Dargent 2017

683164
research-article2017
PASXXX10.1177/0032329216683164Politics & SocietyDargent et al.
Article
Politics & Society
Greater State Capacity, Lesser 2017, Vol. 45(1) 3–34

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DOI: 10.1177/0032329216683164
Peruvian Commodity Boom journals.sagepub.com/home/pas
Eduardo Dargent
Pontificia Universidad Católica del Perú
Andreas E. Feldmann
University of Illinois Chicago
Juan Pablo Luna

Pontificia Universidad Católica de Chile
Abstract
This article analyzes the evolution of state capacity in Peru during the recent commodity
boom. Peru’s economic growth happened in a context in which inclusive democratic
institutions were at play for the longest period ever registered in the country and at a
time when political elites decided to invest considerable resources in developing state
capacity (not the prototypical predatory elites usually identified in the literature). This
case illustrates how boom-led economic growth can lead to the (unilateral) institutional
strengthening of a weak state. However, (net) state capacity continues to be low in Peru.
The causal mechanism that yields such continuity differs from those entertained in classic
path-dependent explanations of state capacity in Latin America. The article identifies a
novel mechanism that helped reproduce the Peruvian path intertemporally. This relational
mechanism suggests that state capacity remains low because of the relatively enhanced
capacities of state challengers to locally fend off and contest an otherwise much stronger
state apparatus. The article argues, on that basis, the need to employ a relational analysis
that gauges net state strength with respect to the power acquired by relevant non-
state actors who might challenge state authority across different local arenas. Classic
conceptualizations of state capacity are indeed relational, but conventional applications are
predominantly unilateral and, thus, misleading. Unilateral notions of state capacity are those
that focus on either state efforts and investments to assert state capacity or, alternatively,
on the presence of challenges that curtail the levels of actually observed state capacity.
Keywords
state capacity, challengers, development failure, commodity boom, Peru
Corresponding Author:
Juan Pablo Luna, Instituto de Ciencia Política, Pontifica Universidad Católica de Chile, Avda, Vicuña
Mackena 4860, Macul, Santiago de Chile, Chile.
Email: jp_luna@me.com
4 Politics & Society 45(1)
Picture a country that during twelve years grows at an annual rate of 7 percent. Assume
that governing elites in that country are fiscally responsible, and allocate windfall rev-
enue to develop state capacity. As a result of those efforts, in less than a decade the
country markedly increases the supply of public schools, health clinics, prosecutor
offices, and police stations throughout its territory. Likewise, it more than doubles its
paved road network and also nearly universalizes access to potable water. One might
view this trajectory as a successful instance of state capacity building during boom
times. Yet if we look closer, particularly in economically booming localities, a very dif-
ferent picture emerges. In these areas, criminality exhibits distressing peaks while the
number of registered social conflicts more than doubles that observed before the boom.
In other words, when analyzed from a stateness perspective, our generic example points
in contradictory directions. The narrative thus resembles the trajectory of several devel-
oping nations in which commodity booms contributed to an important overhaul of the
state and the development of the state’s capacity, but in which this newfound power and
prosperity have not necessarily translated into greater levels of stateness (i.e., state suc-
cess in asserting sovereignty and governing capacity at the local level).
Contemporary Peru, the case we analyze in this article, neatly illustrates the counter-
intuitive dynamic described above. This country constitutes a case in which astonishing
economic growth rates greatly boosted state capacity on several fronts. During the last
fifteen years, state elites sought to—and did—invest the massive financial resources
yielded by the boom in developing state capacity. Intriguingly, however, the strengthen-
ing of the state was met by an equally strong growth of state challengers that benefited
from the very same boom that buttressed state capacity. The Peruvian booming econ-
omy provided incentives for the unlawful practices of legal businesses seeking to assert
control over lucrative economic sectors. Similarly, a thriving economy and the con-
comitant resources it created has enabled the emergence or strengthening of informal or
illegal agents. These social forces, which include peasants, miners, companies, and
organized crime rackets, have successfully challenged or escaped state power even
against the backdrop of growing levels of state coercive capacity. The tensions created
by rapid economic growth thus have prompted or rekindled violent social unrest.
Contradictory outcomes such as those currently observed in Peru can only be
explained by eschewing unilateral interpretations of state capacity (i.e., capabilities
approaches and those solely focused on coercive capacity). Instead, we must employ a
relational analysis that gauges net state strength with respect to the power acquired by
relevant non-state actors who might challenge state authority across different local are-
nas. Net state strength shapes the levels of stateness observed in different local arenas.1
Henceforth, we advocate the adoption of an explicit relational perspective on state
capacity. To be sure, classic conceptualizations of state capacity are indeed relational,
but conventional applications of the concept are predominantly unilateral. Unilateral
notions of state capacity are those that focus on either state efforts and investments to
assert state capacity or, alternatively, on the presence of challenges that curtail the lev-
els of actually observed state capacity. Our work thus outlines our relational approach
to state capacity and explores its lineage in the theoretical literature on the topic.
Dargent et al. 5
The relational account of state capacity that we defend in this article offers a causal
narrative that is at odds with the extant literatures that deal with developmental trajec-
tories and state building. We propose a new causal mechanism that explains the persis-
tence of weak state institutions in the context of commodity booms, a mechanism that
defies conventional explanations (e.g., the resource curse). Before arguing the analyti-
cal leverage and empirical plausibility of a relational framework in the Peruvian con-
text, we explore below the implications of our argument for a set of causal mechanisms
that figure prominently in classic and new political economy approaches to the role that
state elites and institutions play in fostering development.
The case and general argument we present in this piece posits that the combination
of institutionally fragile states and positive external shocks prompted by regional and
global forces yield counterintuitive results, whereby economic growth and prosperity
might lead to decreasing levels of (net) state capacity and stateness.2 From a political-
economy perspective, Evans distinguishes “developmental” states from “predatory”
states, with the former promoting successful industrialization in the global periphery.3
In this respect, the Peruvian state we discuss in this article is neither predatory nor
developmental. Rather, it is a state challenged and evaded by competing agents that at
the local level are better able to capture the rents created by a booming economy.
Since at least 1997, the development community has embraced the motto “institu-
tions matter.” In this literature, strong state institutions play a key role in providing
incentives for economic investment and development.4 Different authors conceptual-
ize these incentives in different ways.5 For instance, in a recent and widely acclaimed
work, Acemoglu and Robinson6 focus on regime institutions. Where democratic and
pluralistic institutions were present, societies prospered. Where rent-seeking autocrats
or oligarchies ruled, development simply failed to materialize.7 Relatedly, rent seeking
is often theorized as a pivotal mechanism in the so-called resource-curse literature,
which advances the hypothesis that resource extraction may have a negative impact
for state capacity, economic development, and democracy.8 Rent seeking associated
with natural resource booms is also linked to a greater likelihood of internal conflicts.9
However, Saylor has recently argued that the effect of commodity-boom rents on
state-making outcomes is not constant, but, rather, contingent on the social roots of
political coalitions that rule during the boom. In certain contexts, the boom might lead
to substantial gains in state capacity.10
Against this backdrop, we introduce a novel narrative about the institutional
underpinnings of developmental failures. As predicted by the resource-curse litera-
ture, Peru’s vertiginous economic growth has coincided with renewed corruption, an
increase in criminal activity (particularly of extortion rackets), and rising political
and social tensions—which often turn violent—that arise from disagreements over
the distribution of rents. Yet, the causal mechanisms driving these outcomes differ
from those theorized by the above mentioned literatures. Peru’s economic growth
happened in a context in which inclusive democratic institutions were at play for the
longest period ever registered in the country and at a time when political elites
decided to invest considerable resources in developing state capacity (not the proto-
typical predatory elites identified in the literature). This is a case that illustrates how
boom-led economic growth can lead to the (unilateral) institutional strengthening of

