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Development studies emphasise the critical role of institutions in generating conditions for economic growth and shared prosperity, categorising them as either inclusive (development-promoting) or extractive (development-inhibiting). This article demonstrates that trade barriers led a multinational corporation to cooperate with small-scale dairy farmers, facilitating successful rural development. Moreover, the inclusive dairy association that evolved as a result is helping farmers respond to recent trade liberalisation under the Central American Free Trade Agreement (CAFTA). Thus, categorising institutions a priori as inclusive or extractive neglects the fact that institutions are constrained and enabled by others in their environment, and obscures the mediation of power relations among social actors.
Lindsey Ibañez (Fri,) studied this question.