Politics & Society

This article introduces the special issue on “Rewarding Regulation in Latin America” by explaining the origins and potential value of the concept. It pays particularly careful attention to the limits of both regulation, as traditionally practiced, and deregulation in developing democracies today. And it briefly describes the individual contributions to the issue and summarizes their broader lessons.

In recent years, global corporations and national governments have been enacting a growing number of codes of conduct and public regulations to combat dangerous and degrading work conditions in global supply chains. At the receiving end of this activity, local producers must contend with multiple regulatory regimes, but it is unclear how these regimes interact and what results, if any, they produce. This article examines this dynamic in the sugar sector in Brazil. It finds that although private and public agents rarely communicate, let alone coordinate with one another, they nevertheless reinforce each other’s actions. Public regulators use their legal powers to outlaw extreme forms of outsourcing. Private auditors use the trust they command as company insiders to instigate a process of workplace transformation that facilitates compliance. Together, their parallel actions block the low road and guide targeted firms to a higher road in which improved labor standards are not only possible but even desirable.

Environmental regulation in middle-income and developing countries is often viewed with high degrees of pessimism. Although many countries have adopted protective laws, violations are widespread and institutions are weak. This paper analyzes the puzzle of shifting patterns of environmental regulation in Argentina, a country with widespread institutional weakness. Most regulators in Argentina take a firefighting approach, acting only when skirmishes emerge between communities and firms. Amidst regulatory chaos, improvements in the environmental performance of firms are few, and noncompliance remains the norm. However, in the province of Tucumán, the pattern of regulation shifted, and officials began to systematically enforce regulations. This paper traces shifts in patterns of enforcement back to broad pressures that provoked industry and environmentalists to support increases in the internal and external components of state regulatory capacity. The analysis uncovers political dynamics that can contribute to strengthening the institutions necessary for sustainable development.

In contrast to analyses that regard health policy and industrial policy as anathema to each other, either because an emphasis on health implies neglect of industry or because gains in industrialization come at the expense of health, we show positive synergies between the two realms. Government intervention into the health sector can catalyze interventions to promote industrial development in the pharmaceutical sector, which in turn can make health policies more effective. We focus on two pathways by which health policies can trigger industrial policies. A demand-driven pathway entails government commitments in health revealing weaknesses and deficiencies in pharmaceutical production, and thus inspiring efforts to build capabilities to stabilize the flow of drugs to the public sector. A regulation-induced pathway consists of sanitary policies revealing mismatches between what is required for firms to continue to participate in the market and pharmaceutical producers’ prevailing levels of capabilities, and government measures then being developed and deployed to address the mismatch. We demonstrate both pathways with the case of Brazil.

To understand how regulation influences competitiveness and upgrading processes, this article focuses on the organizational changes involved in “rewarding regulation.” Through a qualitative study of two clusters in the agrifood industry in Nicaragua, it analyzes two types of regulation and their interaction with small producers’ production organizations: food safety and environmental sustainability. The analysis shows that regulation plays a crucial role in fostering changes in organizational practices and routines. This occurs when local organizations build new knowledge and skills to upgrade products and production processes, while developing new connections among producers and between them to other private and public actors that support economic development. “Rewarding regulation” is part of a process of learning and creating networks that help build local know-how and generate supportive collective resources.

Rewarding regulation involves pursuing the complex goal of bringing labor protection and firms’ economic performance together. A central element in achieving such goals refers to how regulatory bureaucracies operate. This paper examines the organizational structures, processes, and internal dynamics that allow regulatory bureaucracies to innovate and meet such developmental challenges. It reviews well-established interpretations about state bureaucracies that have emphasized either hierarchical structures and control processes or discretion and disperse individual behaviors. In addition, it suggests alternative analytical paths for combining flexibility and control by examining the relational processes and dynamics within bureaucracies. The analysis of the Brazilian Labor Inspectorate, based on qualitative data and extensive fieldwork, and of other empirical examples from the literature, indicates that internal tensions and conflicts instigate a process of technical vigilance between members of the same bureaucracy, inducing innovation and responsible uses of discretion.