a weak state.
In addition, although we agree with Saylor’s emphasis on the need to analyze the
social embeddedness of political coalitions ruling over the boom, our relational per-
spective seeks to broaden the conceptualization of society beyond the social bases of
alternative elite coalitions. From this perspective, we argue that the negative outcomes
observed in Peru result from the strengthening of non-state (and non-elite) challengers
to the state, who profited from business endeavors in the informal and illegal sectors
of the economy. The commodity boom made those endeavors incredibly lucrative,
enabling challengers to successfully contest and avoid regulatory and coercive efforts
by an otherwise strengthening state in different Peruvian localities.
The relational perspective on state capacity and institutional strength that we advo-
cate here offers a novel theoretical narrative about the specific sequence of events
triggered by a booming economy in the context of a (ex ante) weak state. The scope
condition of a formerly weak state is relevant for our argument, as one expects differ-
ent dynamics to ensue when greater levels of state territorial reach co-occur with the
expansion of illegal economies.11 In this regard, we echo Huntington12 and Fukuyama13
in claiming that the key to development is neither political regime nor state scope, but
rather state strength (before the boom). Regarding this point, our argument does not
contest conventional assessments of Peru’s historically limited state infrastructural
capacity.14 The established literature on state making in Latin America successfully
explains, on the basis of path-dependent accounts, why state capacity is lower in Peru
than in, say, Chile or Argentina. This literature might also explain why states with rela-
tively higher capacities can profit more efficiently from positive economic cycles,
reinforcing the different historical trajectories that set weak and strong states apart.
The previous literature on state making in Latin America is less successful, how-
ever, in identifying the “challenger-based” causal mechanism that explains why the
contemporary Peruvian state was able to improve its capacity across localities and
across a wide range of functional arenas, while remaining incapable of increasing
stateness (i.e., regulating social interactions and exercising a coercive monopoly in
economically booming localities.) In sum, our perspective underscores the relevance
of short-term and relational mechanisms for reproducing historical paths and for con-
tributing to developmental failures.15 It also complements recent work on states’ for-
bearance decisions at the local level in reaction to processes that hinge on the presence
of active challengers to state authority.16
Last, but not least, our argument also has implications for conventional measure-
ment strategies deployed to assess state capacity. Most measurement efforts start, at
least implicitly, from a relational conceptualization.17 Operationally, however, most
measurements of state capacity either unilaterally look at state efforts to build their
infrastructural capacities or at substantive results theoretically associated to such capac-
ities.18 There are sound methodological reasons to opt for either “input” or “output”
indicators of state capacity.19 However, our case shows that “unilateral” measures might
be missing a critical counterpart; that is, how investments in state capacity (input) or
alleged products of state capacity (output) are co-produced by what the state does (or
Dargent et al. 7
decides not to do) and by what those who challenge or evade the state do or do not do
when relating to state agents or bureaucracies in different local arenas. A logical exten-
sion of this argument concerning measurement is that state-capacity assessments still
need improvement at describing state-capacity heterogeneity along geographical and
functional dimensions in order to yield more effective case descriptions.20 For such a
description, we also need to combine assessments of input and output.
The remainder of this article proceeds as follows. The first section introduces our
proposed framework, contrasts it with existing theoretical arguments advanced in the
literature and discusses important methodological points derived from it. Subsequently,
we discuss at length our case study, Peru. The section starts by providing a brief out-
line of relevant recent events in the country and describes the evolution of indicators
of the state’s infrastructural and coercive capacity. In addition to common indicators
relied on by conventional wisdom accounts, the section presents a series of alternative
indicators (social conflicts, crime and victimization, informality) that suggest that the
Peruvian state has not necessarily increased its capacity to regulate crucial social inter-
actions in ways that are commensurable with the dynamic of state strengthening it has
experienced. To be sure, we do not claim that the Peruvian state is weaker today than
it was in the 1980s; rather, we claim that, from a relational perspective, the Peruvian
state has not really strengthened stateness despite having allocated massive resources
to state building efforts. Subsequently, we present two qualitative vignettes, illegal
gold mining and extortion, that illustrate how state challengers whose economic and
coercive power has been partly fueled by the economic boom are increasingly contest-
ing state power in economically dynamic localities. We conclude by drawing theoreti-
cal and methodological implications and a research agenda.
Relational State Capacity and State Challengers

Some classical depictions of the nature of modern states have underscored that con-
ceptually state power ought to be understood as relational and not static. Stepan, for
example, asserts:
At the grossest level of abstraction, there are four possibilities. . . . The growth of state
power may be accompanied in a zero-sum fashion by a diminution of the power of civil
society. It also is possible for the power relations between the state and civil society to be
positive-sum. The interaction may also prove to be negative-sum. The state’s capacity to
structure outcomes may decline while the opposition’s capacity to act in concert also
declines. Finally, of course, there is the possibility that the power of actors operating
outside the state apparatus may grow while that of those working within the state declines.21
Scott’s depiction of Zoomia provides further testimony of this insight:
Upland groups have, then, a large bandwidth of possible locations as well as social and
agro-ecological [i.e., productive] configurations available to them. They run the gamut
all the way from, say, taking up padi cultivation on the plains and inviting incorporation
as peasants into the valley state to the other extreme of foraging and swiddening in
remote, fortified, ridge-top settlements while cultivating a reputation for killing intruders.
Between these stark polar opposites lie a host of hybrid possibilities.22
Relational conceptualizations of power are ubiquitous in political theory, compara-

tive politics and international relations. With respect to state power, Michael Mann’s
now classical conceptualization23 incorporates a relational component as one of its two
central traits. According to Mann, a state’s infrastructural power comprises two dimen-
sions: territorial and social. The former is the one that provides the state the capacity
to control the territory that is demarcated by its designated borders. The latter entails a
relational notion, which, according to Soifer and vom Hau, is "grounded in the organi-
zational entwining between state and non-state actors," and is also "shaped by the
relationships among different state agencies themselves."24
The seminal work by Joel Migdal arguably represents the most influential and com-
plete study of state capacity from a relational perspective. According to him, scholarly
work often presents a too stylized version of states’ real ability to impose themselves
upon social forces resisting its power. Migdal posits that, far from imposing its will on
social forces, states share and dispute power in dialectical ways. Thus, power and the
order deriving from it are constantly being (re)shaped between a state that wishes to
impose a certain type of hegemony and social forces that contest and resist its power.25
Recent works on state capacity also introduce an explicitly relational perspective.
Centeno, Kolhi, and Yashar differentiate between state capacity and state performance
in ways that accommodate a relational perspective. They claim:
we take state capacity to mean the organizational and bureaucratic ability to implement
governing projects. State performance, however, cannot be understood as capacity alone;
it requires an analysis of state capacity alongside political actors and social forces.26
Similarly, when arguing that “outcome” measures of state capacity might be co-pro-
duced by societal forces, drawing on Migdal’s work, Fukuyama emphasizes that: “a
government’s ability to penetrate and regulate society depends on the ratio of two fac-
tors, state capacity and the self-organization of the underlying society.”27
As indicated above, the analytic framework we propose is based on an explicitly
relational notion of state capacity. Instead of looking at society at large, however, we
conceptualize stateness in different localities as resulting from the interaction of two
opposing forces; state actions (inactions) to claim sovereign power and the actions
(inactions) of local challengers that adapt, resist, cajole, buy, or seek to eschew state
authority in an area under a state’s de jure jurisdiction. In other words, we depart from
more general notions of “society” (those present, e.g., in Stepan’s, Migdal’s, and
Mann’s relational conceptualizations) and focus on actors that, in a given locality,
muster enough resources to evade, displace, compete, or co-opt state officials. Our
work is thus in line with recent approaches examining the relationship between con-
temporary states and territorial challengers.28 We draw on work by Eaton, who, in
discussing the existing context confronted by Latin American States, defines challeng-
ers broadly as actors that contest the state’s “monopoly on the legitimate use of vio-
lence or [to] seek to prevent or escape the implementation of its laws and policies.”29
Dargent et al. 9
He underscores that challengers may take a variety of forms depending on their identi-
ties and interests (e.g., some take the form of rightful protestors whereas others adopt
deviant, violent forms) and, following Mann’s conceptualization, may challenge the
state territorially or organizationally.30
Let us now outline a set of additional traits that characterize these challengers and
their actions. In contrast to more traditional challengers to the state (e.g., guerrilla or
insurgent movements; indigenous groups or ethnic minorities seeking autonomy or out-
right independence), the type of challengers we analyze here are motivated by eco-
nomic gains to be extracted from the pursuit of informal or illegal pursuits. As a result,
they do not necessarily contest the state actively or directly. These challengers can also
function as state avoidants, seeking to escape or minimize state regulation. In this sense,
the pursuit of economic profit over alternative aims such as political power or secession
provides challengers that organize around illegal economic activities with greater
degrees of freedom. The type of state challenger that interests us can move from one
locality to another as well as across national borders. They may organize around one
type of economic activity but eventually, if conditions change, switch to a different sec-
tor or zone. Territorial and functional mobility enables challengers to more efficiently
avoid or compete with the state in given local arenas. Moreover, they often display the
ability to penetrate the state through mechanisms including bribing, coercion and elec-
toral manipulation. Observed stateness in specific local arenas is thus highly contex-
tual, as well as contingent on the interaction between state agents and challengers.
The abilities described above make it very difficult to neutralize challengers. The
state has to allocate scarce resources to effectively claim its sovereignty homoge-
neously across its territory. The operations that such effort entails are plagued by logis-
tic and organizational complications (e.g., multiple principal-agent dilemmas ensue).
If state capacity increases in a given locality, challengers can relocate operations to
areas where the state is less effective, or where state officials can be more easily co-
opted. Moreover, even when the state is able to control and eventually to shut down
illegal operations in one economic sector, challengers may move on to a new industry
in which state regulation or oversight is relatively weaker. Once an organization devel-
ops, it has incentives to diversify its activities to at least ensure the survival and protec-
tion of its members.31 In other words, reactive, functionally targeted strategies
deployed by the state to thwart challengers have often foundered given challengers’
almost protean ability to mutate and adapt.32
The territorial dynamics of this type of challenger also differ from those of tradi-
tional insurgencies. Criminal groups in particular thrive where business opportunities
emerge including racketeering and extortion; illegal harvesting, mining, or lumbering;
smuggling and the trafficking of people, forbidden goods, or protected species; the
fabrication of pirate goods; retailing in black or illegal markets. Given the centrality of
economic profit for their organizations, illegal market operators do not necessarily
confront the state in the periphery as traditional insurgencies usually do, seeking to
establish an operational base in areas where state capacity is comparatively lower.
Although some illegal activities thrive in the periphery (e.g., harvesting, mining,
extraction), others flourish in metropolitan areas (e.g., extortion, illegal retailing) or in
border areas (e.g. smuggling and trafficking).33 In the latter two cases, local state
capacity might be stronger than in other areas. Yet, the type of challenger we analyze
here has the resources (especially during economic booms) to avoid or contest the
state even in localities where capacity is relatively strong.
In this article, we analyze two specific state challengers active in contemporary
Peru: on the one hand, gold miners, a group that acts in a decentralized fashion in
peripheral areas and that appropriate boom-related resources by direct extraction; on
the other, construction mafias, more hierarchically organized actors especially active
in dynamic and wealthy urban areas where the Peruvian state is more actively present.
Construction mafias profit by extorting those that benefit from economic growth. Both
examples refer to agents that lack strong organizational dimensions and can be better
described as individuals, firms, or actors than as movements or organizations. The two
case studies we present below also illustrate how both types of challengers adapted
over time to cope with state’s attempts at regulation and control. The trajectory of both
challengers also suggests how, once in place, these actors can diversify their primary
economic activity and eventually switch to more profitable (and less state-controlled)
sectors.
The Mammoth Confronts the Cheetahs: Unforeseen

