Compliance with the private standards and capacity building of national institutions under globalization: new agendas for developing countries?
Michiko Iizuka & Yari Borbon-Galvez
#2009-025
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