Rethinking rural development: Making peasant organizations work. The case of Paraguay

This dissertation studies the role of the collective action sector for rural development. A combination of formal modeling, historical and institutional analysis, and econometric methods is used in this research. I develop microeconomic models to analyze the determinants of peasants\u27 decisions to join cooperative institutions, and the corresponding equilibrium fraction of organized peasants. The models suggest multiple organizational equilibria at both local and wider levels. Multiple cooperative equilibria is explained in general by the interplay of two increasing functions: (i) the proportion of cooperators as a function of the expected gains from cooperation, and (ii) the expected gains from cooperation as a function of the proportion of cooperators. The models also study the mechanisms through which cooperation beyond the local level can be achieved. Empirically, I analyze the motivations behind peasants\u27 decisions to organize themselves, and once organized, the ways inequality, gender differences, social capital, and external assistance affect local cooperation. The empirical component of this dissertation is based on fieldwork with peasant organizations in the Paraguayan departments of Concepcion, San Pedro, and Caaguazu carried out between 1995-1996. The results of the fieldwork include two surveys: one of the leadership of 104 peasant committees and the other of 374 peasant households. The most important results of the econometric analysis are that the likelihood of a peasant household joining a peasant organization is an inverse function of higher outside options, the security of her/his landholdings, and the subjective costs of cooperation, and is a positive function of the performance of the cooperative. Cooperative performance is not monotonically related to either the degree of inequality within the community or the level of external assistance; rather, it is of an inverted U-shape form. Cooperative performance increases as the level of women\u27s participation and social capital increases. This dissertation also explores the relationship between democracy and economic development by analyzing the agrarian political economy of Paraguay for the 1954-1996 period. It argues that (i) peasants\u27 organizations play a significant role in rural development and (ii) there is scope for positive synergy between peasants\u27 organizations and the level of political democracy in an agrarian country