Outcomes of the Peruvian Boom
Peru recently has been portrayed as one of the most important success stories in Latin
America. The country and its economy began a massive transformation under President
Alberto Fujimori (1990–2000), who initiated a dismantling of the state-driven eco-
nomic model implemented during the presidency of Velasco Alvarado (1968–75) and
replaced it with a pro-market economy shaped by the policies advocated by the
Washington Consensus.34 This economic liberalization produced notable achieve-
ments in growth and the development of infrastructure—during the 1990s, the country
grew on average 3.2 percent per year, but political instability, massive corruption and
tensions brought on by privatization and deregulation ended up tainting Fujimori’s
economic legacy. Greater political stability, attributable both to the return of democ-
racy and to favorable international conditions derived from a sharp rise in the global
demand for commodities from 2002 onward (i.e., the “commodity boom”) ushered in
an era of prosperity in a country long considered a perennial economic underachiever.
During the 2000s, Peru grew on average a remarkable 6.4 percent per year. In the last
four years, the economy has continued to expand, although at a slower pace as a result
of a global slump in demand for commodities. For instance, Peru grew 4.8 percent and
3.1 percent in 2014 and 2015, respectively.35
Economic growth has affected several development indicators. According to the
World Bank, gross national income adjusted for purchasing power (PPP) reached US$
11,160 in 2013 from US$ 3,420 in 1990.36 Peru’s accelerated economic growth allowed
it to reduce the percentage of Peruvians living in poverty from 59 percent to 24 percent
in the last decade. Likewise, from 1990 to 2014, the percentage of the population liv-
ing on the equivalent of one US dollar a day decreased from 15.9 percent to 3 per-
cent.37 Several other social indicators, including infant mortality, life expectancy,
Dargent et al. 11
access to water and sanitation, and years of schooling, also improved markedly. These
advances have lifted the country’s ranking in the World Human Development Index
(WHDI), situating it in the high human development segment of the WHDI (the coun-
try’s current rank is 82).38 Peru, indeed, has converged with other countries in the
region that used to have a higher development score, including Brazil and Costa Rica.
The resources produced by the commodity boom have also enhanced the public
infrastructure and coercive capacity of the Peruvian state. These enhancements did not
by any means happen “automatically.” Rather, they reflect a conscious strategy to
expand the reach of the state and its institutions across the territory. To be clear, this
case does not conform to a typical instance of elite rentism and predation on state
resources under a commodity boom. However, if we analyze the evolution of crime,
extortion, and social conflicts in Peru, a much less positive picture emerges. The series
of indicators and maps we introduce below show that the development of state capa-
bilities and challengers’ strengthening ran in parallel across the Peruvian territory. The
nature of “challenges” to the state varies, however, according to the types of local
economic activities buttressed by the boom. Where economic growth produced mas-
sive investments in infrastructure and construction (e.g., in Lima and the northern
coast), extortion rackets prospered. In mining zones, on the other hand, crimes related
to illegal mining rocketed. These new industries, fueled by commodity-boom
resources, provided emergent organized crime groups significant economic resources
to reduce the state’s coercive capacity, either via violent means or through the invest-
ment of a fraction of their revenue to buy the acquiescence and protection of local state
officials.
Increased State Capacity

An analysis of state input indicators makes clear that in the last decade and a half the
Peruvian state gained considerable capacity. For example, the state budget, arguably
one of the most relevant indicators of growing state power, rose between 2000 and
2015 from US$ 369 million to US$ 1.1 billion; a threefold increase. This massive
upsurge led to a remarkable investment in public goods (infrastructure) and service
provision (e.g., health, education, security). Regarding the former, the size of the
paved road network more than doubled between 2000 and 2014 from 78,215 kilome-
ters to 165,466 kilometers.39 In the last fifteen years, Peru has built more roads than in
all its previous history. In addition, as Figure 1 shows, the state has significantly
increased citizens’ access to potable water and electricity and, as a result, the current
coverage is almost universal.
Internet coverage also shows positive signs, although it has been promoted mostly
by private actors—rising from 31.1 percent of the population in 2007 to 40.2 percent
in 2014.40 Since 2011, moreover, the government initiated an ambitious program to
provide broadband that purportedly will connect all Peruvian regions and provinces by
2017.41
Social service provision similarly expanded. During the last decade the Peruvian
state invested heavily in areas such as health and education, which manifested in a
Figure 1. Coverage of Services (Percentage of Population Covered).

Source: Authors’ construction based on Compendio Estadístico (INEI, several years).
marked rise in infrastructure and personnel throughout the territory. Between 2004 and
2013, the number of schools increased 25 percent from 83,361 to 104,467; between
2007 and 2013 per capita expenditure on education more than doubled from US$ 325
to US$ 713; and per capita expenditure on secondary education over the same period
increased from US$ 399 to US$ 752.42 Per capita health expenditure similarly increased
from US$ 53 in 2000 to US$ 208 in 2013.43 The number of hospitals and health centers
increased 17 percent from 7,048 in 2004 to 8,252 in 2013.44 Public personnel servicing
these sectors saw a major increase too. Between 2004 and 2013 the number of state
teachers grew 17 percent from 436,249 to 510,474 in 2013. In the same period the
number of doctors working the public sector rose 58 percent from 41,266 to 65,110; as
a result, the ratio of doctors per inhabitants in Peru surged from 1/665 in 2004 to 1/476
in 2014.45 The number of public sector employees working in these sectors also saw a
major increase. As Figures 2 and 3 show, between 2004 and 2013 the number of state
teachers and doctors grew impressively in all Peruvian regions, with a more than 100
percent increase in the number of doctors.
Indicators of the state’s coercive capacity also display a robust, upward surge. As
shown in Figure 4, the budget allocated to the ministry of the interior, and the propor-
tion of that budget appropriated by the Peruvian National Police (PNP) exhibit a sig-
nificant and consistent positive trend. The number of police stations increased from
1,397 in 2012 to 1,459 in 2014.46 The number of judges and prosecutors, likewise,
increased considerably from 1,698 in 2005 to 5,258 in 2014.47 Similarly, the number
of prosecutor offices rose 73 percent between 2005 and 2014 from 734 to 1,277.48 It is
Dargent et al. 13
Figure 2. Relative Expansion of Number of Doctors across the Peruvian Territory (2007–14).
interesting that the number of police agents does not show a major growth: between
2003 and 2013, it increased 8.5 percent as 8,428 agents were incorporated to the
Figure 3. Relative Expansion of Number of Teachers across the Peruvian Territory (2007–14).
forces, leaving the total number at 98,598 in 2013. The police/per inhabitant ratio thus
actually shrank for the period from 3,331/100,000 in 2003 to 3,246/100,000 in 2013.49
Dargent et al. 15
Figure 4. Domestic Security Sectorial Budget.

Source: Authors’ construction based on information supplied by the Peruvian Ministry of Interior.
The budget appropriated by the PNP was thus allocated to significant hikes in police-
men wages, and to equipment investments. Even more impressive, the number of
judges and prosecutors working in these offices increased more than 100 percent in
most Peruvian regions (see Figure 5).
In sum, when looking at indicators that reflect state efforts to build state capacity
across the territory, it is possible to observe empirically a significant advance. As these
indicators clearly reveal, during the last fifteen years the Peruvian state considerably
strengthened its bureaucratic capacity, infrastructure, and territorial reach.
A Stronger State Meets Challengers “Running on Steroids”

Outcome indicators of state capacity, conversely, tell a very different story, one of a
state whose capacity seems increasingly challenged by externalities that derive from
the very same boom that fueled the state’s own vigorous growth. As indicated above,
access to the massive resource inflow derived from the boom either created new actors
or emboldened existing ones whose activities clash with the state’s efforts to impose
authority over the society and territory. Despite the fact that the Peruvian state gained
new power and resources, it has seemed unable to neutralize its challengers. This sug-
gests that, from the perspective of a state output function, Peru’s recent success story
may be interpreted in a different light.
Figure 5. Relative Expansion of Number of Prosecutors across the Peruvian Territory

