Paper

Monday, May 6th

Marnie Ginis (Columbia University)

Title: Production Complexity as Extraction Protection

Abstract:

Do firms in developing countries use production complexity to avoid state extraction of their assets? For states, production complexity creates new, varied, and less visible asset extraction opportunities. For firms, production complexity can protect against asset extraction by making the production process less legi- ble. The implication of this strategic interaction is that production complexity is an important determinant of likelihood of asset extraction by the state. I argue that firms use the complexity of their production processes to obfuscate them from the state and protect themselves from asset extraction. Interviews with firms, government officials, and NGOs in Vietnam suggest that firms manufacturing complex products take advantage of the state’s lack of understanding of their production process to avoid fines, fees, and taxes. These findings reveal a novel way in which the changing global production landscape affects how firms in developing countries protect themselves from state asset extraction.

Moderator: Shiyang Wu (University of California Santa Barbara)