a society has to ow to those whose command over organized violence makes them
powerful in order to keep them from demanding their disproportionate share violently.
Panther - Institutions in a World System | 28
This argument looks essentially Hobbesian. A Leviathan guaranteeing internal peace
will only come into existence if its components do not gain by challenging the distribution
of resources given at any point in time. The alternative to the exploitative Leviathan is
The rents generated by limiting access to political, cultural and economic resources will
be used partially to distribute them to non-elite members of the respective groupings
in exchange for loyal service: feudal systems, systems selling state ofces, patron-
client networks, etc. Over the course of time the identity of those belonging to the elite
may change, both individually and as to the groups being represented, as access of
individuals and groups to the means of violence changes.
The key to understand an OAO is the institutionalized civil control of organized violence,
the military and the police. In a historically unlikely fashion, societies characterized by
OAOs have managed to compartmentalize violence. The Weberian ideal is reached:
the state monopolizes violence and that state is controlled by civilians. This is, in the
eyes of North, Wallis and Weingast (2009), a fundamental departure from the conditions
in an LAO. In a LAO, access to the means of violence is practically open, while access
to economic and political resources is limited. In the ideal OAO access to political and
economic power is open, while access to organized violence is highly restricted. Key to
this is the separation of the control of how to wage war by the military from the control
of the political decisions of when to wage war and how to nance it, which are reserved
for the civilian state organization (North, Wallis and Weingast 2009).
In the ideal type of an OAO, organizations are what North, Wallis and Weingast label
“perpetually lived”: they have potentially an eternal life, independent of the people
running them: They have become depersonalized entities. The rule of law is accessible
to everybody and so is the right to organize privately or politically. Enforcement of
agreements and contracts by third parties is at least in principle available to all too.
Politics is competitive and characterized by free entry, as are economic activities.
This has important effects: A vibrant civil society controls politics and economics, and
economic rents are mostly generated by technological innovations.
LAOs, by contrast, according to North, Wallis and Weingast, come in three distinct
varieties, fragile, basic and mature. In fragile natural states, relationships within the
elite coalition and within the groupings commanded by the members of the elite are
highly personalized. There is no permanent state organization. In basic LAOs, some
state organization appears, but is not yet independent of the personal identities of
those in the ruling coalition, while in mature LAOs a perpetual state organization exists Working Paper Series No. 76, 2014 | 29
independent of the personal identities of those in power. Furthermore, it is possible for
elite members to form private organizations independent of the state to some limited
extent. While this clearly describes an upward gradient to more and more stable state
organization, the authors emphasize that no dynamics necessarily drive a society
along the road thus laid out. Reversals to a more rudimentary form of an LAO do occur.
The change from a limited access order to an open access order is considered
fundamental by North, Wallis and Weingast (2009) and in their view at least so far has
been irreversible. They name three doorstep conditions necessary for a change to an
OAO to be possible (North, Wallis and Weingast 2009: 11):
• rule of law for the elite,
• perpetually lived organizations in the public and the private sphere,
• consolidated political control of the military.
The change itself takes place when the rights so far reserved for the elite are granted
to ever larger parts of the rest of the society.
5.2.2 Discussion – Bringing Initial Distribution and Collective Action Back in
When critically assessing the above, it is all too obvious that this is a modernization
type of narrative describing historical stages leading to the OAO by which rich countries
are characterized. The unit of analysis is the (nation) state and internal conditions are
key to how history progresses. This key failing of all the institutional accounts from the
point of view of this paper will be discussed in the next section. The present section is
devoted to a discussion of the approach in its own right. I think both achievements and
omissions are considerable.
The rst clear achievement of this approach is its focus on violence and its prevention
in human societies, which had been largely absent in previous institutionalist accounts.
A second theoretical innovation is the key ingredient of the concept of the LAO: the
– at least temporal – stabilization of peace through cooperation with rents being
appropriated by potentially violent elites. And lastly, the argument that the regulation of
intra-elite relations by the law, using perpetually lived organizations, is a precondition
for the transformation of an LAO into an OAO is interesting. In some sense it echoes
the proposition that revolutionary change presupposes an idea of how to change a
social or political order: A credible idea of how things could be done differently. Periodic
peasant uprisings are a persistent feature in traditional societies – and it has been
argued that they tend to be persistently unsuccessful due to the lack of an alternative
Panther - Institutions in a World System | 30
vision for political organization: Looking for “the good king” instead of trying to abolish
Conspicuously absent from the account of North, Wallis and Weingast (2009) is a
discussion of socio-economic inequality prior to and independent of the command of
organized violence and how it might inuence the trajectory of a society. The control of
the means of violence by an elite in a grouping is taken for granted. This is fundamental.
In the logic of the North, Wallis, Weingast (2009) argument, anybody can claim to be
part of the ruling coalition who credibly shows a potential for violent intervention –
the control of economic resources and military technology being arguably the most
important ingredients of this capability. Thus how access to both is distributed in a society
might be essential for the course of a society by determining the costs of conict, the
abilities of different groupings in society to organize defensive and offensive potential
of violence, etc.
It is probably not a historical accident that low inequality/open access societies have
developed out of societies at the margins of empires, ancient or more recent, where
the armed arm of the respective centers was weak from the beginning or became weak
early when imperial overstretch set in. Elites or their cronies were relatively few and the
centralized instruments of violence limited to enforce the type of hierarchical system
from which the logics of a LAO may grow.
Very much along the same line of argument, the role of conict to achieve an OAO
is very much downplayed (cf. North et al. 2009: 245). Elites do not just give up their
privileges: they do so only if faced with a sufciently strong threat. How this may
come about is of course a research area of its own with both a long tradition and
a lot of open questions. It is probably not a historical accident that greater equality
was achieved when conscription armies were considered to be the most successful
military technology (and barricades were a promising means of street ghting) giving
the disenfranchised some leverage also due to their importance for military success.
Let us use all of the above to rephrase the North, Wallis, Weingast account. Phrased
very generally (and almost a truism): violent conict in a society will break out when
groups commanding some resources of organized violence have reasons to believe
that this will be to their advantage. This is the more likely if the costs of doing so are
low and the expected gains high.
More specically, the LAO argument sees control of organized violence concentrated
in the hands of an elite. If we go along with this, intra-elite conict is unlikely if conict Working Paper Series No. 76, 2014 | 31
would destroy the very spoils a group wants to obtain a larger share of – e.g. by
producing anarchy, by doing long-term damage to the economy or by sparking
a revolution. However, if access to organized means of violence is more equally
distributed in society, if larger sections of society become able to resist in a conict, or
if costs of repression rise (e.g. due to large distance between center and periphery),
the resulting distribution of economic resources will become more egalitarian as well.
The very ability to organize, i.e. to overcome group-specic collective action problems,
or in yet other words, to overcome divide-and-rule strategies employed by the elite,
may be a central part of this.
On an even more fundamental note: If the LAO framework contests that military power
yields economic power via the extraction of rents from the powerless, does not the
disposition over military power itself presuppose economic power? How circular is this
What nally remains entirely unclear in this approach is why this argument should only
work with rents obtained from extracting surplus by the poor masses and giving it to the
potentially violent few. Peaceful cooperation of the potentially violent few avoids the
destruction of rents, in conict and its aftermath. If rents are generated by repression
this may be the case, when conict may lead to an egalitarian revolution or, more likely,
a complete replacement of one elite by another. However, if income of the potentially
violent few is high because they can tax a thriving capitalist economy, then the peaceful
cooperation of the potentially violent few is even more likely since complex economies
suffer even more from organized internal violence than less complex ones. If this is so,
it is not clear why societies should necessarily be trapped in an LAO, since even elites
in LAO could perceive the potential benets of moving beyond it. Here the Acemoglu
and Robinson approach may help.
