Abstract
Development studies emphasise the critical role of institutions in generating conditions for economic growth and shared prosperity, categorising them as either inclusive (development-promoting) or extractive (development-inhibiting). This article demonstrates that trade barriers led a multinational corporation to cooperate with small-scale dairy farmers, facilitating successful rural development. Moreover, the inclusive dairy association that evolved as a result is helping farmers respond to recent trade liberalisation under the Central American Free Trade Agreement (CAFTA). Thus, categorising institutions a priori as inclusive or extractive neglects the fact that institutions are constrained and enabled by others in their environment, and obscures the mediation of power relations among social actors.
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