(2008–14).
Dargent et al. 17
The next section presents an in-depth discussion of two of those challenges and the
state-society dynamics they illustrate: criminal extortion and illegal gold mining.
Figures 6 and 7 show the growth of prosecutorial investigations (denuncias) related to
extortion and illegal gold mining and the territorial dynamics behind these phenom-
ena. Both maps also identify the Peruvian departments that exhibited greater than
average local economic growth in 2014 and 2015. As is evident in both maps, the
relationship between economic growth and criminal activity is a nuanced one. In par-
ticular, it is important to note how economically dynamic departments (e.g., in the
northern coast) also exhibit a rise on criminal activities.
The cases of extortion and illegal mining are neither exceptional nor exhaustive.
Similar narratives could be developed for the cases of smuggling activities, car theft,
irregular land sales and land grabbing, drug trafficking, and illegal lumbering, among
others. Before presenting our case studies, we briefly discuss the nature and develop-
ment of local challenges and challengers to the state that also are nurtured by the com-
modity boom.
In Peru, as in many other booming economies, the sudden opening of business
opportunities created by the rise of commodity prices fueled a host of illegal activi-
ties such as mining (especially gold) and logging. Although these phenomena were
common in Peru, in the last decade they turned into major problems. High prices
attracted citizens to these activities, and reinforced the power of mafias that profit
from illegally extracting and exporting these resources. In several areas in the coun-
try, the actors that coalesced around these illegal economic activities not only began
to challenge state authority but also undermined it, bribing state officials and tam-
pering with the electoral processes by supporting and funding sympathetic candi-
dates’ campaigns.
Likewise, against the backdrop of rising demand for consumer goods propelled by
economic growth, contraband has reached unprecedented levels, particularly around
border areas. 50 Arguably one of the most afflicted areas is the border region of Puno.
Although smuggling in the border town of Puno and commercial city of Juliaca have
been known and tolerated, the practice has been exacerbated by the economic boom.
In what has become a routine practice, long, informal motor caravans—the so-called
culebra (snake)—carry merchandise from La Paz, Bolivia, to Juliaca, Peru, where
they are redistributed to the rest of the country through flea markets (mercadillos) on
a daily basis. Corruption within the police and among customs officers has also sty-
mied attempts to neutralize this practice. More stunning, groups of enraged peasants
have attacked the police and customs agents trying to stop operations.51
In a similar vein, violence in contemporary Peru seems strongly associated with
economic dynamism, which can be readily observed in the analysis of regional statis-
tics. Although in 2014 the aggregate rate of homicides per 100,000 inhabitants in Peru
was of 6.6 percent, northern cities of the country that currently benefit from agricul-
ture and construction booms show far more impressive figures: Tumbes (37.1 percent)
Barranca (25.1 percent), Trujillo (19.3 percent), and Chimbote (18.2 percent).52
Southern cities that benefit from economic growth led by agriculture also show high
numbers: San Vicente de Cañete (30.0 percent) and Pisco (19.7 percent).53 These
Figure 6. Average Number of Mining Crimes in relation to Local GDP Growth (2014–15).
Source: Authors’ construction based on National Prosecutor’s Office and the Compendio Estadístico
(INEI, several years).
numbers resemble those of countries with medium to high homicide rates in Latin
America (e.g., Colombia).54
Dargent et al. 19
Figure 7. Average Number of Extortion Crimes in relation to Local GDP Growth (2014–15).
Source: Authors’ construction based on National Prosecutor’s Office and the Compendio Estadístico
(INEI, several years).
Peru’s economic boom is correlated with a worrisome spike in social conflicts as

well. The Peruvian Ombudsman Office documents since 2005 the number of social
Figure 8. Number of Social Conflicts per Year.

Source: Authors’ construction based on Peruvian Ombudsman Office (several years).
conflicts in the country.55 As shown in Figure 8, during the commodity boom these
conflicts tripled. and they remain considerably high. A majority of them are related to
extractive activities: sometimes a sharp price increase fuels local demands for a better
redistribution of resources; alternatively, communities and social groups organize to
oppose mining and oil projects that would affect other economic activities (e.g., agri-
culture or fishing) or the environment. As can be seen, social conflicts arise from a
conflictive relation between communities and private agents exploiting a given eco-
nomic activity. Local communities often criticize authorities, accusing them of partial-
ity toward private investors, while the latter blame the state for its inability to protect
them, maintain order, and enforce contracts.56
The next two sections present two case studies in depth that illustrate how the
Peruvian state has seemed impotent to prevent, let alone control these problems. In
each case we document these dynamics to illustrate our general argument. The first
describes the evolution of informal gold mining, and the second describes a surge in a
cottage extortion industry. Our narrative sheds light on how favorable economic con-
ditions derived from the commodity boom elicited unexpected, negative externalities.
Prosperity brought by a booming economy not only nourished the state but also the
emergence of different sorts of state challengers that began to dispute and weaken its
authority. Caught off guard by the emergence of these problems and actors, the state
reacted slowly and with rather limited success. Challengers, conversely, have shown
an astonishing ability to block the state’s efforts to enforce policies and regulations and
neutralize its actions. Indeed, one of their most salient characteristics is their capacity
to adapt and respond to state attempts to (re)impose its authority. Paradoxically then,
Dargent et al. 21
a stronger state appears similar to a weak one because it is incapable of curbing stron-
ger challengers.
In sum, no matter how much the state invested in developing its infrastructural and
coercive capacity in a given region, our evidence suggests that challengers emerged to
profit from illegal economies that yielded massive resources, and these ill-gotten gains
have been pivotal in counterbalancing the greater levels of resources deployed by the
Peruvian state to build local capacity. This sequence illustrates the need to theorize and
observe state capacity as a relational concept.
Although we do not tackle this issue directly in what follows, our evidence also
suggests there is a temporal gap between the deployment of economic resources and
the creation of state capacity at the local level. This gap results both from the presence
of principal-agent problems, as well as from the long-term nature of institution-build-
ing efforts. As one of our interviewees put it, the state moves as a mammoth.
Challengers, in turn, operate locally and can mutate quite rapidly, switching strategies,
locations, industries, and specific organizational forms. They behave like “cheetahs.”
The resources they invest in derailing state-building efforts are relatively minor in
relation to those deployed in state-building efforts. Yet they might be more effective in
yielding immediate results that jeopardize state building.
Challenging State Authority I: Construction Mafias and

Extortion
A worrisome manifestation of the commodity boom’s dark side concerns the increase
in criminal violence, especially new forms of violence. Practices that previously were
unknown or very rare, including contract killings (sicariato), extortion, and racketeer-
ing schemes, have gradually become common occurrences in the last decade. The
Latin American Public opinion Project (LAPOP) reports that in 2012, 7.2 percent of
all Peruvian crime victims suffered some kind of extortion. This makes Peru the Latin
American country with the fourth highest incidence of extortion after Mexico, El
Salvador, and Guatemala.57 Gino Costa, a seasoned Peruvian security expert and for-
mer minister of the interior, considers this development the most serious challenge to
the Peruvian state in the realm of public security.58
Although extortionists have targeted a wide array of businesses that benefit from
booming economic conditions, including small shopkeepers, transportation entrepre-
neurs, restaurant owners, and educational facilities, their main target has been the con-
struction sector. Construction is arguably one of the industries that benefited most
from Peru’s rapid economic growth. Between 2002 and 2008, the construction sector
grew annually 6.8 percent, transforming it into the fastest growing in Latin America
barring Panama. Following a slump prompted in 2007–8 by the global economic cri-
sis, construction regained its vigor growing 61 percent between 2009 and 2013—more
than 10 percent annually.59 Such rapid growth was triggered by feverish demand for
private housing at every level of the social spectrum. The construction boom was also
propelled by aggressive state policies in the area of public housing.
The massive expansion of construction sites, paradoxically, brought with it a host of

problems such as the unexpected emergence of a cottage extortion industry. Coastal
regions (Lambayeque, Piura, La Libertad, Lima) have been particularly hard hit by this
phenomenon. According to experts, extortion arose, in large part, because of the
increase in the number of construction unions, which rose from eighteen in 2005 to 115
in 2012. In most cases, unions were actually created by criminals seeking to build rack-
eteering schemes.60 In the mid 2000s, Peruvian law made union registration quite sim-
ple, allowing these unlawful actors to operate under a formally legal façade. These
newly formed, disreputable unions gradually attained near monopoly control over con-
struction sites and demanded payments (usually weekly) in exchange for “protection.”
Construction mafias, many of which operate from prisons, threaten owners and
managers and their families. Extortion is also perpetrated against workers who are
coerced to pay part of their salaries to mafias or risk being attacked. Illegal unions
have used different strategies for blackmailing businessmen and rolling back adver-
sary unions: work invasion, destruction of property, work stoppage, murder threats,
and even homicides of union leaders. Street brawls among mafias disputing territory
have also become a common occurrence.61 Mafias, however, have not relied only on
extortion. They have also taken by force unoccupied land, normally on the outskirts of
major urban areas that they later sell to developers as part of urbanization plans. In
order to do so, mafias orchestrate “spontaneous” land grabs (ocupaciones) by groups
posing as squatters.62
Despite its newly acquired resources, the Peruvian state has been hard pressed to
tackle this problem. So far, some modest steps have been taken. Plans have focused on
strengthening the capacity of the Peruvian National Police (PNP) and legal changes in
union regulation. Concerning the former, the administration of President Alejandro
Toledo implemented “Plan Ladrillo” (2005) an aggressive initiative to neutralize con-
struction mafias. Before becoming fully operational, however, the plan was deacti-
vated by the incoming administration of President García. He created in 2010 a
specialized division for the Protection of Construction sites. The force, which has 400
operatives and is led by Colonel Ricardo Munaya, an experienced officer with an
excellent record, has stepped up patrolling and investigative proceedings to try to neu-
tralize mafias. In 2014 the Humala administration proposed new legislation that forced
new construction unions to undergo a thorough assessment of their legality to obtain a
state permit.
Thus far, the results of the Peruvian state’s efforts to combat extortion have been
rather modest and have concentrated on larger construction firms. Lack of tangible
results shows that the Peruvian state has not been able to translate its new-found power
and resources into an effective policy to curb extortive mafias’ challenge to the rule of
law. Although part of the problem can be traced to lack of consistent policies that
derived from political dynamics, arguably the most intractable problem concerns the
incapacity of state forces, in particular the PNP, to confront the challenge. Because
extortion was rather unusual in Peru before the boom, the PNP was forced to build
from scratch the technical know-how to confront extortion rings. Enhancing its inves-
tigative capacities and extending its territorial reach became a very tall order for an
Dargent et al. 23
institution described by a former vice minister of the interior, Carlos Basombrio, as a

