Abstract: Market Bound: Concessions as a Development Strategy in Latin America
In the late nineteenth century, modernizing regimes across Latin America granted concessions to attract foreign capital. Concessions gave private investors monopolies, subsidies, guaranteed rates of profit, and other exclusive privileges. In the Dominican Republic, legislators acknowledged that "privileges create monopolies, which are always hateful," yet continued to grant monopolistic contracts because "to condemn concessions is to condemn the republic to stagnation, since no capitalist, given our current conditions, would expose his capital here [otherwise]." This paper explores the granting of concessions as a modernizing strategy. I argue that for weak and capital-starved Latin American states, concessions were a double-edged sword. They allowed modernizing regimes to shape the economy by privileging certain industries, infrastructure projects, regions, and foreign investors. Although the policy had serious drawbacks, as shown by protests about the high prices of goods and services provided by concessionaires, Latin American governments saw few alternatives to promoting national development by fettering economic freedom.