Overall, decomposing the elite of Acemoglu-Robinson into an elite coalition is certainly
an important advance, and the efciency-wage hypothesis of stabilization of peace as
well as the idea of institutional preconditions for a change to an OAO are both worth
exploring. Nevertheless, the relationship between inequality in the access to economic
resources and inequality in the disposition over resources of organized violence does
seem to be in need of further inquiry. For doing so it could be worthwhile to attempt a
synthesis of the frameworks of North, Wallis and Weingast and Acemoglu and Robinson
(especially Acemoglu and Robinson 2006).
Panther - Institutions in a World System | 32
5.3 The World, a Limited Access Order? Coalitions, Units of Analysis and
Mechanisms of Exclusion
After having discussed achievements and omissions of the Limited Access Order/Open
Access Order (LAO/OAO) framework of North, Wallis and Weingast on its original turf,
the country, this section now turns to its relevance when considering the idea of looking
at the entire globe as an Institutional World System as developed in Section 5.1.
Analogous to the Korzeniewicz and Moran move which turned a Global South aspiring
to become like the Global North in terms of inequality into a Global South excluded in
a global high inequality regime, applying the LAO/OAO framework to the entire world
turns the Global South from LAOs which ought to transform themselves into an OAO
into the subordinate followers in some global grouping lead by some in the North who
wield globally relevant means of violence in a global LAO.
Just as in a national context, the LAO/OAO framework has the advantage to allow
for a consistent discussion of intra-elite conicts. Interesting in this perspective – as a
hypothesis – is the importance of possessing relevant means of organized violence as
sources of power. The world as a LAO implies stability being assured by elites having
access to rents from peace larger than any spoils from war. These rents are generated
by limiting the access of the Global South to key economic resources – following the
LAO narrative. If this sounds somewhere between neo-feudalism and neo-imperialism,
so it should.
Whether the globe today is best described as analogous to a fragile, basic or mature
LAO is not uninteresting. It strikes the eye that the establishment of some global
institutions via the UN System after World War Two could be interpreted as a move
from a fragile towards a basic LAO or even a mature one, given the independence
of these organizations from personal relationships and the ease of action for elite
organizations outside the “state” (= the UN organizational framework): Multinational
companies, regional integration agreements, NGO’s, the Davos meetings, etc. This
compares with a pre-1914 framework where personal relationships between monarchs
were deemed important by contemporary observers at the eve of World War One.
At this point the question arises: who actually constitutes the ruling coalition on a global
scale if one would apply the LAO/OAO framework? Early after World War Two, one
would probably have started easily with a state-centered account, dominated by the
then-undisputed hegemon United States at the top of an international hierarchy both
along the lines described by David Lake (2011, 2012) and discussed in Section 4.4 and Working Paper Series No. 76, 2014 | 33
the rapidly dissolving remnants of old-style imperialism. Today a modied description
should emphasize the rise of large transnational enterprises, and would consist of
a partially competitive, partially cooperative network. For this to make sense for a
global LAO/OAO approach, one would have to include a description of how states and
transnational enterprises coalesce in directing the use of the potential for organized
violence by states.
On a national level this idea has been a major element of our reading of the world
systems approach in Section 3. It is also part of the comparative capitalisms approach
of Bruno Amable (2003). Basically, certain political power constellations will create
economic institutions in their interests. These then encourage economic decisions by
many actors adapting to these institutions, creating new interests ready to organize in
order to defend and adapt them in the light of new challenges. It would be interesting to
look at similar mechanisms around a new highly educated, mobile and connected class
of executives relatively high up in the decision-making hierarchy of this government-
transnational complex. NGOs could be seen as a global counter elite, torn between
being a true challenge to the established powers and being co-opted. To analyze
all this, network and Bourdieu-type of analyses of economic and cultural capital of
these elites may be very interesting, particularly to assess the degree to which these
institutions have become more like perpetually lived organizations than purely personal
Around this narrow core elite we then have those who have been “bribed” into the elite,
who have something to lose from a change in the dominant coalition or indeed the
global hierarchy as such. Skilled workers in the Global North are a case in point. So
are the current state elites in the Global South.
A very important issue in such a narrative is the relationship between direct forms of
hierarchy and indirect, more or less anonymous forces of exclusion. More on the direct
hierarchy side is the Korzeniewicz and Moran (2009) argument about exclusion via
citizenship. However, citizenship only becomes a relevant means for exclusion when
the dynamics in the world system maintain the center-periphery gap at the level of
Section 4 below worked out several hypotheses which would qualify as indirect forces
here. However, I would like to focus on one set of such arguments not discussed thus
far: the so called “New Economic Geography” (see Venables 2009 for an account
emphasizing development issues). In the world imagined by this branch of economic
thinking, both externalities and increasing returns are introduced and thus it becomes
Panther - Institutions in a World System | 34
possible that a reduction of trade barriers between (a commodity producing) periphery
and (an industrialized) center may lead to a reduction of welfare in the periphery. The
mechanism is easily explained: Due to the reduced costs of overcoming the distance
between center and periphery in combination with economies of scale in “manufacturing”
it may become more protable to concentrate manufacturing production in the center
and deliver industrial goods into the periphery via trade rather than produce them
locally. Trade leads to deindustrialization. This will reduce welfare in the periphery if
agglomeration externalities in manufacturing are strong enough and monopoly rents
earned there are high.
However, the “New Economic Geography” approach (e.g. Venables 2009) can also
be used to support an interesting alternative to citizenship as a major mechanism
of exclusion: the idea that exclusion works mainly via limited access to education.
Education is the only means by which individuals are able to obtain the appropriate
cognitive mindset (cultural capital) which enables them to become part of the global
elite network.
Frequently it has been argued that agglomeration effects are particularly strong in
innovative, knowledge-intensive industries: Knowledge production in both theoretical
and applied forms becomes more productive if in close spatial contract with other
knowledge production. If this is the case, education opens or closes doors to an
important sector of a modern economy with increasing returns to scale, creating major
inequalities in income between those in the network who benet from the externalities
and those who are excluded. Whether externalities travel by pure spatial proximity
or network proximity and whether network proximity is national, organizational
(transnational companies) or international is an interesting question. It recently has
been fueled by large corporations locating their R&D departments no longer merely
close to headquarters, in center countries, but more and more distributed in a worldwide
network, including major semiperipheral states.
In some ways, access to global knowledge networks and the education opening the
doors to enter them has therefore become similar to another major structural exclusion
effect hypothesized to be present in global nancial markets. It has been very succinctly
dubbed “original sin” by Barry Eichengreen, Ricardo Hausmann and Ugo Panizza
(see Hausmann and Panizza 2011 for a recent discussion by two of the three original
authors) and refers to the problems generated by the Global South not being able to
borrow internationally in national currency. When the going gets rough in an economy,
its currency tends to weaken. If the country is indebted in a foreign currency, the debt
burden rises relative to domestic economic capacity, making it more difcult to service Working Paper Series No. 76, 2014 | 35
external debt at the very time when domestic capacity to do so is enfeebled anyway.
This makes external debt riskier, policymakers less able to run counter-cyclical scal
policies, and increases the overall instability of economies in the Global South.
