This project aims to answer two primary research questions. First, why some authoritarian regimes that export commodities decide to conduct advanced liberal industrialization (ALI) in order to create intensive-growth firms that produce internationally competitive finished goods at home? Second, what explains the success of such industrialization patterns? An original analytical framework is developed. It shows that export of commodities facilitates creation of patrimonial capitalism that is based on commodity and bureaucratic rents. Commodity rents are vulnerable to the Dutch Disease, internal economies of scale and international price and demand fluctuations. Lopsided economic structure is unsustainable, because it losses manufacturing industries and creates budget gaps. Intensive-growth firms are more reliable, because they produce high value-added internationally competitive goods and diversify the export structure offsetting negative trends of commodity production. But these industries require rule of law and competition to survive. Patrimonial capitalism cannot create both requirements. The contradiction between the long-term necessity for ALI and short-term incentives for patrimonial capitalism create a split between the ruler and bureaucracy, because the rulers are interested in ALI to keep the power and stability of the existing regime, whereas bureaucrats are interested in keeping control over rents. The rulers design implementation paths for ALI, called governing rationales, to discipline bureaucracy into sharing the vision. However, bureaucrats resist and subvert the proposed reforms by developing a) personality cults that transfer responsibility for ALI upon the ruler and shift responsibilities for the specific reforms away from their offices; b) depoliticize significance of economic and political problems in order to keep the impression of progress and compliance with higher regulations; c) subversive patrimonial activities that help affiliated companies to win the best bids, subsidies and contracts. The hypothesis is that ALI is impossible with bureaucratic resistance, because rulers’ oversight mechanisms cannot cope with the subversive practices. To prove it, a new analytical framework is applied on two countries that rely on mineral rent (Kazakhstan) and cotton rent (Uzbekistan).
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