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The Rise of the Regulatory State in Latin America: A Study of the Diffusion of Regulatory Reforms Across Countries and Sectors

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  • Levi-Faur, David
  • Jordana, Jacint
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    Abstract

    This paper presents and analyzes the sweeping restructuring of the state in Latin America, using the notion of the rise of the Regulatory State. We present for the first time a database on the creation of regulatory agencies and their reform in 19 countries and 12 sectors over a period of 24 years (1979-2002). We aim to explain the rise of the Regulatory State in Latin America by reference to a distinction between sectoral and national patterns in the diffusion of autonomous regulatory authorities. While national patterns of diffusion imply that the number of prior regulatory authorities within a country will determine the probability of the establishment of new authorities in that country. Sectoral patterns predict that the establishment of new authorities will be determined by the number of regulatory authorities in the same sector in other countries. In order to test these conflicting predictions, we consider the effects of the establishment of regulatory authorities in (a) all sectors in all countries, (b) the same sector by other countries, and (c) other sectors in the relevant country. Thus, the results of the statistical analysis provide a direct measure of contagious patterns of diffusion, namely the effect of prior adoption on current adoption. This distinction is then used to shed light on the two important mechanisms that propel the process of diffusion: policy learning and policy emulation. While international organizations and actors that support and promote the new order usually highlight the first mechanism, critics of the current order usually underline the second mechanism. Our results provide some support for the importance of sectoral diffusion and for the role of emulation in the rise of the Regulatory State. These results coincide with a growing body of literature that emphasizes the role of contagious diffusion in the spread of policy reforms.

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    Bibliographic Info

    Paper provided by University of Manchester, Institute for Development Policy and Management (IDPM) in its series Centre on Regulation and Competition (CRC) Working papers with number 30621.

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    Date of creation: 2004
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    Handle: RePEc:ags:idpmcr:30621

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    Keywords: Public Economics;

    References

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    1. Sharun W. Mukand & Dani Rodrik, 2005. "In Search of the Holy Grail: Policy Convergence, Experimentation, and Economic Performance," American Economic Review, American Economic Association, vol. 95(1), pages 374-383, March.
    2. Sushil Bikhchandani & David Hirshleifer & Ivo Welch, 2010. "A theory of Fads, Fashion, Custom and cultural change as informational Cascades," Levine's Working Paper Archive 1193, David K. Levine.
    3. Vives, X..A., 1995. "Social Learning and Rational Expectations," UFAE and IAE Working Papers 305.95, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    4. Mariano Tommasi & Pablo T. Spiller & Ernesto Stein, 2003. "Political Institutions, Policymaking Processes, and Policy Outcomes. An Intertemporal Transactions Framework," Working Papers 59, Universidad de San Andres, Departamento de Economia, revised Jul 2003.
    5. Dani Rodrik, 1996. "Understanding Economic Policy Reform," Journal of Economic Literature, American Economic Association, vol. 34(1), pages 9-41, March.
    6. Haas, Peter M., 1992. "Introduction: epistemic communities and international policy coordination," International Organization, Cambridge University Press, vol. 46(01), pages 1-35, December.
    7. Przeworski, Adam & Vreeland, James Raymond, 2000. "The effect of IMF programs on economic growth," Journal of Development Economics, Elsevier, vol. 62(2), pages 385-421, August.
    8. Harberger, Arnold C, 1993. "Secrets of Success: A Handful of Heroes," American Economic Review, American Economic Association, vol. 83(2), pages 343-50, May.
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    Cited by:
    1. Serebrisky, Tomás & López Azumendi, Sebastián & Alberto Andrés, Luis, 2011. "Institutional design and governance of airport regulators: The case of Latin America," Journal of Air Transport Management, Elsevier, vol. 17(4), pages 207-210.

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