Business-State Interactions

This chapter extends Chapter 8’s political settlement framework by addressing business-state interactions operating within specific types of settlements. Three levels of interaction follow. At the macro level, political settlements shape such interactions. At an intermediate (meso) level, market configurations—that is, their degrees of competitiveness and domestic versus export orientation—affect the demands businesses place on the state. These dynamics influence the accessibility (openness) of micro-level exchange agreements (deals) as well as their credibility—specifically, the degree to which they are ordered, meaning honored and predictable, or disordered. A shift from disordered to ordered deals reflects resolution of second-order CAPs of enforcing agreements. Such a shift can prompt growth accelerations that facilitate escaping poverty traps. More substantial development, however, requires addressing Chapter 4’s complex coordination CAPs.