Working paper abstract

#2009-025

Compliance with the private standards and capacity building of national institutions under globalization: new agendas for developing countries?

Michiko Iizuka & Yari Borbon-Galvez

There are two assumptions regarding regulatory instruments under the globalizing economy. These are: (1) increasing role of private standards in shaping the economic activities of developing countries; and (2) diminishing role of national institutions in “open” and “liberal” markets. In other words it was considered that global private standards would eventually replace already weak or absent national and local institutions in developing countries. The purpose of our paper is to suggest an alternative interpretation to this widely held view about national regulations and institutions in developing countries under the ‘new standard regime’ in the food and agricultural sector where the regulatory framework is traditionally stronger at national level.

The role of national regulatory institutions is considered to diminish as the countries compete in the “open” and “liberal” global market since firms are obliged to comply with global private standards. Instead, we have observed cases in developing countries which demonstrate an opposite phenomenon. In these cases, the local and national institutional capacity had actually being enhanced through learning in the “open” and “liberal” market at global level. In other words, we discovered that while the global (private) standards intend to control and shape the economic activities in developing countries through value chains, the local institutions also were transformed in a co-evolutionary manner to sustain the viability of existing local economic activities.

This paper hence tries to illustrate our argument with cases from developing countries to demonstrate how the process of adapting to survive in the ‘new regime’—compliance to global (private) standards—may have positive impacts on national and local institutions. Moreover, we intend to highlight some common features of transitions which are taking place in regulatory frameworks within the context of a global ‘new standards regime’ (public-private regulations). We will discuss the following cases of standards compliance and their impacts on enhancement of national and local capabilities: (1) the salmon farming industry in Chile, (2) and the fresh agricultural products in Mexico. These cases illustrate the complex interactions between global standards (both private and public-private) and national and local institutions. As the cases are slightly different, the comparison brings about interesting dimensions in illustrating institutional capacity building ‘trajectories’ from both private and non-private standards.

Keywords: Standards, Role of National Institutions, Capacity Building, Latin America, Agri-food

JEL code: L5, O25

UNU-MERIT Working Papers ISSN 1871-9872