In contrast to the debt intolerance literature discussed in Section 4.3, the original sin
hypothesis sees the problem in the structures of the global nancial markets, and not
in the institutional weakness present in the Global South (see Eichengreen et al. 2007
for a discussion). Essentially, the appetite of global investors to diversify their portfolios
is limited on the one hand due to the transaction costs associated with handling
additional currencies in the portfolio and on the other hand due to declining benets
of diversication as more and more currencies are added. As a result, the optimal
currency portfolio has a limited number of currencies. Big countries have advantages
due to the internal diversication they provide by offering an already well-diversied
set of economic activities to invest in. Also for trade, network effects play into the
hands of a handful of major currencies as carrier currencies. Eichengreen, Hausmann
and Panizza (2011) do not deny that institutional weakness might have an effect, but
neither does it seem robust nor strong. The gist of the analysis: There is only space
for a few currencies in the portfolios of global nance and the big economies of the
Global North sit relatively comfortably in their respective slots. As a consequence, the
Global South is cut off from the capital ows which could generate a welfare gain and
especially help to stabilize national economies.
A fourth possible structural exclusion mechanism has a very similar effect. Ever since
the Prebisch-Singer hypothesis, specialization in the export of a very limited set of
natural resources has been criticized heavily. Recently Jeffrey Williamson (2011) has
prominently argued that the main cause for detrimental effects of entering the global
division of labor as a natural resource exporting country are not long term price trends
– even though they may well contribute – but the volatility of commodity prices.
Thus, both original sin and specialization in a small set of natural resource exports
puts economies in the Global South under the increased strain of a highly volatile
economic environment. Clearly these scal and economic challenges demand more of
institutionally weaker governance structures in the South than from the stable ones in
the North. Whether it actually does lead to a vicious circle of institutional deterioration
in the South and a symmetric virtuous circle in the North is a very interesting research
Panther - Institutions in a World System | 36
Table 3: The World as a Global Limited Access Order
The World as a Limited Access Order: Key Research Questions
Character of the global LAO: Basic or mature?
Key issues: the role and character of global intergovernmental institutions,
multinational cooperation and global NGOs
Character of global elite coalition: A coalition of states or a network of state, business
and cultural elites or some composite?
Exploration of mechanisms of limited access/exclusion on a global scale:
Migration and citizenship
Global networks in the presence of positive network externalities and differential
access to education
Financial ows and “original sin”
Trade and the volatility of commodity prices
Source: Own elaboration
What is the signicance of these anonymous mechanisms to which we can add those
discussed in Section 4 based on the impact of international economic interaction on
national distribution of resources? I think this is most readily understood by referring
back to the work of David Lake on international hierarchy discussed in Section 4.4. The
dominant state he refers to is the United States, and the international order which is
provided is the liberal economic order. If the mechanisms described above and in Section
4 are relevant and dominant, and if all these different virtuous and vicious circles cut
at the same point in the socio-economic continuum, then in this liberal economic order
there will be a tendency towards the development of underdevelopment. This then
provides a reason why the median voter in the Global South has voting preferences
opposed to those of the US hegemon and why thus US dominance in the Global
South has had the tendency to be associated with the support of autocratic regimes as
hypothesized in (Lake 2012).
The question left open on this level is whether this is a necessary consequence of a
liberal economic order or not. Avenues in which unequal interaction stabilizes global
inequalities have been described. However, nothing in the arguments generated so far
presupposes that the capitalist market economy would not thrive when all countries
had their share of technological leadership in stable political and economic conditions.
Center and periphery may be but one possible conguration of a capitalist world
economy characterized by multiple stable political economic congurations. Working Paper Series No. 76, 2014 | 37
But have we already reconstructed the globe as an Institutional World System, a global
limited access order? No, we have not. The story up to this point has once again turned
out to be a story with a single peaked hierarchy, describing at best one of the groups
commanding organized violence on the global scale, but not the global coalition – if
there should be one. Yes, the global executive elite could be part of such a coalition.
But it does not command organized violence comparable to countries. In order to get
one step further, we need to step back and ask whether we have grasped the ideas of
center and periphery sufciently yet.
6. Center and Periphery: Bringing Space Back in
6.1 Conceptual Reections
When looking at the journey covered so far in this paper, one issue is striking: the
absence of any explicit consideration of geographical space, even though some issues
have of course been part of the discussion so far. In this section I will remedy this
somewhat by systematically probing into the concepts of center and periphery.
At a very general level I propose to understand the spatial differentiation of center
and periphery as a spatial expression of a hierarchy. One immediate consequence:
Center and periphery become a continuum where spaces closer to the center end of
the continuum are higher up in the hierarchy and spaces closer to the periphery end
are lower down. This has a corollary: The more center-like an activity, a place, an
interaction, the greater is its spatial reach. Or, more succinctly: A place is the higher up
in the center-periphery hierarchy the larger is the spatial reach of the choices made in it
and the less it is subject to decisions taken elsewhere. Whether we measure space by
distance or territory or rather by number of people – or, how the interaction of the two
is in itself a sign of centeredness ‒ is an interesting issue I shall bypass here.
While the focus on choices/decisions might be due to the author being an economist,
it most easily ts for the political dimension considered so far. Within states it is clear
that decisions taken by a national government, laws passed by national parliaments,
and cases decided by a supreme court determine (often central) aspects of life in the
entire country. The decisions taken by federal states – should they exist – in provinces
or in local communes have less spatial impact. Insofar as a country is a subordinate
part of an international hierarchy or otherwise inuenced by other powerful states (see
the discussion of the ideas of David Lake in Section 4.4 above) there are other centers
which are hierarchically superior – at least in some dimensions.
Panther - Institutions in a World System | 38
The more different dimensions of state decisions are concentrated in the same space,
the more “centered” is political life in a state. Thus a supreme court might be in the
capital or it might not be. Less frequently, parliament and government might not be
situated in the same city, ministerial bureaucracies might be spatially concentrated or
not. At the extreme, all decisions taken for the entire territory of a state are taken in the
same city.
Obviously, if we want to analyze the reach of a political center, it also matters how deep
national political decisions, or for that matter, any decisions, interfere with interactions
within its territorial reach. Analogous to the concepts introduced by Michael Mann
(2012), let us dene the spatial reach of a center as its extensive reach and the depth
of interference as the intensive reach of a center.
All this seems to work quite well in the political sphere, but how about in the economy?
Where economic choices are made inside organizations, little is changed. Strategic
decisions taken in the headquarters of a large multinational have both a large extensive
and possibly also a large intensive reach. Headquarters of enterprises tend to locate
in major cities and indeed, without them, the centrality of a city is considered to be
lacking. But what about markets? They can be spatially decentralized, even diffuse.
But especially nancial markets like stock exchanges tend to be concentrated spatially
and here indeed major decisions are taken by market participants and aggregated in
the markets themselves (and major actors in nancial markets tend to concentrate
headquarters in those locations).
More systematically, looked at from economics, the concept of economies of scale
(and scope) has been traditionally used to explain the concentration of production in
one specic location. It is cheaper to locate a large output of the same product (or the
output of many products) in one location and serve a large market area from it rather
than disperse production in different locations. The concepts come in two varieties:
internal economies require the concentration in one location and one rm, external
economies in one location, but not in one rm (economies of agglomeration, see also
the discussion in the previous section). The distinction is analytical of course and the
phenomena do mix in practice. Analyzing them has been the turf of the sub-discipline
of economic geography.
