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

Why do countries differ so much in the extent to which they adopt neo-liberal, marketoriented reform in their infrastructure industries? Building on world-society and neo-institutional theories in sociology, we argue that international pressures of coercion, normative emulation, and competitive mimicry strongly influence the domestic adoption of market-oriented reform. We consider 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. We find generally robust support for our 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. Our results also suggest that the coercive effect of lending by the IMF and World Bank differs for each reform element. We discuss the possibility that, by leading countries to adopt some reform elements but not others, international coercion may not produce ideal outcomes. Word count : [13,559]