This paper argues that the construction of two opposing ideal types of sustainable development – market-friendly and grassroots development – serves as a useful analytical tool for understanding political conflict over environmentally sensitive policy for the native, or autochthonous, forest sector. Explaining the degree to which a country has mostly market-oriented forest policy or whether it also includes significant elements of the grassroots approach requires an examination of when and how four broad factors affect outcomes: ideas, state institutions, social groups and international conditions. Paired comparisons show that cohesive teams of experts in lead ministries may define legislation and decrees proposed by the executive branch, but whether they become law depends on other factors. These are, in the first instance, the capacity of social groups to forge larger socio-political alliances, and secondly, the presence or absence of direct external intervention in the policy process. Such political dynamics also affect the degrees to which future policy begins to resolve the tension between the two approaches to the sustainable development of forests in Latin America.