Repertoires of Development in Economic Divergence on The U.S. - Mexico Border by Seth Daniel Pipkin B.A., Brown University, 2002 M.C.P, MIT, 2006 Submitted to the Sloan School of Management in Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy at the MASSACHUSETTS INSTITUTE OF TECHNOLOGY September 2012 ( 2012 Seth Pipkin. All rights reserved. The author hereby grants to MIT permission to reproduce and to distribute publicly paper and electronic copies of this thesis document in whole or in part in any medium now known or hereafter created. Author: A ( eth D. Pipkin Sloan School of Management, June 28, 2012 Certified by: Michael J. Piore David W. Skinner Professor of Political Economy Thesis Supervisor Accepted by: Ezra W. Zuckerman Sivan Nanyang Techiological University Professor of Technological Innovation, Entrepreneurship, and Strategic Management Director, Ph.D. Program, MIT Sloan School of Management Repertoires of Development in Economic Divergence on the U.S. - Mexico Border by Seth D.Pipkin Submitted to the Sloan School of Management on June 28, 2012 in Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy in Management Abstract This dissertation represents a new approach to the age-old social science problem of the underlying causes of economic development. It focuses on two initially very similar cross- border pairs of cities (McAllen, TX - Reynosa, Tamaulipas and Brownsville, TX - Matamoros, Tamaulipas) along the U.S. - Mexico border. The comparison of these two cross-border city pairs reveals that differences in patterns of local behavior led one small city on the US side, McAllen, to successfully exploit the opportunities offered by NAFTA after 1994. A review of relevant economic and demographic data as well as one year of in- depth field investigation show that the differences in local outcomes cannot be explained by established causes. Their pre-NAFTA endowments were essentially the same, and McAllen and Brownsville pursued very similar economic development policies. Rather, I trace the economic divergence to the means by which local elites introduced and contested their projects. These differences and similarities enable us to speak of a community's "repertoire," a term borrowed from Tilly (1977, 1993, 2006) and Swidler (1986) to characterize a group's means pursuing and contesting goals with each other. Insofar as they pertain to patterns of communications and trust, repertoires relate to the network literature; however, in the cases observed here, the repertoires seem to predate the key networks of interaction, and, in a sense, to produce rather than to reflect them, suggesting that they are the underlying causal mechanism upon which we need to focus. While very similar for much of their early history, the two US-side cities' repertoires diverged around the 1930s. This took place when a region-wide shift in demographics and industrial base overturned the political boss structure that was common throughout South Texas. Insurgents in McAllen were left to their own devices and defeated their local boss after twenty years of struggle, in the process instituting a new local repertoire based on the "progressive," technocratic, pro-business politics they had brought with them from the 2 American Midwest. Meanwhile, their peers in Brownsville overturned their political boss in half the time, albeit by allying with local pre-existing boss opponents who knew only the old polarized, parochial approach to politics. Thus the long-term history of these cities offers the possibility that repertoires can change dramatically when new resource flows are harnessed by groups who are able to articulate a set of political practices without interruption or cooptation from those steeped in a prevailing repertoire. Although the differences among the two cities' repertoires were apparently inconsequential to their growth patterns during the era of industrial agriculture (1930s-1980s), the opening to global capital in the 1990s provided a venue where McAllen's "collective, constructive and cosmopolitan" repertoire far outperformed Brownsville's set of "atomized, antagonistic, and atypical" practices and understandings. Despite the consistency of these practices over time, there is significant variety in actors' ongoing attempts to come to grips with and solve their problems in uncertain situations. Significant, sustained deviations from local repertoire occur in both McAllen and Brownsville in the present day. In McAllen, the political and social isolation of its local physicians led them to stymie the construction of a medical school in their city, a project which had been a major goal of nearly every other element of the local political and economic elite. Similarly, in Brownsville, the