Resistance To Multilateral Influence On Reform : The Political Backlash Against Private Infrastructure Investments (original) (raw)
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2003
Why do some countries adopt market-oriented reforms such as deregulation, privatization and liberalization of competition in their infrastructure industries while others do not? Why did the pace of adoption accelerate in the 1990s? Building on neo-institutional theory in sociology, we argue that the domestic adoption of market-oriented reforms is strongly influenced by international pressures of coercion and emulation. We find robust support for these arguments with an event-history analysis of the determinants of reform in the telecommunications and electricity sectors of as many as 205 countries and territories between 1977 and 1999. Our results also suggest that the coercive effect of multilateral lending from the IMF, the World Bank or Regional Development Banks is increasing over time, a finding that is consistent with anecdotal evidence that multilateral organizations have broadened the scope of the "conditionality" terms specifying market-oriented reforms imposed on borrowing countries. We discuss the possibility that, by pressuring countries into policy reform, cross-national coercion and emulation may not produce ideal outcomes.
2000
We investigate the replacement of the traditional state-centered institutional model in the electricity supply industry with a market-oriented neo-liberal model in 83 countries. We argue that the societal legitimacy of an institutional replacement is central to its survival during the period following the replacement's adoption. We find that, in adopting countries, governments were more likely to subsequently impede private investors in the industry when the neo-liberal model was deemed to lack legitimacy. We provide empirical evidence on the role of multiple mechanisms that influence the legitimacy of an institutional replacement, including several that link reforms in a country to the influence multilateral lenders such as the World Bank and IMF, as well as to the behavior of peer countries. Specifically, institutional reforms associated with financial support from multilaterals and reforms that diverge from those in peer countries are associated with a higher incidence of ex post government intervention that impedes the process of the state-centered models' replacement with the neo-liberal model.
2005
We investigate the replacement of the traditional state-centered institutional model in the electricity supply industry with a market-oriented neo-liberal model in 83 countries. We argue that the societal legitimacy of an institutional replacement is central to its survival during the period following the replacement's adoption. We find that, in adopting countries, governments were more likely to subsequently impede private investors in the industry when the neo-liberal model was deemed to lack legitimacy. We provide empirical evidence on the role of multiple mechanisms that influence the legitimacy of an institutional replacement, including several that link reforms in a country to the influence multilateral lenders such as the World Bank and IMF, as well as to the behavior of peer countries. Specifically, institutional reforms associated with financial support from multilaterals and reforms that diverge from those in peer countries are associated with a higher incidence of ex post government intervention that impedes the process of the state-centered models' replacement with the neo-liberal model.
2011
Inspired by Hirschman's classic Exit, Voice and Loyalty (1970), a venerable line of scholarship in political economy has argued that government economic policy can be influenced by investor threats of exit. Exit threats issued by firms operating in capitalintensive industries such as infrastructure and utilities are assumed to be less credible, which makes them vulnerable to governmental opportunism, particularly in weak institutional environments that provide few checks upon policymakers. The vulnerability of firms operating in weak institutional environments is heightened because of the intensity and frequency of economic crises in such settings. These crises typically prompt governments to revise original contractual conditions. This paper offers a new framework for understanding project and sector-level variation in post-crisis negotiation outcomes that turns standard exit cost arguments on their head. We argue that investors that are more patient as a result of high exit costs and that can draw on a broad range of informal bargaining strategies are more likely to conclude contract renegotiations yielding crucial changes that allow them to operate on more favorable terms in a given market. This paper assesses the explanatory power of this argument through an examination of an original panel dataset of exit decisions and contract renegotiation outcomes in the electricity distribution and water and sanitation sectors in Argentina following the 2001-2002 macroeconomic crisis. *We thank Ben Allen, Tomás Bril-Mascarenhas, Eugenia Giraudy, and Jorge Mangonnet for excellent research assistance for this project and Santiago Urbiztondo and Walter Cont for advice. We are also grateful for feedback received from Katerina Linos and participants in the Jan.
2009
Abstract We develop theory about the effect of domestic and global institutional forces across countries and over time, following a national government's adoption of a globally diffusing policy, on retrenchment—the degree to which a government reinstates the objectives of a policy's predecessor without repealing the new policy to balance conflicting institutional forces. World political culture legitimates and supports the new policy, while the policy's domestic opponents seek to mobilize opposition to it.
Political institutions and electric utility investment: A cross-nation analysis
1998
While cross-border investment flows are surging to levels not witnessed since before the Great Depression, the evaluation of political risk inherent in these projects has changed little since the 1960s. Since 1983, foreign direct investment inflows to developing countries have increased five-fold. From 1989 to 1992, the stock of American affiliates infrastructure assets grew by 153% leading to the share of total assets invested in infrastructure doubling from 1.6% to 3.0%.
Cambridge Working Papers in Economics, 2004
De e v ve e l lo op pi in ng g C Co ou un nt tr ri ie e s s : : A A S Su ur rv ve e y y o of f E Em mp pi ir ri ic c a al l E Ev vi id de e n nc ce e o on n D De e t te e r rm mi in na an nt ts s a an nd d P Pe e r rf fo or rm ma an nc ce e a We acknowledge the support of The World Bank Electricity Research Programme and the CMI Electricity Project (IR-45) for supporting this research. We thank. Ioannis Kessides, Paul Joskow, and Jon Stern for their valuable comments and Beth Morgan for editorial assistance. All remaining errors are the responsibility of the authors.