Networks and Public Policies in the Global South: The Chilean Case and the Future of the Developmental Network State

Recently, there has been considerable excitement about the economic potential of the “developmental network state”—decentralized government policies that successfully accelerated growth in several high- and medium-income countries. The question remains whether such a strategy could be successful in less-developed nations whose scientific and technological resources were relatively limited. This paper analyzes the trajectory of Chile, a Southern country which, despite adverse conditions, managed to produce something akin to an economic miracle during the last few decades. Our argument is that Chile’s success was based on the developmental network state strategy. Moreover, we highlight the centrality to understanding the Chilean experience of the concept of “network failures”—a common phenomenon that occurs when domestic production would be best served by network forms of organization but for a variety of reasons, these networks either fail to materialize or fail to take hold (Schrank and Whitford 2011). Over and over again, we see that the logic behind the actions of the Chilean state was to provide resources that reduced the likelihood of network failures. We examine three case studies of successful export sectors: salmon; wine; and fruit and vegetables. The paper outlines some of the challenges faced by the Chilean model and assesses its long-term viability.     

Control and controls: A reexamination of control patterns in budget execution

Consistent choice in an inconsistent world requires processes both for rational calculation and effective control. The budgetary process incorporates both of these functions. However, students of public sector budgeting tend either to ignore budget execution or to view the time expended by budgeteers on the execution of budgets - as opposed to their construction - as a gross misallocation of resources. In the authors' opinion this perspective - or lack thereof - seriously undervalues the control function and the budgeteer's role in preventing control loss. At the same time, the authors acknowledge that budgeteers frequently misuse the controls at their disposal and that in certain cases (i.e., where competitive supply of a public service is justified and in effect) expenditure controls are redundant and serve no real purpose.Budget execution is primarily concerned with two kinds of expenditure controls, allotment controls and fund reports, and is supported by position controls. The immediate purpose of these controls is to insure that purchases are limited to the amounts and purposes specified in the budget act. However, given the typical relationship between the budget agency and the operating bureau, we argue that their ultimate function is to prevent the bureau from distorting or concealing cost and production information so as to increase its bargaining power, thereby permitting the budget office to insure that the preferences of the state are at least approximately met. Performance standards and control rules also serve to avoid inconsistency in the dealings between the budgeteer and the bureau and to stabilize expectations about the ground rules for bargaining and the likely outcomes of the bargaining process so as to reduce the costs of uncertainty to both sides.