The Worldwide Diffusion of Market-Oriented Infrastructure Reform, 1977-1999

• Published in: American sociological review 2005-12, Vol.70 (6), p.871-897
• Main Authors: Henisz, Witold J., Zelner, Bennet A., Guillén, Mauro F.
• Format: Article
• Language: English
• Subjects: Adoption; Authority; Coercion; Comparative economics; Competition; Economic growth; Economic history; Economic Policy; Economic reform; Economic regulation; Economics; Electricity; Elimination; Energy industry; GDP; Globalization; Gross Domestic Product; Imitation; Industrial regulation; Inferences; Influence; Information dissemination; Infrastructure; Institution building; Institutions; Interest groups; International; International Economic Organizations; International relations; Liberalization; Marketization; Markets; Multilateralism; Neoliberalism; Organizational change; Organizations; Political economy; Political Influences; Political power; Political reform; Political science; Politics; Privatization; Reforms; Regulatory reform; Social Structure; Sociological theory; Sociology; Strategic management; Studies; Telecommunications; World Bank; World economy
• ISSN: 0003-1224; 1939-8271
• DOI: 10.1177/000312240507000601

Why do countries differ so much in the extent to which they adopt neoliberal, market-oriented reform in their infrastructure industries? Building on world-society and neo-institutional theories in sociology, this paper argues that international pressures of coercion, normative emulation, and competitive mimicry strongly influence the domestic adoption of market-oriented reform. The paper considers the effect of such pressures on the adoption of four reform elements: the privatization of state-owned firms, the formal separation of the regulatory authority from the executive branch, the de facto elimination of executive political influence on the regulatory authority, and the opening of the retail market to multiple service providers. It finds generally robust support for its arguments using a multivariate probit analysis of reform adoption in the telecommunications and electricity industries of as many as 71 countries and territories between 1977 and 1999. The results also suggest that the coercive effect of lending by the IMF and World Bank differs for each reform element. The paper discusses the possibility that, by leading countries to adopt some reform elements but not others, international coercion may not produce ideal outcomes.