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

tries around the world have implemented a series of neoliberal policies aimed at redefining the role of the state in the economy. This trend has been particularly pronounced in infrastructure industries such as telecommunications, electricity, water, sanitation, and transportation, in which state-owned enterprises long enjoyed monopolies. “Market-oriented” reform in these industries has included the adoption of at least one of four elements: the privatization of state-owned firms, or simply “privatization”; the formal separation of the regulatory authority from the executive branch, or “regulatory separation”; the de facto elimination of executive political influence on the regulatory authority, or “depoliticization”; and the opening of the retail market to multiple service providers, or “liberalization.” Economists argue that the joint adoption of privatization, regulatory reform, and liberalization increases efficiency and improves service standards (Megginson and Netter 2001). Yet, despite this normative rationale, countries have varied substantially in their decision whether to initiate market-oriented reform in a given infrastructure industry, the timing of such reform, and the specific number and combination of reform elements. To understand the intricate and incomplete pattern of worldwide diffusion of neoliberal, market-oriented reform, we examine the factors The Worldwide Diffusion of Market-Oriented Infrastructure Reform, 1977–1999