For most social scientists, business associations
are presumed to lobby for particular benefits and, if successful,
associations thereby impede overall growth. While this presumption
is warranted in many cases, this paper documents a wide range of
empirical cases where associations enhance economic performance,
generally by reducing information and transaction costs. The contributions
by business associations can be categorized according to the general
functions of: horizontal coordination, vertical coordination, reducing
information costs, setting standards, and upgrading skills and technology.
Examples of "developmental associations" arise in many different
cultural, social, and political contexts in Africa, Asia, and Latin
America. What distinguishes developmental associations from those
that simply seek rents? A common characteristic of developmental
business associations is institutional strength, which depends on
high member density, valuable membership benefits (selective incentives),
and effective internal representation of member interests. Internal
strength though is not sufficient. Two further contextual or enforcement
factors - states and competitive markets - ensure that associations
use their strength for productive ends.
Richard F. Doner, Department
of Political Science, Emory University
Ben Ross Schneider, Department of Political Science,
Northwestern University
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