A transaction costs approach to community participatory development : orthodox theory vs reality in traditional communities in Mexico
This thesis examines the obstacles that communities have to confront, and the solutions they have made use of to organise and sustain community participation for service provision. Orthodox participatory theory assumes that communities have the knowledge and the appropriate attitudes to manage participatory projects effectively. This thesis questions these assumptions by using Transaction Cost Theory to understand the failures and successes of Community Participatory Development (CPD). Participant observation in three traditional rural Mexican communities demonstrated that the assumptions of self-reliant participatory development theory overlook important problems, such as unequally distributed and limited information, limited resources and skills, opportunistic attitudes and conflicts of interest. These problems generate cooperation costs in terms of time, effort and other material and intangible resources. We argue that the larger these costs, the less likely it is that community participation will succeed unless effective incentives are created to overcome them. This is so, because rural people intend to be rational and self-interested individuals, who will only involve themselves in collective action if they expect the benefits to exceed the costs. However, we argue, that rationality is institutionally bounded, and that local institutions play a central role in determining choices and behaviour. Therefore, successful community participation is directly related to communities' capacity to use institutional arrangements to deal with the costs of cooperation and specially to reconcile private and collective interests. This thesis shows that institutional arrangements that sanction opportunism, and shape individual behaviour in favour of the collective interest are needed for collective action to arise. These institutional solutions involve sanctions and hierarchies to ensure successful projects, problems ignored by populist participatory theories. By so doing, this thesis builds an alternative and more critical model for the analysis of participation theory, and presents a new perspective on the possibilities and limitations of Transaction Costs Economics.