Institut d'études politiques de Paris ÉCOLE DOCTORALE DE SCIENCES PO Programme doctoral de science politique, mention sociologie politique comparée Centre de recherches internationales Doctorat en science politique Embedding industrial policy in oil-states The mixed-effects of an uncoordinated state and the strategies of the Venezuelan business elites at the close of an oil boom (2012-2014) Eduardo Rios Ludeña Dissertation co-directed by Olivier Dabène, Professeur des universités, IEP de Paris and Franck Poupeau, Directeur de recherche au CNRS, Director of UMI iGLOBES, The University of Arizona, Defense 22 June 2016 Committee: Olivier Dabène, Professeur des universités, IEP de Paris William Genieys, Directeur de recherche CNRS, CEPEL, Université de Montpellier (rapporteur) Johannes Hjellbrekke, Professor, Department of Sociology, Universitetet i Bergen (rapporteur) Claire Lemercier, Directrice de recherche CNRS, CSO, Sciences Po Franck Poupeau, Directeur de recherche au CNRS, Directeur de l’UMI iGLOBES, The University of Arizona Ben Ross Schneider, Ford International Professor of Political Science, MIT Acknowledgments First, many thanks to Olivier Dabène and Franck Poupeau for supervising this dissertation. Olivier’s secret admiration for Hirschman and his passion for Latin American politics made this work possible. Franck’s acute understanding of the power structure in Latin America and his insistence that studying business elites in Venezuela had larger implication on the theory of oil states was central for writing our theoretical framework. Furthermore, we wish to extend our gratitude to David Doyle who joked that we still needed a “sexy theoretical framework” when we presented the results of our fieldwork to him. Many thanks also to Pierre François who insisted that the Venezuelan state had to be more complicated than what had previously been written. We are indebted to Yves Dezalay who told us that a career analysis was the best way of studying the business elites. We thank him also for letting us know that the question “how did you get to occupy the position you are now in” is the best introductory question. We extend our gratitude to Eric Brian for helping us seize that strategies are stochastic in nature and for insisting on the importance of the long- term for analyzing economic decision-making. We also wish to thank Monique de St Martin for making us understand that the position of the business elites depends on the attributes of the company for which they work. We also are indebted to Catalina Banko for her tireless precisions on 19th century Caracas’ commercial class. We wish to extend our thanks to Brian McBeth who displayed his encyclopedic knowledge on Venezuela under Gómez and for his criticism on our first draft; his insistence on observing the “average business man” was cardinal in our interpretation of the business sector. Gabriela Bronfermeijer was patient in clarifying the details of the construction of the Venelite data set in 1963. Michael Penfold correctly pointed out the heterogeneities of the Venezuelan business world. Lawrence Whitehead was pivotal in understanding that state incentives did not reach the business world evenly, and that therefore the specialization of the business elites limited their scope of economic action. We thank Bruno Cousin and Johannes Hjellbrekke for their methodological insights – by the coffee machine at the EHESS – on the presentation of the data and on the need to combine qualitative and quantitative methods. Most importantly, we wish to thank Brigitte le Roux for her Londoner patience in explaining to us how to better take advantage of the MCA technique. This dissertation would not have been possible without her precise critiques. We wish to thank a series of institutions that made this work possible. First to the Fondation Nationale des Sciences Politiques for their economic support. Secondly, to the staff at the doctoral school at Sciences Po for their help during our dissertation. We also wish to thank the staff at the CERI for their invaluable help during the years. We wish to thank the appariteurs at SciencesPo whom we bored for hours with conversations on the cold Parisian winter. Finally, we wish to thank the librarians that helped us find the strangest books in the treasure cave that is the SciencesPo library. We also wish to thank Heladio Hernández at the department of political sciences at the Central University of Venezuela, as well as the CENDES for opening the doors of their marvelous archives. Our last year of writing would not have been possible without the help of OxPo and Florence Faucher. We also wish to extend our gratitude to DPIR and the Latin American Center at the University of 1 Eduardo Rios Ludeña - Embedding industrial policy in oil-states - 2016 Oxford for helping us finish our