demoralized force without the manpower and resources to do its job properly, an insti-
tution that is subservient to the more resourceful and politically influential army.63
Moreover, this rigid, old-fashioned force was supposed to control a daring criminal
underworld awash with money and ready to coerce or corrupt officials including police
officers, prosecutors and judges.64
As we elaborated in the theoretical section of the article, perhaps one of the most
difficult challenges faced by authorities has to do with criminals’ astonishing capacity
to adapt quickly to the strategies devised by Peruvian authorities to neutralize them.
Hence, the few strategies that proved successful, particularly in Lima, came to no avail
as criminals migrated to other regions where the state lacked similar enforcement
capacity (Callao, La Libertad, Lambayeque, rural Lima).65 Moreover, even in Lima,
extortionists have adopted other strategies including blackmailing and directly threat-
ening businessmen and managers and selective killing of union leaders. This, in turn,
requires the state to spend more resources on intelligence to detect these actions.
Interestingly, the recent fall in construction investment, due to less favorable macro-
economic conditions, did not bring an end to the extortions but, rather, a migration
from construction to other activities such as transport, commerce, and education.
Challenging State Authority II: Unregulated Gold Mining

Gold mining is another interesting example of the commodity boom’s unexpected
negative consequences and the difficulties these consequences pose to the state.
Because gold is easier to mine than other minerals, artisanal gold mining has been
fairly common in Peru, especially during boom eras. The sharp increase in gold
prices, from US$ 416 an ounce in 2004 to US$ 1,657 in 2013 prompted a surge in
this activity. Lured by the prospects of massive and quick financial gain, artisanal
miners, typically people from low social strata, started a frantic quest for gold. This
resulted in a sharp increase in the number of informal gold miners, a group that has
become a powerful source of resistance to the state in peripheral regions character-
ized by shallow institutional presence, mainly Madre de Dios, Puno, La Libertad and
some areas of Ayacucho, Ica, and Arequipa.66 As a result, informal gold mining has
become one of the largest social, criminal, and environmental challenges faced by
the Peruvian state.67
This type of informal activity, as Kuramoto reminds us, prospered in Peru due to
the combination of opportunity and necessity.68 Most informal gold miners started
operations without permission: the majority lack land titles or mining permits. Irregular
mining encompasses both informal and illegal mining, which are analytically distinct.
Peruvian law distinguishes them in that while informal mining has the potential to
become legal if it acquires or regularizes permits, illegal mining cannot become legal
because it operates in forbidden zones (e.g., protected areas).69 This distinction is often
blurred, however, because most irregular miners cannot or do not want to legalize their
activities. Even if they wanted to legalize their situation, legalization would still be
especially complex because of the lack of effective and coordinated mechanisms of
land entitlement in the country. With a limited territorial reach, the Peruvian state dis-
covered not only the difficulty of verifying and guaranteeing land permits, but also
that some of its agencies have granted in the same areas competing permits for differ-
ent economic activities.70
Along the gold value chain there are different types of challengers: small illegal and
informal miners, informal owners of processing plants, and mafias that export their
product either illegally (smuggling) or legally (legalizing illegal extraction). The first
type includes artisanal miners (and often their families) who work in precarious condi-
tions and organize themselves in large formal or informal mining unions with impor-
tant mobilization power at the local level. There is no consensus on the exact number
of irregular miners in Peru, although authors agree that the number has been increas-
ing.71 Damonte estimated the number to be 53,600 in 2009.72 Other sources claim that
there are between 300,000 and 500,000 irregular miners in Peru if their families are
counted.73 After a decade of high gold prices, these individuals constitute an important
societal and territorial base of resistance. Miners, their families, and those profiting
indirectly from this activity, defend informal and illegal mining because it has become
the main economic activity in many provinces of the aforementioned regions.74 Some
informal groups have grown to constitute local and regional criminal groups, which
possess capital to buy machinery and pay workers’ salaries or even dispute local elec-
tions. Moreover, these groups have also created racketeering (protection) schemes and
sold land fraudulently.75
Processors and exporters are, in contrast, few, but they control a bigger share of the
illegal resources created by gold mining. Processing plants often operate at least partly
in the informal economy. Many of these businesses, particularly at the beginning of the
current gold rush, required documentation that was easy to forge in order to “legalize”
the gold they bought—a simple declaration of legality signed by the seller sufficed.
Thus, although frequently operating without permits, processors legalized their pro-
duction and even paid taxes to the Peruvian state. In addition to legal exports, weakly
controlled borders have fostered massive smuggling to neighboring markets where the
production can be laundered.
Botched attempts by Peruvian authorities to curb some of the negative effects of the
mining activity shed light on the difficulties middle income states with scattered state
capacity face when dealing with complex challenges. In their detailed analysis describ-
ing state policies in the realm of mining regulation, Dargent and Urteaga and Valencia76
distinguish three periods. The first phase (2004–8) was characterized by almost total
inaction. In 2002 the state promulgated Law 27651 to formalize and promote small
and artisanal mining (Ley de Formalización y promoción de la pequeña minería y
minería artesanal), but it has been for the most part ineffective. The administration of
Alejandro Toledo (2001–6) was indecisive on the issue and preferred to remain on the
sidelines. A major part of the problem was that Lima and several regional governments
were at loggerheads over the distribution of the wealth being created. Disagreement
led to paralysis. As a result, as Valencia underscores, the Peruvian state’s policy, both
at the central and regional level, was “live and let live.” Small miners were left alone,
and while the state did not interfere in their business, it did nothing to help them
Dargent et al. 25
either—they received no support of any kind (e.g., financing, commercialization, tech-

