Latin America is no foreign land to totalitarian governments; however, we know little on the characteristics of economically successful dictatorships. Armando Razo tackles this issue in Social Foundations of Limited Dictatorship. Looking at the Mexican Porfiriato (1876–1911), he finds that the dictator, Porfirio Díaz, managed to remain in power by dispensing private rents to selected firms functioning under a well-connected network of private protection. The configuration of this network was instrumental to diminish the risk of predation and to promote economic growth. Armed with an impressive database of political and private actors, he finds that the benevolent nature of this regime was the result of a complex relationship between the dictator and the selected beneficiaries of economic policies. Razo's work is an important theoretical and empirical contribution to the literature of the political economy of economic development.

From a macro perspective, no consensus exists in terms of the role of democracy or autocracy in promoting economic development. The evidence suggests that autocracies can deliver both high and low rates of economic growth. Razo's work illuminates the relationship between economic growth and the absolute and relative power of the state. In particular, as “we lack a good understanding of how politics interact with economics in nondemocratic settings” (p. 4). The case study highlights the dictator's solution to the commitment problem with investors by investigating the role of formal and informal institutions in Mexico during Porfirian times. His main contribution is the inclusion and analysis of informal institutions as part of the framework for sustainable economic growth and investment.

The author claims that the existence of well-integrated social network is key to the economic success of a dictatorship. The crucial link of this network is “overlapping private protection […] among influential political actors” (p. 11). This characteristic translates into collective power to punish the dictator when predatory. As such, this type of network allows for the existence of a powerful and reliable dictator based on socially founded policymaking. This theoretical conclusion is complemented by empirical evidence from one of the most famous and lasting dictatorships in Latin America: the Porfiriato. This period in Mexican history has captivated the interest of many scholars over time as the country attained fast economic growth and industrialization after half a century of postcolonial stagnation.

The literature, however, failed to unveil the roots of the Díaz government successful economic policies implementation. Razo effectively fills the void with “a comprehensive study of political institutions during the Porfiriato, with an explicit analysis of the interaction between politics and economics, formal and informal institutions” (p. 16). With the aide of network theory, the author reveals the nature and structure of protection. He discovers that firms allied with public officials to gain and maintain protection against predatory activities from the dictator. In addition, while public actors were distributed across different industries, protection was concentrated in the banking sector.

The backbone of this study is the meticulous collection of the composition of corporate boards and their links to public officials during this dictatorship. The empirical evidence is concentrated in the later years, from 1907 to 1910, reflecting “a mature system” that “does not look particularly different from […] the late 1890s” (p. 132). However, looking at earlier data on the private protection network should prove fruitful to understand the significant economic success of the origins of this dictatorship. While the consolidation of the structure took place during the later years, the Mexican economy experienced faster economic growth in the earlier period as output doubled from 1877–1895 (INEGI).

The unprecedented economic growth under this dictatorship may tempt us to ask for “a manual on how to run a successful dictatorship” (p. 169). Yet, the author clearly warns us against such impulse. We must consider Razo's findings together with the overall performance of this famous dictatorship. Economic growth was based on allocating special concessions making it not sustainable in the long run. Still, the case study is about the “making of a dictator” (p. 173). As such, we learn that a highly concentrated banking system is fundamental to the stability and development of the network system.

This work sheds light on how a country may experience economic growth under an autocracy. Nonetheless, this political option does not guarantee sustainable economic growth with universal protection of property rights. The transition towards a more inclusive political and economic system may not emerge from an autocracy as many historical examples confirm. This book is an excellent example of the use of economic history to illuminate contemporary puzzles. Armed with detailed data and sophisticated theoretical tools, Razo makes an important contribution to our collective knowledge of the political economy of development.