From the point of view of the present discussion, it is decisive that all these varieties
of economies of scale and scope lead to the spatial concentration of (production,
marketing, R&D, etc.) decisions in one geographic space from which they then affect Working Paper Series No. 76, 2014 | 39
the market area served from this location directly or indirectly (product design decisions
taken in A and realized in B, C, D from where they are distributed in space).
This is even true in the sphere of wholesale and retail trade. The specialist shop
located in a metropolitan city serves a large market area and – at least in the pre-
internet age – consumers make their one-time choices concerning this special need in
this location. This shop is located there because other special needs shops are also
located there: consumers go there to satisfy their occasional needs in one trip and visit
other specialist shops too. Here they also nd the department stores with the greatest
variety of goods and can enjoy cultural events they consume only once in a while (a
type of agglomeration economy of scope).
In the economic sphere, the intensive reach of decisions concerns the economic
importance of the goods affected. A specialist rm serving a large market for specialist
consumer needs has a large extensive reach, but little intensive reach. By way of
contrast, the world’s nancial centers combine large extensive with large intensive
Thus the conceptualization of center-periphery as hierarchy in space and of centricity
as a combination of spatial, extensive reach and of intensive reach of decisions taken
in a certain location seems to work out well in economics and politics. But it could also
be that centricity is not limited to economics and politics.
The Norwegian Stein Rokkan, on the sidelines of his efforts to understand the course
and fate of democratization in Europe (cf. Rokkan 2000: 138-170), has developed a
four-dimensional model of center-periphery relations, discussing Immanuel Wallerstein,
Perry Anderson, Talcott Parsons and Albert Hirschman, among others, along the way.
He adds the military and the cultural dimensions to the economic and the political. The
earlier discussion concerning the political sphere can be transferred to the military
without difculties. As the social eld of organized violence it is overall more centrally
organized. It is, moreover, especially closely connected to the political sphere.4
The cultural sphere tends to be less centrally organized. Clearly, also in the cultural
sphere some elds are populated by hierarchical organizations like churches and
rms, where much of the earlier discussion applies without difculties. However, in
4 Rokkan (2000) is a systematic compilation of the theoretical core of Stein Rokkan’s work by the
German sociologist Peter Flora. In as far as this is to be taken at face value, it appears that in earlier
versions of his theoretical thinking, Rokkan had merged the military and the political dimensions into
a single military-administrative one (cf. Rokkan 2000: 138-170). This seems to be a more general
issue. See e.g. the discussion about Michael Mann’s four sources of power political, military,
economic and ideological (see Hall and Schroeder 2006).
Panther - Institutions in a World System | 40
the cultural eld much of the inuence of a center is not by command and control but
rather by diffusion of a trend, a fashion, an idea from creative centers into receptive
peripheries. Thus, choices about fashion made in Paris, Milan or New York have a far
greater extensive reach than fashion choices made in other locations.
6.2 The Institutional World System Revisited
The conceptual reections of the last section make it possible to raise a few issues not
considered so far: issues that relate hierarchy to space.
The rst one is almost trivial, but nevertheless important. There is nothing in the logic
of center and periphery that makes it necessary for geographical space to be taken up
seamlessly by systems of centers and periphery. There might be empty spaces which
fall in between the extensive reach of any center of a particular type in a specic period
of time. Is this a benet or a curse? With reference to history, this debate is indeed
core of the seminal article “Reversal of Fortune” by Acemoglu, Johnson and Robinson
(Acemoglu et al. 2002), pointing out that those Latin American countries not penetrated
deeply by the colonizing powers later had a considerable advantage over the deeply
penetrated centers due to the lesser grip of the exploitative institutions that had been
In an interesting further differentiation of this story, the historian James Mahoney (2010)
has argued, again analyzing Latin America, that the effect of colonization depends
on the kind of regime in place – being more or less left out of a mercantilist system,
he claims, is an advantage, while being left out of a liberal regime a disadvantage.
While intensive mercantilist colonization establishes a strong landowning class whose
power is detrimental to later economic development, strong liberal colonial penetration
creates a strong commercial class supporting further economic development. Thus,
in this narrative, not only does the same type of regime, the same type of institutions,
affect centers, peripheries, and peripheries of peripheries differently, but different type
of regimes and the hierarchies they create again have different spatial institutional
effects. Thus under some conditions, being in the outback of a hierarchical socio-
economic system creates conditions under which a new center may rise, sometimes
not; an obvious area for further research.
A second, related, idea results from the realization that in a world of countries ‒ as the
prime sources of organized violence in one way or the other central elements of the
ruling coalition in the center of the global system ‒ lines of disputed loyalties between
different groups in the coalition become geographical areas, contested areas. How Working Paper Series No. 76, 2014 | 41
does this status of being contested terrain affect a state? Can it benet from playing the
interested powers off against each other? Or will it be torn apart in the process (divided
or thrown back by a civil war fought by parties with diverging international support).
Third: All of the conceptual points made so far can interact to create multifaceted
landscapes generating a multitude of entangled dynamics. Cultural multicentricity
may go hand in hand with political and military monocentricity. An economic center of
great reach may be dominated politically. A location might be a political periphery in a
country but right in the middle of the economic center of a larger region. And so on. The
combinatorial possibilities are immense.
One example of an attempt to systematically map such a landscape in order to analyze
one specic issue is the work of Stein Rokkan himself. When trying to explain the distinct
political dynamics of different European states from the early times of nation-building
up to the fate of democracy in the 20th century, he traced the dynamics of center-
periphery relations in the four dimensions both on a national and a European scale.
Thus he for example explains how the political clout of cities in most of the economic
center of Europe (the so called “Blue Banana” reaching from London across Belgium
and the Netherlands along the Rhine across the Alps to Northern Italy) contributed to
the slow speed of state building in this region. And cities of course were strong there
because this was the economic center of the continent.
Similarly, it has been argued that the European dynamic of the last millennium was at
least partially due to (stable) political and military multicentricity, also in its economic
center, combined with cultural homogeneity and shifting cultural centers.
Returning to some of the issues raised so far in Sections 5 and in this section, one
might add: Does it inuence the character of center-periphery relations if the dominating
country is more or less hierarchically structured itself? Or in other words, under some
conditions, do egalitarian conditions back home soften international domination?
Does it matter whether the political system of the dominant power is democratic or
And how does it inuence a system when it is penetrated by a global network of business-
government elites? Who shares international benets of international peaceful order?
Under which conditions is it necessary to collaborate, sharing the benets with the
commanders of organized violence in the countries? Adding the debate in political
science on the so called “democratic peace” or “liberal peace” to the considerations
in these last two sections could be helpful to start to answer these kind of questions.
Panther - Institutions in a World System | 42
It would be very easy to continue. At the very moment one superimposes the institutional
considerations, the spatial dimensions of the reach of domination, and the different
sources of power and hierarchy, a matrix emerges which opens a rich eld for both
case studies and systematic analytical research. Not all of the logical possibilities may
be relevant, but again, nding out which ones are, seems well worthwhile.
7. Final Discussion
At the end of this attempt to fruitfully interconnect the institutional perspective, the
dominant explanation of global inequality of income in economics, and world system
analysis, what has been achieved, where does it point to, and what are the omissions?
World systems were introduced to the institutional approach using two main lines of
attack. The rst one, in Section 4, centered on the idea to endogenize institutions via
the impact of various forms of international economic and political interactions on the
key concepts of the distribution of income and economic and political resources in a
country, which are central in the political economy approach of Acemoglu and Robinson
taken as the point of departure. The key to this discussion seems to be the realization
that the impact of international economic interaction on domestic distribution may be
changed signicantly, and even in sign, if rights are weakly enforced and grabbing type
of redistributive activities are ubiquitous, especially inside and by the state.
