Between power and poverty: A study of political-economic adaptation and the autonomy of emerging nation-states, with special reference to Peru

This dissertation inquires into the adaptive strategies employed by emerging nation-states seeking to establish sovereign governing authority by asserting national autonomy. Specifically, it explores the interaction between foreign policy and economic policy, and the joint effect of these policies on governability, in Peru and five other medium-small less developed countries. As a unique contribution to the state-building subfield of historical political economy, it specifies precise policy linkages based on a review of theories from the respective fields of international relations and macroeconomics. It then tests two hypotheses based on opposing conceptions of the international system: anarchic (a "sink or swim" context in which constraints on policy are rigid) vs. hierarchic (allowing for varying degrees of state consolidation and policy choice). With regard to the first hypothesis, I find some evidence of a predicted affinity between defiant (militarized) foreign policies and heterodox (statist) economic policies on one hand, and between orthodox (open-market) economic policies and compliant (pacific) foreign policies on the other hand. The evidence is somewhat stronger in favor of the second hypothesis: Countries that adopt a noncompetitive heterodox-compliant strategy are prone to suffer an erosion of state authority, while those that manage to sustain an ultra-competitive orthodox-defiant strategy for many years tend to achieve the most success in state building. Based on an in-depth examination of decision-making processes in Peru during four successive governments from 1968 to 1990 (based on thorough primary research on Peru, including interviews with a number of former top officials), I find that failures by leaders to promptly adjust their foreign and economic policies in response to changing external conditions usually leads, perforce, to an extreme reaction in the opposition direction. I contend that these abrupt, awkward policy oscillations reflect the "existential predicament" faced by emerging nation-states: their struggle to survive by competing with the outside world is "smothered" by international norms that were originally created to facilitate cooperation among great powers. Given the razor-thin margin for policymaking error in an era of globalization, I conclude that we should expect a continuation of periodic regime crises in the Third World, and even outbreaks of international conflicts.