completion of a multi-use education, research, and business development center (called the ITEC) demonstrates that exceptions can arise and produce more than momentary, fleeting effects. Furthermore, the ITEC was the project of the University of Texas at Brownsville, whose involvement in many cases of Brownsville politics-as-usual raises the possibility that organizations are capable of deploying multiple distinct repertoires. These observations taken together suggest the following contributions: first, that economic development can be as much an outcome of locally ingrained cultural practices, tools and techniques as of traditionally defined factors such as geography, human capital, institutions, and policies. Moreover, these local cultures are not simply reducible to other apparent causes of development. Second, it demonstrates that to assess constraints and opportunities in local economic development, repertoires should be taken into account by observing actors in their everyday experiences and experiments across different institutions. Finally, this research shows that repertoires of development are subject to change through groups' ongoing experiences of learning to communicate and coordinate with each other, and that understanding the contingencies therein can help us to better grasp the causes of economic stability and change. Thesis Supervisor: Michael J. Piore Title: David W. Skinner Professor of Political Economy 3 Acknowledgements The completion of such a lengthy project carries with it a certain sense of liberation. At the same time, all the peaks and valleys, twists and turns can render ambiguous what it all means. I am reminded of the words of Shunryu Suzuki, who, in reference to the experience of accomplishment, said, "Before you attain it, it is something wonderful, but after you obtain it, it is nothing special. It is just you yourself, nothing special." Likewise, in this slow, ongoing intellectual journey, I have come across many points where, in anticipating a next step, I saw something wonderful, only to pass through and find myself. Nothing special. Extraordinarily special, by contrast, are the individuals without whom I could not have possibly undertaken this journey. First and foremost I owe gratitude to my committee, those mentors who were most closely involved with this project. To Michael Piore, my committee chair, for teaching me to own my work. To Richard Locke, for always believing, regardless of the many undeniable reasons to doubt. To Paul Osterman, for helping me to get all of this started, and for never missing the key gaps. To Susan Silbey, for setting such a high standard for honesty, and for listening. To the many other faculty persons and academics who have read and supported my work and thinking over the years: Lucio Baccaro, Emilio Castilla, Robert Harrison, Patrick Heller, Tom Kochan, Michele Lamont, Louis Menand, James Samstad, Bishwapriya Sanyal, Ben Schneider, Andrew Schrank, Ofer Sharone, Judith Tendler, and John Van Maanen. For taking a discerning yet ultimately sympathetic view to my works-in-progress. To those students who came before me, set an example, and at times, set me straight: Matthew Amengual, Rodrigo Canales, Salo Coslovsky, Zev Eigen, John-Paul Ferguson, Ruthanne Huising, Natasha Iskander, Roberto Pires, Sean Safford, Gustavo Setrini, and Kyoung-Hee Yu. To my friends and contemporaries who talked and shared as we muddled through together: Alan Benson, Phech Colatat, Greg Distelhorst, Joelle Evans, Ryan Hammond, Gabi Kruks-Wisner, Jason Jackson, Heidi Maldonado, Akshay Mangla, Timea Pal, Kate Parrot, Federico Perez, Aruna Ranganathan, Ben Rissing, Francisco Ruiz, Hiram Samel, Ivette Salom, Alvaro Santana-Acufia, Enying Zheng - my classmates, study-group mates, and informal network of mutual grad student therapists. To the seminars - the Institute for Work and Employment Research and the Economic Sociology Working Group at MIT, as well as the Harvard Workshops on Culture and Social Analysis and History, Culture and 4 Society - which allowed me the chance to air out and fine-tune my ideas in a public setting. To Shiben Banerji, always down the hall, literally or otherwise, with advice far wiser than I deserved. To Jigar Bhatt and Bruno Baroni, who lived to tell the tale. To Alberto Fuentes, with whom I look forward to carrying on in homage to the greats. To Ian Gray: ever true, Brother Jack Acid. To Chris Muller, for the salad days at VP. To Dmitri Seals: tenacious. My deepest thanks are due to all of those who participated in this research, from the Texas- Mexico border and elsewhere. You offered a generosity and forthrightness far greater than I could have asked, and I hope that this work offers some useful contribution in turn. Also,