The second line of attack, developed in Sections 5 and 6, was centered on the idea
to alienate institutional approaches geared towards explaining national developments
by applying them to the entire globe. The pioneering approach of Korzeniewicz and
Moran (2009), informed considerably by the Acemoglu and Robinson political economy
approach (Acemoglu et al. 2005a), could gain by considering the whole range of
interactions discussed in Section 4. Alongside that pioneering effort we added a reading
against the grain of North, Wallis and Weingast’s (2009) more conservative, but also
more differentiated account of the interaction of inequality of access to resources.
Considerations of the paramount impact of organized violence and its social regulation
as well as the issue of considering the privileged elite as a potentially instable coalition
seem particularly fruitful. The argument central in North, Wallis and Weingast’s (2009)
own eyes – rents from repressing the poor are central for peace in a limited access
order – has a ring of circularity to it, given that military power – at least in modern days
– is itself closely tied to access to economic resources.
Moreover, this – and indeed any – reconstruction of an institutional narrative geared
towards the national sphere on the global scale has a lot to gain by explicitly integrating Working Paper Series No. 76, 2014 | 43
geographical space into its account of a hierarchical world system – the idea behind
Section 6. Key issues retrieved from this exercise are two especially interesting spatial
zones – the outbacks of a hierarchy, those regions not or hardly within the reach of a
hierarchy, and the contested areas, where the claims of different centers clash. When
combined with the idea of different varieties of hierarchies – economic, political, military
and ideological/cultural and with the institutional considerations considered before, a
conceptual matrix appears with the help of which a rich set of interacting inuences
can be explored.
As bets its nature, there are many omissions in this exploration of a research program
in the making. Let me briey touch upon two of them. Of the four dimensions of core-
periphery relations the political, the economic and the military dimensions have been
in the center of the previous discussion – the ideological/cultural dimension has
not. I would like to make a point in stressing that this is not because I deem it to be
unimportant. However, while evolutionary economists have something to say on the
change of mindsets, values and beliefs, this nevertheless is simply not the natural
turf of economists. Here collaboration with the cultural sciences is a must and indeed,
evolutionary economics may well be the best ground to meet.
What is also left over for the future is a discussion of policy issues. Here I think it
important to stress that in the above I have made a conscious effort to emphasize
hypotheses which may support vicious and virtuous circles stabilizing a polarization
into center and periphery, thus producing global inequality. I understand them as forces
pressuring countries in either direction. But there may be counterforces. When returning
to the Acemoglu and Robinson framework of Section 2, any factor making national
political leadership interested in a more egalitarian distribution of power and resources,
a more equal access to education and a better enforcement of rights may be of prime
importance in this context. This line of argument had also been stressed by the work of
Dieter Senghaas and Ulrich Menzel mentioned before (Senghaas 1982; Menzel 1988),
a good starting point for further research in this direction. Any other forces favoring the
coherence of national policy making are likely to help too. And as already hypothesized
above – the weakening dominance of an ageing center may help as well.
But all this deserves a far more differentiated and less speculative discussion as the
ideas contained in the above discussion are translated into specic research projects,
putting the research program into action and modifying it along the way. The proof of
the pudding is in the eating.
Panther - Institutions in a World System | 44
8. Bibliography
Acemoglu, Daron; Johnson, Simon; Robinson, James A. (2002): “Reversal of Fortune:
Geography and Institutions in the Making of the Modern World Income
Distribution”, in: The Quarterly Journal of Economics 117, 4, 1231-1294, online
at: (last access: 20.06.2014).
(2005a): “Institutions as a Fundamental Cause of Long-Run Growth”, in:
Aghion, Philippe and Durlauf, Steven N. (eds.), Handbook of Economic Growth,
Amsterdam: Elsevier, 386-472.
(2005b): “The Rise of Europe: Atlantic Trade, Institutional Change, and Economic
Growth”, in: American Economic Review 95, 3, 546-579.
Acemoglu, Daron and Robinson, James A. (2006): Economic Origins of Dictatorship
and Democracy, Cambridge and New York: Cambridge University Press.
(2012): Why Nations Fail: The Origins of Power, Prosperity and Poverty [1st ed.],
New York: Crown Publishers.
Acemoglu, Daron and Wolitzky, Alexander (2011): “The Economics of Labor Coercion”,
in: Econometrica 79, 2, 555-600.
Amable, Bruno (2003): The Diversity of Modern Capitalism, Oxford and New York:
Oxford University Press.
Coase, Ronald (1937): „The Nature of the Firm,“ in: Economica 4, 386-405. Reprinted
in Oliver E. Williamson and Sidney Winter (eds.) (1991): The Nature of the
Firm: Origins, Evolution, Development, New York: Oxford University Press, 18-
Eichengreen, Barry; Hausmann, Ricardo; Panizza, Ugo (2007): “Currency Mismatches,
Debt Intolerance, and the Original Sin: Why They Are Not the Same and Why
It Matters”, in: Edwards, Sebastian (ed.), Capital Controls and Capital Flows
in Emerging Economies: Policies, Practices and Consequences, Chicago:
University of Chicago Press, 121-169, online at:
c0150.pdf (last access: 01.07.2014).
Feenstra, Robert C. (2004): Advanced International Trade: Theory and Evidence,
Princeton: Princeton University Press.
Hall, John A. and Schroeder, Ralph (eds.) (2006): An Anatomy of Power: The Social
Theory of Michael Mann, Cambridge and New York: Cambridge University
Press. Working Paper Series No. 76, 2014 | 45
Harvey, David (2005): The New Imperialism, Oxford and New York: Oxford University
Hausmann, Ricardo and Panizza, Ugo (2011): “Redemption or Abstinence? Original
Sin, Currency Mismatches and Counter Cyclical Policies in the New Millennium”,
in: Journal of Globalization and Development 2, 1, 1-33.
Helpman, Elhanan (2011): Understanding Global Trade, Cambridge: Harvard University
Hiscox, Michael J. (2014): “The Domestic Sources of Foreign Economic Policies”, in:
Ravenhill, John (ed.): Global Political Economy [4th ed.], Oxford and New York:
Oxford University Press, 74-105.
Korzeniewicz, Roberto Patricio and Moran, Timothy Patrick (2009): Unveiling Inequality.
A World-Historical Perspective, New York: Russell Sage Foundation.
Lake, David A. (2011): Hierarchy in International Relations, Ithaca: Cornell University
Lake, David A. (2012): Legitimating Power: The Domestic Politics of U.S. International
Hierarchy, San Diego: University of California.
Mahoney, James (2010): Colonialism and Postcolonial Development: Spanish
America in Comparative Perspective, Cambridge: Cambridge University Press
[Cambridge Studies in Comparative Politics], online at:
lib/alltitles/docDetail.action?docID=10394697 (last access: 01.07.2014).
Mann, Michael (2012): The Sources of Social Power. Volume 1: A History of Power from
the Beginning to AD 1760 [4 volumes], Cambridge and New York: Cambridge
University Press.
Mehlum, Halvor; Moene, Karl; Torvik, Ragnar (2006): “Institutions and the Resource
Curse”, in: Economic Journal 116, 508, 1-20.
Menzel, Ulrich (1988): Auswege aus der Abhängigkeit. Zur entwicklungspolitischen
Aktualität Europas, Frankfurt am Main: Suhrkamp.
