While there is growing recognition of the role of emulation in the policy process in general and in policy transfer in particular there are only limited efforts to model it in a systematic way. This paper takes this challenge through a temporal analysis of the role of contagion in the diffusion of liberalization across countries and sectors. It offers a formal model where one's preferences, strategies and payoffs are dependent on others and where political and policy outcomes are the result of imitation and contagious behaviour. The model is examined against the advance of reforms in seventeen Latin America and their stagnation in seventeen Mediterranean countries. The empirical research cover eight indicators for electricity reforms (commercialisation, legislation, regulatory agency, independence of regulatory agency, IPPs, vertical and horizontal divestiture, privatisation of generation and privatisation of distribution) and eight indicators for telecommunications (commercialisation, legislation, regulatory agency, independence of regulatory agency, competition in international telecoms, privatisation of cellular market, privatisation of incumbent, competition in local loop). On the basis of these indicators a general grade for the effectiveness of the reforms is developed and is given to each country in each of the two sectors. The comparative method is than applied in order to examine within-region and cross-region variations and commonalities in order to shed some light on the obstacles for the advance and effectiveness of reforms.
Manchester, UK, CRC Working Paper, No. 69, 36 pp.