nological transfer).77
This second phase (2008–11) coincided with the presidency of Alan García (2006–
11) and saw a gradually more attentive state. Confronted with many difficulties result-
ing from an unregulated informal industry, especially shocking reports and images of
a devastated Amazon basin in Madre de Dios, the García administration decided to act
more decisively. The existing law was modified creating Regional Directorates of
Mining and Energy (Direcciones Regionales de Energía y Minas) which were charged
with monitoring and coordinating duties. At the same time, President Garcia unveiled
a “National Plan for the Formalization of Artisanal Mining and a Multisector Technical
Commission” (Comisión Técnica Multisectorial) charged with developing and imple-
menting the plan. The Garcia administration took steps to curb ecological devastation
in Madre de Dios. The government established special ecological areas (zonificación
ecológica económica, or ZEE) where mining activities were prohibited. In addition to
creating these agencies and plans, the government engaged in some selective repres-
sive moves that sought to dislodge miners working in prohibited areas. While the
Garcia administration took several concrete steps to address the matter, actions were
for the most part disjointed and piecemeal. Agencies were neither furnished with
enough financial resources nor sufficiently endorsed politically. Repressive actions
backfired as they unnecessarily increased social tension and helped to galvanize resis-
tance on the part of miners and their families.78
Last, in the third phase (2011–15) under president Ollanta Humala, Peru tackled the
challenge in a more integral fashion, combining targeted repression and interdiction
with proactive steps that would incorporate measures to help and regulate miners.
Polices addressed diverse phases of the mining process including extraction, process-
ing and exports. As part of this plan, the Humala administration created the position of
High Commissioner for Mining, a senior figure that would oversee the coordination of
all state entities involved with monitoring the mining industry. According to a former
first minister of Peru, Salomón Lerner, illegal gold mining had become for the presi-
dent a serious security issue that needed more decisive action.79
A pivotal dimension of the High Commissioner’s task was to develop a national
interdiction strategy to curb the production and commercialization of gold. As a result,
the armed forces, the police, the public ministry (i.e., judiciary), and the customs and
taxing agency began a more coordinated effort to prevent and prosecute illegal pro-
duction. The plan had its problems, but it helped to improve the coherence of state
responses by enhancing coordination and rationalizing the use of finite resources. One
important step was to differentiate among illegal and informal miners and offer the
latter incentives to regularize their situation.80
State challengers have neutralized the aforementioned measures, however.
Stoppages and strikes called by mining unions have been a common method of resis-
tance each time the Executive announced deadlines for the formalization process or
interdictions were carried out. In some cases, they have produced violent clashes
between police and miners. The executive has been forced to put off constantly a full
implementation of the formalization policy, resulting in an incredibly low number of
formal artisanal miners.81 Another mechanism used by both small and large miners has
been supporting and sponsoring politicians who favor informal and illegal mining
(Madre de Dios and Puno), and who in turn have blocked the enforcement of regula-
tory and coercive policies at the subnational level.
In the case of the production of illegal gold, we also find quick adaptation mecha-
nisms on the part of challengers. Challengers take advantage of the state’s inability to
guarantee a continued presence and surveillance. Soon after the police or the army with-
draw from mining areas, groups resume operations and reoccupy the area. Interdictions
and destruction of supplies and machinery disrupts operations only temporarily as chal-
lengers use vast sums of accumulated capital to replace what they have lost. Interdictions,
moreover, for the most part have only targeted the department of Madre de Dios. Dante
Salas, director of the regional agency in charge of the process of formalizing informal
miners, stresses that effectively asserting territorial control currently challenged by
diverse actors constitutes the most pressing problem for the state and its formalization
strategy.82 Another example of challengers’ adaptability can be seen in the use of alterna-
tive routes to export gold that dodge the Peruvian customs authorities.
In short, easy access to gold allowed challengers to emerge in areas of limited state
presence. The possibility of certifying the appropriate use of land entitlements, of
solving disputes between competing claimants to land, or maintaining permanent
supervision of these areas, simply surpasses the capacity of the state, notwithstanding
its new acquired power.
Conclusion
The recent trajectory of Peru defies easy classifications. Although the capacity and
territorial reach of the Peruvian state has certainly improved as a result of elites’ efforts
to build state capacity on the basis of resources extracted from the booming economy,
economic growth has simultaneously strengthened state challengers. Those challeng-
ers profit from illegal and informal activities and have accrued significant resources
that allow them to undermine stateness. This dynamic is particularly noticeable in
many localities where illegal economic activities thrived, not only in the Peruvian
periphery, but also in metropolitan areas such as Lima and the northern coast.
The type of challengers we analyze here are formidable when the state is territori-
ally bounded and has to allocate scarce resources across a large territory while con-
fronting several logistic and organizational obstacles. The challengers’ pursuit of
economic profit over alternative aims provides them greater flexibility. They can move
rapidly and adapt to (eventually) more profitable endeavors. Such flexibility is pivotal
in rendering innocuous state efforts to effectively increase stateness.
In line with classic appraisals of Peru’s net state capacity, we conclude that such
capacity continues to be low. Yet the causal mechanism that yields such continuity
differs from those entertained in classic path-dependent explanations of state capacity
in Latin America. Our story identifies a novel relational mechanism that helped repro-
duce the Peruvian path intertemporally. We suggest that state capacity remains low
because of the relatively enhanced capacities of state challengers to locally fend off
and contest an otherwise stronger state apparatus.
Dargent et al. 27
The relational perspective we advocate in this article also has obvious implications
for conventional measurement efforts of state capacity. Such capacity is co-produced
by state actions (inactions) and their interaction with societal dynamics. Neither input
nor output measures of state capacity can do the trick in isolation. More interesting,
our argument also identifies another set of complications for describing the evolution
of relational state capacity. Such capacity can often vary significantly across time,
space, and functional dimensions as a result of the interaction between state actions
(inactions) and societal dynamics. Henceforth, although inspiring, O’Donnell’s classic
trichotomy83 of “brown,” “green,” and “crystalline” state areas falls short. Seeking
more precise descriptions of relational state capacity at the local level is thus a crucial
pending task for this research agenda. Innovative aggregation procedures are also
needed in order to construct more valid cross-national indicators of state capacity that
better represent the scope of territorial and functional variance observed in each case
and across time.
As indicated in the introductory section, we sought to describe and explain a coun-
terintuitive outcome, such as the one observed in Peru, where massive investment of
resources derived from the commodity boom did not translate into a higher net state
capacity. Analytically our measurement strategy seeks to avoid incurring in the mis-
take of conventional measures of state capacity, which by concentrating on indicators
such as governmental spending often fail to capture the real extent of state capacity. In
this regard we believe it is problematic mechanically to equate higher investment into
more state authority, because such a move fails to take into account the forces resisting
the state. A state may invest sizable resources in a given area (e.g., security, environ-
ment); however, assessing net results in that sector requires a relational account that
contrasts newly acquired state capacity with the capacity gained by forces challenging
it. This is particularly critical at the local level. In other words, if challengers’ rate of
return due to innovation, flexibility, and the like surpasses that of the state, then the
latter’ s allocation of resources will not necessarily translate into higher levels of
authority. Against this backdrop, we propose an approach that gauges state capacity by
combining different measures (input, output) and across diverse areas (security,
administration, extraction), which then are contrasted with indicators about challenger
activity (smuggling, extortion, social protest, irregular commodity exploitation).
Admittedly, measuring challenger’s capacity represents an empirical minefield, given
their clandestine nature and in particular their convoluted links with the state as they
often seek to corrupt or coerce its agents. These problems notwithstanding, we ulti-
mately believe that our measurement efforts should be better aligned with the (rela-
tional) ontology of state capacity.
Finally, our account of recent economic growth in Peru suggests a series of general
implications for future analyses of the interaction between economic growth in boom
times, (state) institutions, and rent seeking. This case illustrates, as others have done,
how massive economic growth can ensue in the context of weak institutions. Less
conventionally, our case further suggests that in certain contexts, state elites can decide
to invest resources in enhancing state capacity, instead of looting public coffers.
However, the case also suggests that such efforts might fall short, even if reasonably
well implemented. Such might be the case where state challengers are able to appro-
priate boom revenue disproportionately through increasingly profitable illegal and
informal activities. In revealing this pattern, the case of Peru illustrates a new causal
mechanism for explaining developmental failures in the context of booming
economies.
The scope and generalizability of the mechanism identified above needs to be
assessed in future works. In this regard, we analyzed a case in which the increased
power of both state and social actors has the same source: a resource boom that nur-
tured both the state and its challengers. Nonetheless, our relational argument is also
useful to analyze cases in which (a) the source of increased power feeds only one type
of actor, state or social; and (b) contexts of shrinking resources, as resource busts, in
which both state and social actors lose power. Therefore, we claim that while the spe-
cific dynamic observed in Peru might be unique to this case, the scope of our proposed
argument is broader. As such, it can be applied to a larger set of contextual conditions.
For instance, growing resources can feed social actors and not state ones. Transnational
illegal economies, for example, can feed previously weak (or weaker) challengers
without benefiting the state. These social actors will increase their relative strength
vis-à-vis the state, consequently reducing stateness in a greater degree than in our pres-
ent case. For example, since the nineties the development of alternate drug routes
toward Europe through the southern cone has increased the resources and power of
illegal actors in southern Peru and Bolivia. Conversely, some resources (e.g., oil) are
more easily controlled by states without nurturing challengers, thus leading to an
enhancement in overall stateness. Also, our relational perspective is useful to analyze
how falling commodity prices may not lead to an overall change in stateness or even
benefit states. States no longer have to confront rivals that can only exist while high
prices make their activities profitable. A reduction in the price of gold is expected to
cause a strong reduction in illegal mining, as happened in Peru in the seventies and
eighties when artisanal mining became a marginal activity. In this way, commodity
busts are not only a problem for weak states: they might, in certain contexts, be also a
blessing.
In that last regard, the interaction between previous levels of state capacity, the
economic boom, and the consolidation of state challengers that can profit when the
boom strikes is also complex, and it constrains the scope of our argument. Linearly
extrapolating the Peruvian experience to contexts in which state capacity and the size
of the formal economy are higher, we can expect that the boom can, in those contexts,
further enhance legality and relational state capacity. We suspect, however, that com-
plex interactions between preexisting state capacity, economic booms, and the activa-
tion of local challengers to the state may also occur.
Acknowledgments
Authors would like to express their gratitude to Kent Eaton, Hillel Soifer, Agustina Giraudy,
Carla Alberti, and Rhicard Snyder for their insightful comments and suggestions on earlier ver-
sions of the piece. We also acknowledge the valuable assistance from Nicolás Palacios, Madai
Urteaga, and David Schwartz.
Dargent et al. 29
Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship,
and/or publication of this article.
Funding
The author(s) disclosed receipt of the following financial support for the research, authorship,
and/or publication of this article: Juan Pablo Luna and Andreas Feldmann acknowledge finan-
cial support from the Millennium Nucleus for the Study of Stateness and Democracy in Latin
America (RS130002) and from FONDECYT Project 1150324. Eduardo Dargent acknowledges
support from the Vicerectorado de Investigacion and the Escuela de Gobierno y Políticas
Públicas, Pontificia Universidad Católica del Perú.
Notes
1. To be sure, in this paper we make a simplifying assumption regarding legitimacy (the
power of authorities in a Weberian sense). Here, we see legitimacy as socially constructed,
ex post, by those that wield power in each locality. Even if the state has legitimacy de jure,
eventually it can de facto be less legitimate than challengers who might successfully pro-
vide security and social welfare at the local level.
2. This pattern is described as economic growth without development. See Nazih Richani,
Systems of Violence: The Political Economy of War and Peace in Colombia, 2nd ed.
(Albany: State University of New York Press, 2013).
3. Peter Evans, “Transational Linkages and the Economic Role of the State: An Analysis of
Developing and Industrialized Nations in the Post World War II Period,” in P. Evans, D.
Rueschemeyer, and T. Skocpol, eds., Bringing the State Back In (Cambridge: Cambridge
University Press, 1985), 192–226.
4. Francis Fukuyama, State Buiding: Governance and World Order in the 21 St Century
(Ithaca, NY: Cornell University Press, 2004); David Laitin, Nations, States and Violence
(Oxford: Oxford University Press, 2007); Robert Rotberg, When States Fail: Causes and
Consequences (Princeton, NJ: Princeton University Press, 2004).
5. Economists, e.g., describe a series of diverse “investment-attracting” institutions, which
could range from property rights enforcement to investment friendly labor codes or an
open economy. Hernando de Soto, The Other Path: The Invisible Revolution in the Third
World (London: Tauris, 1989); James Walsh, and Jiangyan Yu, “Determinants of Foreign
Direct Investment: A Sectoral and Institutional Approach,” International Monetary Fund
Working Paper 10/187 (Washington, DC: IMF, July 2010).
6. James A. Robinson, and Daron Acemoglu, Economic Origins of Dictatorship and
Democracy (Cambridge: Cambridge University Press, 2006).
7. For a similar, more nuanced argument see Robert Bates, Prosperity and Violence, 2nd ed.
(New York: W.W. Norton, 2010).
8. Richard Auty, Sustaining Development in Mineral Economies: The Resource Course
Thesis (London: Routledge, 1993); Thad Dunning, Crude Democracy: Natural Resource
Wealth and Political Regime (Cambridge: Cambridge University Press, 2008).
9. Paul Collier and Anke Hoeffler, “Greed and Grievance in Civil War,” Oxford Economic Papers
56 (2004): 563–95; Philipe Le Billon, Wars of Plunder: Conflict of Profits and the Politics of
Resources (London: Hurst, 2012); M.L. Ross, “How Do Natural Resources Influence Civil
War? Evidence from Thirteen Cases,” International Organization 58, no. 1 (2004): 301–24.
10. Ryan Saylor, State Building in Boom Times: Commodities and Coalitions in Latin America
and Africa (Oxford: Oxford University Press, 2014).
11. Matías Dewey, El Orden clandestino (Buenos Aires: Katz Editores, 2015).
12. Samuel Huntington, Political Order in Changing Societies (New Haven, CT: Yale
University Press, 1968).
13. Fukuyama, State Buiding.
14. Miguel Angel Centeno, “The Centre Did Not Hold: War in Latin America and the
Monopolization of Violence,” in J. Dunkerley, ed., Studies in the Formation of the Nation
State in Latin America (London: Institute of Latin American Studies, University of
London, 2002), 54–76; Marcus J. Kurtz, Latin American State Building in Comparative
Perspective: Social Foundations of Institutional Order (Cambridge: Cambridge University
Press, 2013); Hillel Soifer, State Building in Latin America (Cambridge: Cambridge
15. Ruth Bernis Collier and David Collier, Shaping the Political Arena: Critical Junctures,
the Labor Movement, and Regime Dynamics in Latin America (Princeton, NJ: Princeton
16. Catherine Boone, “Territorial Politics and the Reach of the State: Unevenness by Design,”
Revista de Ciencia Política 32, no. 3 (2012): 623–41; Dan Slater and Diana Kim,
“Standoffish States: Nonliterate Leviathans in Southeast Asia,” TRaNS: Trans-Regional &
-National Studies of Southeast Asia 3, no. 1 (2015): 25–44.
17. Hillel Soifer and Matthias vom Hau, “Unpacking the Strenght of the State: The Utility of
State Infrastructural Power,” Studies in Comparative International Development 43, nos.
3–4 (2008): 219–30.
18. According to Soifer input measures follow this approach: “To measure the extent of state
capabilities, this approach assesses the resources at the disposal of the state for exercising
control over society and territory.” Hillel Soifer, “State Infrastructural Power: Approaches to
Conceptualization and Measurement,” Studies in Comparative International Development
43, no. 3–4 (2008): 231–251. This resource-based view draws on the notion of power as
a dispositional attribute—one that exists as a potentiality that an actor can choose to acti-
vate. Peter Morriss, Power: A Philosophical Analysis (Manchester: Manchester University
Press, 2002). Although resources do not measure what Mahoney calls “emanation”—the
degree that capabilities are directed at a particular outcome and are thus analytically dis-
tinct from power itself—they do serve as a crude approximation of the extent of state
capabilities, perhaps as an upper bound.” James Mahoney, “Revisiting General Theory in
Historical Sociology,” Social Forces 83, no. 2 (2004): 459–89. Meanwhile, output mea-
sures are predicated on the following rationale: “The second approach to infrastructural
power is therefore more reluctant to assess power based on the resources at the disposal of
the central state, and more concerned with how states are limited and constructed by non-
state actors.” Soifer, State Infrastructural Power, 239.
19. David Altman and Juan Pablo Luna, “Introducción: El Estado latinoamericano en su laber-
into,” Revista de Ciencia Política 32, no. 3 (2012): 521–43.
20. Guillermo O’Donnell, “On the State, Democratization and Some Conceptual Problems:
A Latin American View with Some Glances at Post Communist Countries,” World
Development 21, no. 8 (1993): 1355–69.
21. Alfred Stepan, “State Power and the Strength of Civil Society in the Southern Cone of Latin
America,” in Peter Evans, Dietrich Rueschemeyer, and Theda Skocpol, eds. (Cambridge:
Cambridge University Press, 1985), 318.
Dargent et al. 31
22. James C. Scott, The Art of Not Being Governed: An Anarchist History of Upland Southeast
Asia (New Haven CT: Yale University Press, 2014), 334.
23. Michael Mann, The Sources of Social Power, vol. 1, A History of Power from the Beginning
to AD 1760 (Cambridge: Cambridge University Press, 1986); Michael Mann, The Sources
of Social Power, vol. 2, The Rise of Classes and Nation-States, 1760–1914 (Cambridge:
Cambridge University Press, 1993).
24. Soifer and vom Hau, Unpacking the Strength of the State, 222.
25. Joel Migdal, State in Society: Studying How States and Societies Transform and Constitute
One Another (Cambridge: Cambridge University Press, 2001).
26. Miguel Centeno, Atul Kolhi, and Deborah Yashar, eds., States in the Developing World
(Cambridge: Cambridge University Press, 2016).
27. Francis Fukuyama, “What Is Governance?,” Governance 26, no. 3 (2013): 355.
28. Kent Eaton, “The State in Latin America: Challenges, Challengers, Responses and
Deficits,” Revista de Ciencia Política 32, no. 3 (2012): 643–57; Agustina Giraudy and
Juan Pablo Luna, “Unpacking the State’s Uneven Territorial Reach: Evidence from Latin
America,” in M.A. Centeno, A. Kolhi, and D. Yashar, eds., States in the Developing World
(Cambridge: Cambridge University Press, 2016), 85–108.
29. Eaton, “The State in Latin America,” 648.
30. Eaton’s definition is broad enough to encompass several, conceptually diverse types of
challengers including autonomy-seeking indigenous groups that mobilize with the goal of
curtailing state reach in certain localities under the jurisdiction of a given nation-state—
see Deborah Yashar, Contesting Citizenship in Latin America: The Rise of Indigenous
Movements and the Postliberal Challenge (Cambridge: Cambridge University Press,
2005)—or “non-state armed actors who struggle to secure economic dominion, and whose
activities reveal alternative networks of power, authority, independence, and self-gover-
nance unfolding on a variety of territorial scales both smaller and larger than the nation-
state.” Diane Davis, “Non-State Armed Actors, New Imagined Communities, and Shifting
Patterns of Sovereingty and Insecurity in the Modern World,” Contemporary Security
Policy 30, no. 2 (2009): 221.
31. Because of their ingenuity and flexibility criminal organizations they are very difficult to
control by the state. Such resilience is even greater in contexts of historically weak or lim-
ited state capacity. Even if the state is able to accrue resources and deploys them to confront
this type of challenger, it usually arrives late or its efforts are curtailed by clever copying
mechanisms deployed by criminals. Susan Strange, The Retreat of the State: The Diffusion
of Power in the World Economy (Cambridge: Cambridge University Press, 1996), chap.
8. Andreas E. Feldmann, “Measuring the Colombian ‘Success’ Story,” Revista de Ciencia
Política 32, no. 3 (2012):739–52.
32. To be sure, the nature of specific challenger adaptation strategies is highly contextual and
can remain indeterminate for our general argument. In certain contexts it might be more
convenient to switch industries, while in others to switch localities or both industry and
location. We thank Kent Eaton for underscoring this point.
33. Dirk Kruijt and Kees Koonings, “The Rise of Megacities and the Urbanization of
Informality, Exclusion and Violence,” in D. Kruijt and K. Koennings, eds., Megacities:
The Politics of Urban Exclusion and Violence in the Global South (London: Zed Books,
2009), 8–26.
34. Maxwell Cameron, Democracy and Authoritarianism in Peru: Political Coalitions and
Social Change (New York: Palgrave MacMillan, 1994).
35. World Bank, “World Development Indicators: Peru"; online at http://databank.worldbank.