Mjøset, Lars (2007): “An Early Approach to the Varieties of World Capitalism:
Methodological and Substantive Lessons from the Senghaas/Menzel-Project”,
in: Mjøset, Lars and Clausen, Tommy H. (eds.), Capitalisms Compared, Bingley:
Emerald Group Publishing Limited [Comparative Social Research, 24], 123-
Panther - Institutions in a World System | 46
North, Douglass Cecil; Wallis, John Joseph; Webb, Steven; Weingast, Barry R. (eds.)
(2013): In the Shadow of Violence. Politics, Economics, and the Problems
of Development, Cambridge: Cambridge University Press, online at: http:// (last access:
North, Douglass Cecil; Wallis, John Joseph; Weingast, Barry R. (2009): Violence and
Social Orders: A Conceptual Framework for Interpreting Recorded Human
History, Cambridge: Cambridge University Press, online at: http://www. (last access: 09.06.2014).
Nunn, Nathan (2009): “The Importance of History for Economic Development”, in: Annual
Review of Economics, 1, 65-32, online at: http://economics-
Andrabi/courses/Econ126/Nunn_ARE_2009.pdf (last access: 5.2.2014).
Reinhart, Carmen M. and Rogoff, Kenneth S. (2004): “Serial Default and the ‘Paradox’
of Rich to Poor Capital Flows”, National Bureau of Economic Research Working
Paper Series 10296, Cambridge, MA: National Bureau of Economic Research,
online at: (last access: 01.07.2014).
(2009): This Time is Different: Eight Centuries of Financial Folly, Princeton and
Oxford: Princeton University Press.
Reinhart, Carmen M.; Rogoff, Kenneth S.; Savastano, Miguel A. (2003): “Debt
Intolerance”, National Bureau of Economic Research Working Paper Series 9908,
Cambridge, MA: National Bureau of Economic Research, online at: http://www. (last access 16.01.2014).
Robinson, James A. and Torvik, Ragnar (2011): “Institutional Comparative Statics”
National Bureau of Economic Research Working Paper Series 17106,
Cambridge, MA: National Bureau of Economic Research.
Rodrik, Dani (1999): “Where Did All the Growth Go? External Shocks, Social Conict,
and Growth Collapses”, in: Journal of Economic Growth, 4, 385-412.
Rokkan, Stein (2000): Staat, Nation und Demokratie in Europa. Die Theorie Stein
Rokkans [with assistance of Elisabeth Fix, 1st ed.], Frankfurt am Main:
Senghaas, Dieter (1982): Von Europa lernen. Entwicklungsgeschichtliche
Betrachtungen [1st ed.], Frankfurt am Main: Suhrkamp. Working Paper Series No. 76, 2014 | 47
Sokoloff, Kenneth L., and Stanley L. Engerman (2000), in: „Institutions, Factor
Endowments, and Paths of Development in the New World“, Journal of Economic
Perspectives 14, 3, 217-232.
Venables, Anthony J. (2009): “Rethinking Economic Growth in a Globalizing World:
An Economic Geography Lens”, in: African Development Review 21, 2, 331-
Wallerstein, Immanuel (1974): The Modern World System [Vol. 1], New York: Academic
(2004): World-Systems Analysis. The Modern World-System as a Capitalist
World-Economy, Durham: Duke University Press.
Williamson, Jeffrey G. (2011): Trade and Poverty. When the Third World Fell Behind,
Cambridge, MA: MIT Press.
Working Papers published since February 2011:
1. Therborn, Göran 2011: “Inequalities and Latin America: From the Enlightenment
to the 21st Century”.
2. Reis, Elisa 2011: “Contemporary Challenges to Equality”.
3. Korzeniewicz, Roberto Patricio 2011: “Inequality: On Some of the Implications
of a World-Historical Perspective”.
4. Braig, Marianne; Costa, Sérgio und Göbel, Barbara 2013: “Soziale Ungleichheiten
und globale Interdependenzen in Lateinamerika: eine Zwischenbilanz”.
5. Aguerre, Lucía Alicia 2011: “Desigualdades, racismo cultural y diferencia
6. Acuña Ortega, Víctor Hugo 2011: “Destino Maniesto, libusterismo y
representaciones de desigualdad étnico-racial en las relaciones entre Estados
Unidos y Centroamérica”.
7. Tancredi, Elda 2011: “Asimetrías de conocimiento cientíco en proyectos
ambientales globales. La fractura Norte-Sur en la Evaluación de Ecosistemas
del Milenio”.
8. Lorenz, Stella 2011: “Das Eigene und das Fremde: Zirkulationen und
Verechtungen zwischen eugenischen Vorstellungen in Brasilien und
Deutschland zu Beginn des 20. Jahrhunderts”.
9. Costa, Sérgio 2011: “Researching Entangled Inequalities in Latin America: The
Role of Historical, Social, and Transregional Interdependencies”.
10. Daudelin, Jean and Samy, Yiagadeesen 2011: “‘Flipping’ Kuznets: Evidence from
Brazilian Municipal Level Data on the Linkage between Income and
11. Boatcă, Manuela 2011: “Global Inequalities: Transnational Processes and
Transregional Entanglements”.
12. Rosati, Germán 2012: “Un acercamiento a la dinámica de los procesos de
apropiación/expropiación. Diferenciación social y territorial en una estructura
agraria periférica, Chaco (Argentina) 1988-2002”.
13. Ströbele-Gregor, Juliana 2012: “Lithium in Bolivien: Das staatliche Lithium-
Programm, Szenarien sozio-ökologischer Konikte und Dimensionen sozialer
14. Ströbele-Gregor, Juliana 2012: “Litio en Bolivia. El plan gubernamental de
producción e industrialización del litio, escenarios de conictos sociales y
ecológicos, y dimensiones de desigualdad social”.
15. Gómez, Pablo Sebastián 2012: “Circuitos migratorios Sur-Sur y Sur-Norte en
Paraguay. Desigualdades interdependientes y remesas”.
16. Sabato, Hilda 2012: “Political Citizenship, Equality, and Inequalities in the Formation
of the Spanish American Republics”.
17. Manuel-Navarrete, David 2012: “Entanglements of Power and Spatial
Inequalities in Tourism in the Mexican Caribbean”.
18. Góngora-Mera, Manuel Eduardo 2012: “Transnational Articulations of Law and
Race in Latin America: A Legal Genealogy of Inequality“.
19. Chazarreta, Adriana Silvina 2012: “El abordaje de las desigualdades en un
contexto de reconversión socio-productiva. El caso de la inserción internacional
de la vitivinicultura de la Provincia de Mendoza, Argentina“.
20. Guimarães, Roberto P. 2012: “Environment and Socioeconomic Inequalities in
Latin America: Notes for a Research Agenda”.
21. Ulloa, Astrid 2012: “Producción de conocimientos en torno al clima. Procesos
históricos de exclusión/apropiación de saberes y territorios de mujeres y pueblos
22. Canessa, Andrew 2012: “Conict, Claim and Contradiction in the New Indigenous
State of Bolivia”.
23. Latorre, Sara 2012: “Territorialities of Power in the Ecuadorian Coast: The
Politics of an Environmentally Dispossessed Group”.
24. Cicalo, André 2012: “Brazil and its African Mirror: Discussing ‘Black’
Approximations in the South Atlantic”.
25. Massot, Emilie 2012: “Autonomía cultural y hegemonía desarrollista en la
Amazonía peruana. El caso de las comunidades mestizas-ribereñas del Alto-
26. Wintersteen, Kristin 2012: “Protein from the Sea: The Global Rise of Fishmeal
and the Industrialization of Southeast Pacic Fisheries, 1918-1973”.
