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

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.