org/data/reports.aspx?source=2&country=PER.
36. Ibid.
37. Ibid.
38. United Nations Development Programme, Human Development Report 2015: Work for
Human Development (New York, UNDP, 2015).
39. Instituto Nacional de Estadística e Informática. “Compendio éstadístico Peru 2015” (Lima:
INEI, 2015).
40. Ibid.
41. It is the Red nacional dorsal de fibra óptica initiative currently under implementation.
42. Instituto Nacional de Estadística e Informática, “Compendio éstadístico Peru 2013” (Lima:
INEI, 2013); Instituto Nacional de Estadística e Informática, “Compendio éstadístico Peru
2014” (Lima: INEI, 2014); Instituto Nacional de Estadística e Informática, "Compensio
éstadístico Peru 2015" (Lima: INEI, 2015).
43. World Health Organization, “Global Health Observatory Data, Peru”; online at http://
www.who.int/gho/countries/per/en/.
44. Instituto Nacional de Estadística e Informática, Compendio 2015. Ministerio de Salud,
Información Estadística; online at http://www.minsa.gob.pe/index.asp?op=6#Estadística.
45. Instituto Nacional de Estadística e Informática, Compendio 2013; Instituto Nacional de
Estadística e Informática, Compendio 2014; Instituto Nacional de Estadística e Informática,
Compendio 2015.
46. Instituto Nacional de Estadística, Compendio 2015; Instituto Nacional de Estadística e
Informática, “II Censo nacional de comisarias” (Lima: INEI, 2013); Instituto Nacional de
Estadística e Informática, “III Censo nacional de comisarias” (Lima: INEI, 2014); Instituto
Nacional de Estadística e Informática, “IV Censo nacional de comisarias” (Lima: INEI,
2015).
47. Instituto Nacional de Estadística, Compendio 2015.
48. Instituto Nacional de Estadística e Informática, Compendio 2013; Instituto Nacional de
Estadística e Informática, Compendio 2014.
49. United Nations Office on Drugs and Crime, “Total Police Personnel at the national level:
Peru” online at http://Total%20Police%20Personnel%20at%20the%20National%20
Level%20(11%20Aug%202016%202241).pdf. It is worth noting, though, that Peru ranks
among the Latin American countries with more policemen per capita. See Gino Costa and
Rachel Neild, “Police Reform in Peru,” Australian & New Zealand Journal of Criminology
38, no. 2 (2005): 216–29.
50. Carla Alberti. “Communities of Smugglers: Controlling Transnational Violence in the
Central Andes” (paper presented at the conference “Unequal Security in the Americas:
Challenges of Governance at the Local Level,” Watson Institute for International and
Public Affairs, Brown University, April 29–30, 2016).
51. “Policías detenidos con droga,” El Comercio (October 29, 2015).
52. Instituto Nacional de Estadística, Compendio 2015.
53. Ibid.
54. David Gagne, “InSight Crime’s 2015 Latin America Homicide Round-Up,” Insight
Crime (January 14, 2016); online at http://www.insightcrime.org/news-analysis/
insight-crime-homicide-round-up-2015-latin-america-caribbean.
55. Defensoría del Pueblo, “Estado de los conflictos sociales a enero del 2015”; online at
http://www.defensoria.gob.pe/blog/la-defensoria-del-pueblo-registro-210-conflictos-soci-
ales-en-enero/.
Dargent et al. 33
56. Moisés Arce, Resource Extraction and Protests in Peru (Pittsburgh, PA: University of
Pittsburgh Press, 2014).
57. Elizabeth J. Zechmeister, “La Cultura política de la democracia en las Américas, 2014:
Gobernabilidad Democrática a través de 10 años del barómetro de las Américas"; online at
http://www.vanderbilt.edu/lapop/insights/IO908es_v3.pdf.
58. Gino Costa. “El Próspero negocio de las extorsiones,” El Comercio (February 11, 2014).
59. “Sector construcción crecerá 6.8% en el 2014, según la CCL,” Gestión (August 4, 2014).
60. Luis García and Esteban Valle-Riestra, ¿Cómo responde un “Estado anémico”?:
Empresarios, policías y crimen organizado en el ‘boom’ de la construcción en Perú” (paper
presented to the Asociación Latinoamericana de Ciencia Política Congress, Lima, July
22–24, 2015).
61. Instituto de Defensa Legal, “Informe anual sobre seguridad ciudadana: Crisis política,
temores y acciones de esperanza” (Lima: Instituto de Defensa Legal, 2013); online at
http://www.idl.org.pe/sites/default/files/publicaciones/pdfs/Informe%20Seguridad%20
Ciudadana%202013.%20IDL.pdf.
62. Ibid.
63. Author interview with Carlos Basombrío, former vice minister of the interior, Lima, April
19, 2014.
64. Dirk Kruijt and Carlos Iván Degregori, “Lima Metropolitana,” in Kees Koonings and Dirk
Kruijt, eds., Fractured Cities: Social Exclusion, Urban Violence and Constested Spaces in
Latin America (London: Zed Books, 2006), 100–116.
65. García and Valle Riestra, “Cómo responde.”
66. Lenin Valencia, Madre de Dios: ¿Podemos evitar la tragedia? Políticas de ordenamiento
de la minería aurífera (Lima: Sociedad Peruana de Derecho Ambiental, 2014).
67. Gerardo Damonte, “Formalizing the Unknown The Stalemate over Formalizing Small-
Scale Mining in Madre de Dios,” The Broker (November 5, 2013); online at http://www.
thebrokeronline.eu/Articles/Formalizing-the-unknown; José Carlos Orihuela, “Bonanza
Minera, conflictos y salidas instituciones a nivel local,” Economia y Sociedad 84, no. 1
(2014): 36–41.
68. Juana Kuramoto, “La Minería artesanal e informal en el Perú,” Working Paper no. 82
(International Institute for the Environment and Development, September 2001); online at
http://pubs.iied.org/pdfs/G00731.pdf.
69. Defensoría del Pueblo, “Estado de los conflictos.”
70. Sociedad Peruana de Derecho Ambiental, Las rutas del oro ilegal: Estudios de caso en
cinco países amazónicos (Lima: Sociedad Peruana de Derecho Ambiental, 2015); Alicia
Albanto, Peruvian ombudsman office commissioner, interviewed by author, Lima, January
15, 2015.
71. Maiah Jaskoski, “Environmental Licensing and Conflict in Peru’s Mining Sector: A Path
Dependant Analysis,” World Development 64 (2014): 873–83.
72. Damonte, “Formalizing the Unknown.”
73. Fernando Rospigliosi, “Mineros traicionados,” El Comercio (October 28, 2014).
74. Eduardo Dargent and Madai Urteaga, “Respuesta estatal al boom de la minería informal
e ilegal de oro en el Perú (2004–2015): Desafíos al estado e instituciones desbordadas,”
Revista de Ciencia Política (forthcoming).
75. Stanislao Maldonado, “Boom minero y corrupción de funcionarios públicos de los gobi-
ernos locales en el Perú: Evidencia de un experimento natural,” Economia & Sociedad 82
(2013): 9–17.
76. Dargent and Urteaga, “Respuesta Estatal”; Valencia, Madre de Dios.