27. Martínez Franzoni, Juliana and Sánchez-Ancochea, Diego 2012: “The Double
Challenge of Market and Social Incorporation: Progress and Bottlenecks in
Latin America”.
28. Matta, Raúl 2012: “El patrimonio culinario peruano ante UNESCO. Algunas
reexiones de gastro-política”.
29. Armijo, Leslie Elliott 2012: “Equality and Multilateral Financial Cooperation in
the Americas”.
30. Lepenies, Philipp 2012: “Happiness and Inequality: Insights into a Difcult
Relationship – and Possible Political Implications”.
31. Sánchez, Valeria 2012: “La equidad-igualdad en las políticas sociales
latinoamericanas. Las propuestas de Consejos Asesores Presidenciales
chilenos (2006-2008)”.
32. Villa Lever, Lorenza 2012: “Flujos de saber en cincuenta años de Libros de
Texto Gratuitos de Historia. Las representaciones sobre las desigualdades
sociales en México”.
33. Jiménez, Juan Pablo y López Azcúnaga, Isabel 2012: “¿Disminución de la
desigualdad en América Latina? El rol de la política scal”.
34. Gonzaga da Silva, Elaini C. 2012: “Legal Strategies for Reproduction of
Environmental Inequalities in Waste Trade: The Brazil – Retreaded Tyres
35. Fritz, Barbara and Prates, Daniela 2013: “The New IMF Approach to Capital
Account Management and its Blind Spots: Lessons from Brazil and South
36. Rodrigues-Silveira, Rodrigo 2013: “The Subnational Method and Social
Policy Provision: Socioeconomic Context, Political Institutions and Spatial
37. Bresser-Pereira, Luiz Carlos 2013: “State-Society Cycles and Political Pacts in
a National-Dependent Society: Brazil”.
38. López Rivera, Diana Marcela 2013: “Flows of Water, Flows of Capital:
Neoliberalization and Inequality in Medellín’s Urban Waterscape”.
39. Briones, Claudia 2013: “Conocimientos sociales, conocimientos académicos.
Asimetrías, colaboraciones autonomías”.
40. Dussel Peters, Enrique 2013: “Recent China-LAC Trade Relations: Implications
for Inequality?”.
41. Backhouse, Maria; Baquero Melo, Jairo and Costa, Sérgio 2013: “Between
Rights and Power Asymmetries: Contemporary Struggles for Land in Brazil and
42. Geoffray, Marie Laure 2013: “Internet, Public Space and Contention in Cuba:
Bridging Asymmetries of Access to Public Space through Transnational
Dynamics of Contention”.
43. Roth, Julia 2013: “Entangled Inequalities as Intersectionalities: Towards an
Epistemic Sensibilization”.
44. Sproll, Martina 2013: “Precarization, Genderization and Neotaylorist Work:
How Global Value Chain Restructuring Affects Banking Sector Workers in
45. Lillemets, Krista 2013: “Global Social Inequalities: Review Essay”.
46. Tornhill, Soe 2013: “Index Politics: Negotiating Competitiveness Agendas in
Costa Rica and Nicaragua”.
47. Caggiano, Sergio 2013: “Desigualdades divergentes. Organizaciones de la
sociedad civil y sindicatos ante las migraciones laborales”.
48. Figurelli, Fernanda 2013: “Movimientos populares agrarios. Asimetrías, disputas
y entrelazamientos en la construcción de lo campesino”.
49. D’Amico, Victoria 2013: “La desigualdad como denición de la cuestión social
en las agendas trasnacionales sobre políticas sociales para América Latina.
Una lectura desde las ciencias sociales”.
50. Gras, Carla 2013: “Agronegocios en el Cono Sur. Actores sociales, desigualdades
y entrelazamientos transregionales”.
51. Lavinas, Lena 2013: “Latin America: Anti-Poverty Schemes Instead of Social
52. Guimarães, Antonio Sérgio A. 2013: “Black Identities in Brazil: Ideologies and
53. Boanada Fuchs, Vanessa 2013: “Law and Development: Critiques from a
Decolonial Perspective”.
54. Araujo, Kathya 2013: “Interactive Inequalities and Equality in the Social Bond: A
Sociological Study of Equality”.
55. Reis, Elisa P. and Silva, Graziella Moraes Dias 2013: “Global Processes and
National Dilemmas: The Uncertain Consequences of the Interplay of Old and
New Repertoires of Social Identity and Inclusion”.
56. Poth, Carla 2013: “La ciencia en el Estado. Un análisis del andamiaje regulatorio
e institucional de las biotecnologías agrarias en Argentina”.
57. Pedroza, Luicy 2013: “Extensiones del derecho de voto a inmigrantes en
Latinoamérica: ¿contribuciones a una ciudadanía política igualitaria? Una
agenda de investigación”.
58. Leal, Claudia and Van Ausdal, Shawn 2013: “Landscapes of Freedom and
Inequality: Environmental Histories of the Pacic and Caribbean Coasts of
59. Martín, Eloísa 2013: “(Re)producción de desigualdades y (re)producción de
conocimiento. La presencia latinoamericana en la publicación académica
internacional en Ciencias Sociales”.
60. Kerner, Ina 2013: “Differences of Inequality: Tracing the Socioeconomic, the
Cultural and the Political in Latin American Postcolonial Theory”.
61. Lepenies, Philipp 2013: “Das Ende der Armut. Zur Entstehung einer aktuellen
politischen Vision”.
62. Vessuri, Hebe; Sánchez-Rose, Isabelle; Hernández-Valencia, Ismael;
Hernández, Lionel; Bravo, Lelys y Rodríguez, Iokiñe 2014: “Desigualdades de
conocimiento y estrategias para reducir las asimetrías. El trabajo de campo
compartido y la negociación transdisciplinaria”.
63. Bocarejo, Diana 2014: “Languages of Stateness: Development, Governance
and Inequality”.
64. Correa-Cabrera, Guadalupe 2014: “Desigualdades y ujos globales en la frontera
noreste de México. Los efectos de la migración, el comercio, la extracción y
venta de energéticos y el crimen organizado transnacional”.
65. Segura, Ramiro 2014: “El espacio urbano y la (re)producción de desigualdades
sociales. Desacoples entre distribución del ingreso y patrones de urbanización
en ciudades latinoamericanas”.
66. Reis, Eustáquio J. 2014: “Historical Perspectives on Regional Income Inequality
in Brazil, 1872-2000”.
67. Boyer, Robert 2014: “Is More Equality Possible in Latin America? A Challenge in
a World of Contrasted but Interdependent Inequality Regimes”.
68. Córdoba, María Soledad 2014: “Ensamblando actores. Una mirada antropológica
sobre el tejido de alianzas en el universo del agronegocio”.
69. Hansing, Katrin and Orozco, Manuel 2014: “The Role and Impact of
Remittances on Small Business Development during Cuba’s Current Economic
70. Martínez Franzoni, Juliana and Sánchez-Ancochea, Diego 2014: “Should Policy
Aim at Having All People on the Same Boat? The Denition, Relevance and
Challenges of Universalism in Latin America”.
71. Góngora-Mera, Manuel; Herrera, Gioconda and Müller, Conrad 2014: “The
Frontiers of Universal Citizenship: Transnational Social Spaces and the Legal
Status of Migrants in Ecuador”.
72. Pérez Sáinz, Juan Pablo 2014: “El tercer momento rousseauniano de América
Latina. Posneoliberalismo y desigualdades sociales”.
