Chain governance, sector policies and economic

Chain governance, sector policies and
economic sustainability in cocoa
How to bring the state back in?
September 18, 2012, First Conference on Economics and Politics of Chocolate,
KU Leuven
Sietze Vellema and Anna Laven
Wageningen University and Royal Tropical Institute (KIT)
Internationalization – question on the state
 Growing number of standards and certification schemes
inducing news form of value chain governance and
 Consolidation at buying end combines with
fragmentation at supply end of value chain
≈ Tempered volatility in commodity markets
 Transition from economic governance with strong state
involvement to blended forms
? Will this contribute to a process of industrial
transformation ?
Proposition – only with the involvement of a
transformative, developmental state
How to bring the state back in?
 The degree of state involvement and value chain
coordination in economic governance
● Griffiths, A. and R. F. Zammuto (2005). Institutional Governance Systems and
Variations in National Competitive Advantage: an integrative framework. The
Academy of Management review 30(4): 823-842.
● Giel Ton, Sietze Vellema, Geoffrey Hagelaar, and Anna Laven (2008) Chain
governance, sector policies and economic sustainability in cocoa: a comparative
analysis of Ghana, Côte d’Ivoire, and Ecuador. Markets, Chains and Sustainable
Development Strategy & Policy paper #7
 The kind of interventions and regulations by the state
● Peter Evans (1995) Embedded autonomy: states & industrial transformation
● Whitley, R.D. (1999) Divergent Capitalisms: the social structuring and change of
business systems, Oxford: Oxford University Press.
● A.H.J. (Bert) Helmsing and Sietze Vellema (eds) (2011) Value Chains, Inclusion
and Endogenous Development: Contrasting Theories and Realities
Ivory Coast
State is involved in economic governance
 Ghana – partial liberalization and shifts from within
revealing ownership of and investment in sector
 CdI – market-based governance and emergence of new
sector-specific institutional arrangements in period of
 Shift focus from upgrading and compliance with
standards to unravelling what happens when global
value chains touch down in local realities
● Business systems theory: nature of doing business,
state as economic agent, and state-business
● State theory: connectedness and internal structure
How to see the state?
 Predatory state
 Developmental state
● Possibilities for rent
● Shared projects of
● Explains focus on
● Invites interest in
degree of state
involvement and
reliance on markets
as independent
agents of change
concrete social ties
that bind state to
society and provide
channels for continual
The concept of embedded autonomy
 Connectedness
● State-society relation; focus on industrial and
entrepreneurial class
 Internal structure
● Corporate coherence
 Only in combination this creates a condition for effective
state involvement in industrial transformation
● Internal coherence and dense external ties are
complementary and mutually reinforcing
Different roles of the state
More conventional roles
More transformative roles
Play role of rule
Play role of
Respond to doubts about
vitality private capital
Take over risky,
complementary tasks
Privilege policing
over promotion
Private actors
are incapable
Malleable capacities of
local enterprises
Global changes challenge
local firms
Enabling or
Compete in
markets for
private goods
Assist in bargaining with
international capital
Varying thrusts
Large scale or
Assist in emergence of
new entrepreneurial
groups / induce existing
groups to venture into
challenging kinds of
Greenhouses – isolated
from international
Support and prod private
 Survival of sector, in the case of Evans ICT, depends in part on
the state’s ability to assume a blend of roles congruent with
the sector’s needs - embedding
● State combines roles in the same sector – historically
contingent creation
● Bureaucracies do not stand in opposition to markets
● States and societies are mutually constitutive
 Enhance coherence of state structure - autonomy
● Technico’s; sector specific agencies; strategically located
strong groups
● Entrepreneurial bureaucrats / Institutional entrepreneurs
 Politics: cocoa is politicized commodity – state tied to farmers
– perspective Evans shift attention to entrepreneurial classes
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