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THE POLITICAL ECONOMIES OF ECONOMIC LIBERALIZATION: THE ROLE OF DIFFUSION, CRISIS, AND PARTIES IN THE SHIFT TO FREE MARKET ECONOMIES

THE POLITICAL ECONOMIES OF ECONOMIC LIBERALIZATION: THE ROLE OF DIFFUSION, CRISIS, AND PARTIES IN... What factors drove the global shift towards more marketoriented economic policies over the past three decades? The extant literature posits three main factors impacted policy-making in both the developed and the developing world: policy diffusion, economic constraints, and domestic political actors. Our paper utilizes factor analysis to construct a unidimensional measure of economic liberalization. We then examine whether learning through policy diffusion, economic crisis, and party preferences and fractionalization affect economic liberalization in both the developed and the developing world. In general, we find that policy diffusion had by far the greatest impact on economic policy-making. Economic crises can also help spur reform, but we find little evidence that political parties have systematic effects on economic liberalization. JEL: A10, B59, G01 Keywords: political, economic, liberalization, diffusion, crisis, market http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Economics, Management, and Financial Markets Addleton Academic Publishers

THE POLITICAL ECONOMIES OF ECONOMIC LIBERALIZATION: THE ROLE OF DIFFUSION, CRISIS, AND PARTIES IN THE SHIFT TO FREE MARKET ECONOMIES

GREGG B. JOHNSON
Economics, Management, and Financial Markets , Volume 5 (2): 105-124 – Jan 1, 2010
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Publisher
Addleton Academic Publishers
Copyright
© 2009 Addleton Academic Publishers
ISSN
1842-3191
eISSN
1938-212X
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Abstract

What factors drove the global shift towards more marketoriented economic policies over the past three decades? The extant literature posits three main factors impacted policy-making in both the developed and the developing world: policy diffusion, economic constraints, and domestic political actors. Our paper utilizes factor analysis to construct a unidimensional measure of economic liberalization. We then examine whether learning through policy diffusion, economic crisis, and party preferences and fractionalization affect economic liberalization in both the developed and the developing world. In general, we find that policy diffusion had by far the greatest impact on economic policy-making. Economic crises can also help spur reform, but we find little evidence that political parties have systematic effects on economic liberalization. JEL: A10, B59, G01 Keywords: political, economic, liberalization, diffusion, crisis, market

Journal

Economics, Management, and Financial Markets – Addleton Academic Publishers

Published: Jan 1, 2010

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