The politics of sectoral defense: Pharmaceutical retail in Portugal

This is a study of the political dynamics that influence economic response to globalization. It investigates why, in the face of the similar and sustained pressures and challenges of economic integration, the trajectory of modernization of services sectors that had a similar economic organization and social role three decades ago has diverged in major ways. It does so by in-depth examination of a key services sector, namely pharmaceutical retail, in Portugal in a comparative perspective. The empirical puzzle driving research is that, while adjustment in most Portuguese retail sectors has been marked by a movement to economic concentration in large corporations, pharmaceutical retail continues to be exclusively structured by small firms and the latter have modernized and prospered under the pressures of heightened competition that have concurred with economic integration. The dissertation addresses this puzzle.; The main argument is that the exceptional evolution of pharmaceutical retail is the outcome of an extended and successful politics of sectoral defense. The latter is characterized as the pre-emptive and sustained organization and deployment by the small entrepreneurs of the sector of collective structures and strategy that modernized their firms and made them highly competitive before economic integration, as well as securing a strong institutional shield against competition. In-depth examination of the dynamics of sectoral defense suggests that its success is closely associated with coordination capabilities of the firms of a given sector, themselves linked with the character of interest organization and the institutional conditions that influence it.; In essence, this is a new institutionalist analysis of modernization that departs from standard modernization theory. The latter tends to analyze economic adjustment as the outcome of a contest between market and state forces. The dissertation argues for moving beyond such dualistic approach and bringing back social organization into the center of analysis of adjustment. Also, it addresses the gap left by comparative political economy's tendency to focus research on the effects of globalization upon industrial sectors and large firms and overlook small firms in services sectors. These constitute a large part of the economy of OECD countries and deserve further research.