dissertation in the best conditions imaginable. Finally, we want to thank the Maison Française for putting a roof over our head, when we had none. Most importantly, for teaching us that tea time, is important. On a more personal note, we wish to extend our gratitude to the various businessmen and women who made our fieldwork possible. to whom I still owe a 30 pages article, and for his acute comments on the Venezuelan business sector. To fidel for his contacts among experienced bankers. To the economic service for helping us access the right businessmen. We are also in owe to Cesar for opening her library to us. We wish to thank guasdualito for his multiple interviews and his trailblazing writings. To the staff of the Universidad Metropolitana who opened the doors of this amazing institution. To Lorena, who is at the center of the private sector’s politics. We thank our students in Venezuela who forced us to clarify our historical argument and whose works helped us understand the intricacies of the state economic sector. We wish to extend our thanks to the myriads of moto taxistas who endangered their, but most importantly, our life to take us, in suit, at a speed consistent with our level of adrenaline. We also extend our gratitude to all of our interviewees who said much more that they should have to a twenty something year old graduate student with a recorder and a wrinkled tie. To them I can only express my sincerest thanks. Finally, we would want to thank Eduardo whose help during our last year saved our academic future. Karen, for her laborious job of correcting our – if improving – still inexpert English. To Rico for his political wisdom and tireless advice. To Argelia, for helping us understand grassroots politics, and to surf Caracas’ violence. To Jerjes who will be sorely missed. To Carin, for her patience with an unmathematical son. We wish to thank Sebastián for asking when we were going to finish and why we needed to write so many pages. Finally, to Stéphanie whose support in moments of doubts, insightful comments – and forced weekends – helped us finish this dissertation in time. To her also my complete gratitude for sharing our holidays with a copy of the dissertation. But more importantly for her understanding at each “oh I got it” that gave an illusion of having finished the dissertation. To her this finished job. This work will not have been possible without Nicolás, Gustavo and Alejandro that re-introduced us to a city that we had never fully understood. To Nashla, who likes politics almost as much as dead medical anthropologists. We thank Antoine for the coffee and the talks. To Francesca for sharing an office and invaluable advice. We thank also Matias who heard us more that he should have. We wish also to thank Mohamed for organizing a wonderful workshop. We are indebted to Maryhen for bringing back the precious and for her help with our theoretical framework. Finally, we wish to thank Federico and Pierre, for the discussions, the advice, Schelling, Guyane and a dead Venezuelan poet. 2 Eduardo Rios Ludeña - Embedding industrial policy in oil-states - 2016 Table of content ACKNOWLEDGMENTS ....................................................................................................................................... 1 TABLE OF CONTENT ......................................................................................................................................... 3 FIGURES .............................................................................................................................................................. 6 TABLES ................................................................................................................................................................ 8 1. INTRODUCTION. THE BUSINESS ELITES’ STRATEGY-FORMATION PROCESS IN OIL- DRIVEN ECONOMIES ....................................................................................................................................... 9 1.1. PUZZLE: STATE INCENTIVES ON BUSINESS ELITES’ ECONOMIC STRATEGIES IN OIL-COUNTRIES ................... 11 1.2. THE ARGUMENT: STRATEGY FORMATION PROCESSES’ INSTITUTIONAL AND SOCIAL INCENTIVES ................ 12 1.2.1. Supply-side, industrial policies’, mixed institutional incentives: a statistical equilibrium ................ 13 1.2.2. A specialized and diversified business sector: oil-driven state capitalism. ....................................... 15 1.2.3. A long-term process of specialization: the continual screening of the business elites ....................... 16 1.3. HYPOTHESES: THE STATE AND THE STRUCTURE OF THE BUSINESS ELITES, INCENTIVES ON STRATEGY FORMATION PROCESSES ...........................................................................................................................................