73. Jelin, Elizabeth 2014: “Desigualdades de clase, género y etnicidad/raza.
Realidades históricas, aproximaciones analíticas”.
74. Dietz, Kristina 2014: “Researching Inequalities from a Socio-ecological
75. Zhouri, Andéa 2014: “Mapping Environmental Inequalities in Brazil: Mining,
Environmental Conicts and Impasses of Mediation”.
76. Panther, Stephan 2014: “Institutions in a World System: Countours of a Research
Program”. is an interdisciplinary, international, and multi-institutional
research network on social inequalities in Latin America supported by the Bundesmi-
nisterium für Bildung und Forschung (BMBF, German Federal Ministry of Education
and Research) in the frame of its funding line on area studies. The Lateinamerika-
Institut (LAI, Institute for Latin American Studies) of the Freie Universität Berlin and
the Ibero-Amerikanisches Institut of the Stiftung Preussischer Kulturbesitz (IAI,
Ibero-American Institute of the Prussian Cultural Heritage Foundation, Berlin) are in
overall charge of the research network.
The objective of is to work towards a shift in the research on
social inequalities in Latin America in order to overcome all forms of “methodological
nationalism”. Intersections of different types of social inequalities and
interdependencies between global and local constellations of social inequalities are
at the focus of analysis. For achieving this shift, researchers from different regions
and disciplines as well as experts either on social inequalities and/or on Latin America
are working together. The network character of is explicitly set
up to overcome persisting hierarchies in knowledge production in social sciences
by developing more symmetrical forms of academic practices based on dialogue
and mutual exchange between researchers from different regional and disciplinary
Further information on
Executive Institutions of
Freie Universität Berlin
Boltzmannstr. 1
D-14195 Berlin, Germany
Tel: +49 30 838 53069
... Sul piano più generale dell'integrazione delle istituzioni e dello stato nell'analisi della globalizzazione, la prospettiva sistemica può fungere da antidoto al teleologismo di molta storiografia neoistituzionalista, che assume pervicacemente lo stato-nazione come unità di analisi tracciando un ranking di virtuosità delle istituzioni nazionali come variabile esplicativa dello sviluppo di lunga durata 71 . Non mancano a tal proposito indicazioni di metodo dalla ricerca economica a coniugare la prospettiva neoistituzionalista con la world system analysis 72 , o più in generale a relativizzare il ruolo delle istituzioni come determinanti primarie dello sviluppo sulla lunga durata, considerandole piuttosto come il risultato di fattori strutturali che determinano asimmetrie nei rapporti di interdipendenza 73 . ...
Full-text available
Conceptual analysis on equality, heterogeneity, polarization and dependency theory. Empirical analysis on the trade China-LAC relationship. Conclusions and proposals on the center-core relationship between LAC and China. In the last decade, the socioeconomic relationship between Latin America and the Caribbean (LAC) and the People's Republic of China has increased massively. How has this new qualitative relationship between LAC and China affected inequality in LAC? This paper highlights the degrees of concentration of trade since the 1990s until 2011 and its technological content. Future research will have to deepen this relationship at the national, regional and even firm-level. Based on a brief critical review of the relationship between trade and equality/inequality, the document analyzes several of the outstanding features of the booming trade relationship between LAC and China. It concludes, among other issues, that both academics and policy makers have to overcome the bias against the agricultural sector and natural resources based on the concepts of global commodity chains, systemic competitiveness and territorial endogeneity. In addition, one of the most striking features of the new LAC-China trade is its increasing concentration, both compared with historical levels of LAC-China trade, as well as with the rest of the world, a development that will affect inequality in LAC substantially. It is not "old wine in new bottles," but rather a new socioeconomic relationship with dynamic and profound impacts in LAC that will have to be considered in more detail by scholars and policy makers in the future.
Full-text available
The present paper analyzes the effects of global flows on socioeconomic inequality in the four Mexican states bordering Texas: Tamaulipas, Nuevo León, Coahuila and Chihuahua. In particular, this work analyzes the effects of migration, cross-border trade, extraction and trade of hydrocarbons, and transnational organized crime. The results of the present research clearly show higher levels of inequality in the municipalities of greater economic dynamism and presence of (formal, informal or illicit) global flows. Transnational organized crime has a strong presence in these states of the Mexican Republic and seems to operate in the same direction than the rest of formal global flows, that is, reinforcing inequalities within these Mexican states, as well as inequalities between Mexican and Texan border cities.
Full-text available
Full-text available
Este trabajo presenta los primeros resultados de la investigación empírica que he conducido sobre las recientes extensiones de derechos políticos a inmigrantes en Latinoamérica considerando su relevancia dentro del panorama teórico global sobre el fenómeno y, a partir de ello, generando hipótesis sobre las desigualdades que podrían generar en la región, desde una perspectiva de ciudadanía política y justicia global. El artículo está organizado en seis partes, excluyendo las conclusiones. Primero, una introducción a la literatura que ha tratado la ciudadanía en Latinoamérica. Segundo, una aproximación a la perspectiva de la ciudadanía que desde la cual se observa la relación entre la extensión del derecho a votar a los residentes no-ciudadanos y las desigualdades en este trabajo. Tercero, una exposición más detallada del marco teórico; especialmente de las hipótesis existentes que explican las extensiones de derechos políticos a no ciudadanos. Cuarto, una descripción concisa del panorama mundial de los derechos políticos de migrantes no ciudadanos. Quinto, una descripción de las características de los casos latinoamericanos con el objetivo de entender de qué reformas se trata y de evaluar si existe un patrón regional distintivo respecto al mismo fenómeno en el mundo. Sexto, el adelanto de hipótesis para entender el porqué y el cómo de estas reformas, con sus variaciones, para futuros estudios sobre las razones por las que diferentes tipos de reformas de extensión de derechos políticos a migrantes aparecen en Latinoamérica.
Full-text available
Por medio del análisis de la producción científica sobre las grandes ciudades latinoamericanas en las últimas décadas –con un énfasis especial en la evolución de la Región Metropolitana de Buenos Aires– este artículo reflexiona sobre un escenario paradójico: mientras en la última década muchos países de la región han implementado políticas que lograron reducir (levemente) la desigualdad de ingresos, se verifica la continuidad del movimiento expansivo de áreas metropolitanas fragmentadas que incrementan no solo la desigualdad en el acceso a la ciudad y a sus bienes, servicios y oportunidades, sino que también consolidan –articuladas con la segmentación del sistema educativo y el mercado de trabajo– redes y circuitos sociales segregados. Ante este panorama se sostiene como hipótesis que la continuidad del patrón de urbanización excluyente limita los efectos de las políticas redistributivas y torna necesaria una política del uso del suelo para impactar en las desigualdades de la región.
This chapter examines the domestic sources of foreign economic policies. Different people in every society typically have different views about what their government should do when it comes to setting the policies that regulate international trade, immigration, investment, and exchange rates. These competing demands must be reconciled in some way by the political institutions that govern policy making. To really understand the domestic origins of foreign economic policies, we need to perform two critical tasks: identify or map the policy preferences of different groups in the domestic economy; and specify how political institutions determine the way these preferences are aggregated or converted into actual government decisions. The first task requires some economic analysis, while the second requires some political analysis. These two analytical steps put together like this, combining both economic and political analysis in tandem, are generally referred to as the political economy approach to the study of policy outcomes. The chapter then considers the impact of domestic politics on bargaining over economic issues between governments at the international level.