77. Dargent and Urteaga, “Respuesta Estatal.”
78. Ibid.
79. Authors’ interview with Salomón Lerner, former president of the Peruvian Council of
Ministers, Lima, February 25, 2015.
80. Dargent and Urteaga, “Respuesta Estatal”; Valencia, Madre de Dios.
81. Defensoría, “Estado de los conflictos.”
82. Author interview with Dante Salas, Director, Regional Direction of Energy and Mines,
Puno, March 12, 2015.
83. O’Donnell, “On the State.”
Author Biographies
Eduardo Dargent (edargent@pucp.edu.pe) is associate professor in the department of social
sciences at the Pontificia Universidad Católica del Perú. His main teaching and research inter-
ests are the state in Latin America, political economy, and comparative public policy. His book
Technocracy and Democracy in Latin America: The Experts Running Government (New York:
Cambridge University Press) was published in 2015.
Andreas E. Feldmann (feldmana@uic.edu) is associate professor in the Latin American and
Latino studies program and the political science department at the University of Illinois Chicago.
His research, which investigates political violence and population movements in Latin America,
has been published in journals including Terrorism and Political Violence, Latin American
Politics & Society and Third World Quarterly.
Juan Pablo Luna (jlunaf@uc.cl) is professor in the Instituto de Ciencia Política of the Pontificia
Universidad Católica de Chile. His research looks at the political economy of Latin America.
His book Segmented Representation: Political Party Strategies in Unequal Democracies (New
York: Oxford University Press) was published in 2014.

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Greater State Capacity, Lesser 2017, Vol. 45(1) 3­–34

Juan Pablo Luna

boom-led economic growth can lead to the (unilateral) institutional strengthening of

Relational State Capacity and State Challengers

Scott’s depiction of Zoomia provides further testimony of this insight:

Relational conceptualizations of power are ubiquitous in political theory, compara-

The Mammoth Confronts the Cheetahs: Unforeseen

Increased State Capacity

Figure 1. Coverage of Services (Percentage of Population Covered).

Figure 4. Domestic Security Sectorial Budget.

A Stronger State Meets Challengers “Running on Steroids”

Figure 5. Relative Expansion of Number of Prosecutors across the Peruvian Territory

Peru’s economic boom is correlated with a worrisome spike in social conflicts as

Figure 8. Number of Social Conflicts per Year.

Challenging State Authority I: Construction Mafias and

The massive expansion of construction sites, paradoxically, brought with it a host of

institution described by a former vice minister of the interior, Carlos Basombrio, as a

Challenging State Authority II: Unregulated Gold Mining

either—they received no support of any kind (e.g., financing, commercialization, tech-

Declaration of Conflicting Interests

35. World Bank, “World Development Indicators: Peru"; online at http://databank.worldbank.

76. Dargent and Urteaga, “Respuesta Estatal”; Valencia, Madre de Dios.

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Greater State Capacity, Lesser 2017, Vol. 45(1) 3–34