The rules were clean. The outcome wasn’t. What two Mexican states teach us about power and reciprocity

by E. Fernanda Barreto Pérez (1)

We tend to believe that good people make good economies. If only those who hold economic power were more conscientious, more responsible, more aware of the common good, the thinking goes, our systems would become fairer and more sustainable. Pope Francis, in launching the Economy of Francesco, called young people to build an economy that «brings life, not death; that is inclusive and not exclusive.» Much of how we respond to that call still leans on a hope about character: that we can persuade elites to behave better.

My research, which compares how two Mexican states attract foreign investment, suggests that this hope, while not wrong, is incomplete. The sustainability and justice of an economy depend far less on the virtue of the powerful than on something we rarely examine: how they are organized and build industrial ecosystems. And that turns out to be both a sobering finding and a hopeful one.

A paradox on the border

Baja California and Chihuahua sit on Mexico’s northern frontier. They are remarkably alike: both built on export manufacturing, both deeply tied to the United States, both home to the same global firms in automotive, electronics, and medical devices. They compete for the same foreign capital. Yet they govern that competition in different ways, and comparing them produced a result I did not expect.

Baja California does almost everything the good-governance manuals recommend. Its investment incentives follow clear, public rules, organized through a points system written into law. Professional agencies provide continuity even when governments change. By every conventional measure, this is the transparent, rule-based model we are told to admire.

And yet, beneath those clean rules, I found something troubling. The actors who truly shape policy are industrial real-estate developers and logistics firms, a tightly knit group that one interviewee called an «extremely strong» guild. The transparent system works smoothly, but it works mostly for them. Local small suppliers remain on the margins. Many foreign firms operate through «shelter» arrangements that let them avoid entangling themselves with the local economy at all. The rules are public and orderly, but what they organize, in practice, is the tidy distribution of advantage among those who already hold the levers.

I came to call this ordered capture: not the corruption we usually picture, but processes captured with paperwork, capture that follows the rules. Transparency, it turned out, was protecting the incumbents rather than opening the door to everyone else.

Chihuahua is the mirror image. Its incentives are negotiated case by case, without clear public rules; by the textbook, this discretion looks like a weakness. Yet because power there is spread across many municipalities and business groups rather than concentrated in one coalition, the system stays more open to newcomers and more flexible in adapting to change. It has its own problems of opacity and occasional capture. But the comparison made one thing unmistakable: neither transparency alone nor flexibility alone makes an economy just. What matters is how power is distributed.

Power as a property of the structure

We usually think of economic power as something a person or company has, like wealth. But power, especially the power to shape public decisions, lives in relationships and channels, not in bank accounts. A local business deeply woven into the right networks can wield more real influence than a far larger firm that stands outside them.

In these productive networks, everyone depends on everyone else. Governments need investment and jobs; multinationals need permits and infrastructure; local firms need access to global supply chains. That mutual dependence could be a foundation for cooperation. But when control over the strategic nodes (the permits, the incentives, the water and energy, the key contracts) concentrates in a few hands, dependence curdles into something coercive. Whoever holds the nodes can quietly reward and punish, and reciprocity drains out of the system. I named this dynamic internal coercive interdependence.

Here is why it matters for anyone who cares about an economy of communion: a perfectly well-intentioned business leader, placed inside a structure of concentrated nodes, will still produce exclusion. Good character is not enough when the architecture itself channels power toward the few. The ethical question has to move from the conscience of the individual to the design of the organizational structure.

From virtue to architecture, and back to reciprocity

This is where the tradition of civil economy, so central to the Economy of Francesco, becomes an analytical tool. The economists Luigino Bruni and Stefano Zamagni remind us that a healthy economy rests on three principles. We readily accept the exchange of equivalents (the market) and redistribution (the state). But we tend to exile the third, reciprocity, to the private world of family and charity, as if it had no place in serious economics.

Civil economy insists otherwise: reciprocity is an economic principle that can be built into the very structure of markets and institutions, or designed out of them. Seen this way, Baja California’s paradox becomes clear. It is an economy rich in the exchange of equivalents (clear rules, real contracts) but poor in reciprocity. The rules bind, but they do not oblige the powerful toward the wider community. The gains stay at the top.

So what would a better arrangement look like? Drawing on both cases, I propose what I call an adaptive polycentric model, defined not by the goodness of its actors but by four features anyone can design and recognize: (1) power dispersed across many actors who cooperate rather than concentrated; (2) transparency joined to reciprocity, so that rules actually bind the strong toward local suppliers and the shared productive environment; (3) the deliberate spreading of capabilities to small firms and universities, not just to a leading core; and (4) cooperation across levels of government that can sustain long-term, shared projects rather than fragmenting into rivalry.

A hopeful conclusion

This reframing carries a quiet hope. If sustainability depended on the moral conversion of every powerful actor, we would be waiting a long time. But if it depends on how power is organized, then it becomes a matter of policy design and organizational architecture, something we can study, build, and reform.

The question for those of us who long for the economy Francis described shifts accordingly. We need not ask only, «Are these good people?» We can ask the more useful question: Does this structure make reciprocity, or coercion, the path of least resistance? Building the economy of communion, it turns out, is not only a work of conversion. It is also, very practically, a work of architecture.

E. Fernanda Barreto Pérez

Fernanda Barreto Pérez is a political economist and public policy practitioner from Mexico. She holds a Ph.D. in Social Sciences with a specialization in Political Science from FLACSO Mexico and an M.A. in Sociology and Management from the University of Essex.

Her research focuses on the political economy of regional development, state-business relations, foreign direct investment attraction, and industrial coordination at the subnational level in Mexico. Through her work, she explores how business organizations, public institutions, and local governance structures shape economic development and territorial competitiveness.

Fernanda has collaborated with governments, universities, and international organizations on projects related to public innovation, strategic planning, ethics in government, and public policy evaluation. 

As a member of the Economy of Francesco community (and 2025-2026 EoF Academy Fellow), she is interested in understanding how institutions, business organizations, and public policies can contribute to building a more human-centered, sustainable, and inclusive economy that promotes the common good and the dignity of every person.

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(1) Facultad Latinoamericana de Ciencias Sociales (FLACSO), Mexico. E-mail: [email protected].