Skip to main content
    • Aa
    • Aa

The Globalization of Liberalization: Policy Diffusion in the International Political Economy


One of the most important developments over the past three decades has been the spread of liberal economic ideas and policies throughout the world. These policies have affected the lives of millions of people, yet our most sophisticated political economy models do not adequately capture influences on these policy choices. Evidence suggests that the adoption of liberal economic practices is highly clustered both temporally and spatially. We hypothesize that this clustering might be due to processes of policy diffusion. We think of diffusion as resulting from one of two broad sets of forces: one in which mounting adoptions of a policy alter the benefits of adopting for others and another in which adoptions provide policy relevant information about the benefits of adopting. We develop arguments within these broad classes of mechanisms, construct appropriate measures of the relevant concepts, and test their effects on liberalization and restriction of the current account, the capital account, and the exchange rate regime. Our findings suggest that domestic models of foreign economic policy making are insufficient. The evidence shows that policy transitions are influenced by international economic competition as well as the policies of a country's sociocultural peers. We interpret the latter influence as a form of channeled learning reflecting governments' search for appropriate models for economic policy.

Corresponding author
Professor, Government Department and Faculty Associate, Weatherhead Center for International Affairs, Harvard University, 1033 Massachusetts Avenue, Cambridge, MA 02138 (
Assistant Professor, Department of Political Science, University of Illinois, 702 South Wright Street, 361 Lincoln Hall, Urbana, IL 61801 (
Linked references
Hide All

This list contains references from the content that can be linked to their source. For a full set of references and notes please see the PDF or HTML where available.

AnselinLuc. 1988 Spatial Econometrics: Methods and Models. Dordrecht, The Netherlands: Kluwer Academic.

AxelrodRobert. 1997The Dissemination of Culture—A Model with Local Convergence and Global Polarization.” Journal of Conflict Resolution 41 (2): 20326.

BartoliniLeonardo, and DrazenAllan 1997bWhen Liberal Policies Reflect External Shocks, What Do We Learn?” Journal of International Economics 42 (3–4): 24973.

BennettColin. 1991How States Utilize Foreign Evidence.” Journal of Public Policy 11 (1): 3154.

BlalockHubert M. 1984Contextual Effects Models: Theoretical and Methodological Issues.” Annual Review of Sociology 10: 35372.

BradyHenry E., and SnidermanPaul M. 1985Attitude Attribution: A Group Basis for Political Reasoning.” American Political Science Review 79: 106178.

CargillThomas F., and ParkerElliott 2001Financial Liberalization in China: Limitations and Lessons of the Japanese Regime.” Journal of the Asia Pacific Economy 6 (1): 121.

CheckelJeff. 1993Ideas, Institutions, and the Gorbachev Foreign Policy Revolution.” World Politics 45: 271300.

ChunAllen. 2000Democracy as Hegemony, Globalization as Indigenization, or the ‘Culture’ in Taiwanese National Politics.” Journal of Asian and African Studies 35 (1): 727.

ColemanJames S. 1960The Adolescent Subculture and Academic Achievement.” American Journal of Sociology 65 (4): 33747.

CollierDavid, and MessickR. E. 1975Functional Requisites versus Diffusion: Testing Alternative Explanations of Social Security Adoption.” American Political Science Review 69: 12991315.

CooperRichard N. 1968 The Economics of Interdependence: Economic Policy in the Atlantic Community. New York: McGraw–Hill for the Council on Foreign Relations.

DavisGerald F., and Greve.Henrich R. 1997Corporate Elite Networks and Governance Changes in the 1980s.” American Journal of Sociology 103: 137.

EdwardsA. C., and EdwardsSebastian 1992Markets and Democracy—Lessons from Chile.” World Economy 15 (2): 20319.

ElkinsZachary. 2000Gradations of Democracy? Empirical Tests of Alternative Conceptualizations.” American Journal of Political Science 44 (2): 293300.

EncarnationDennis J., and Mason.Mark 1990Neither MITI nor America: The Political Economy of Capital Liberalization in Japan.” International Organization 44: 2554.

FingerJ. M., and KreininM. E. 1979A Measure of ‘Export Similarity’ and Its Possible Uses.” Economic Journal 89: 90512.

FriedenJeffrey A. 1991Invested Interests: The Politics of National Economic Policies in a World of Global Finance.” International Organization 45 (4): 42551.

GhoshA. R., and WolfH. C. 1996On the Mark(s): Optimum Currency Areas in Germany.” Economic Modelling 13 (4): 56173.

GleditschKristian S., and WardMichael D. 2000War and Peace in Space and Time: The Role of Democratization.” International Studies Quarterly 44 (1): 129.

GoffPatricia M. 2000Invisible Borders: Economic Liberalization and National Identity.” International Studies Quarterly 44 (4): 53362.

GoodmanJohn, and PaulyLouis 1993The Obsolescence of Capital Controls? Economic Management in an Age of Global Markets.” World Politics 46: 5082.

GoreCharles. 2000The Rise and Fall of the Washington Consensus as a Paradigm for Developing Countries.” World Development 28 (5): 789804.

GranatoJim, InglehartRonald, and LeblangDavid 1996The Effect of Cultural Values on Economic Development: Theory, Hypotheses, and Some Empirical Tests.” American Journal of Political Science 40 (3): 60731.

GranovetterMark. 1978Threshold Models of Collective Behavior.” American Journal of Sociology 83 (6): 142043.

GrayVirginia. 1973Innovation in the States: A Diffusion Study.” American Political Science Review 67: 117485.

GruberLloyd. 2000 Ruling the World: Power Politics and the Rise of Supranational Institutions. Princeton, NJ: Princeton University Press.

HaggardStephan, and MaxfieldSylvia 1996The Political Economy of Financial Internationalization in the Developing World.” International Organization 50 (1): 3568.

HelleinerEric. 2002Economic Nationalism as a Challenge to Economic Liberalism? Lessons from the 19th Century.” International Studies Quarterly 46 (3): 30729.

IidaKeisuke. 1999 International Monetary Cooperation among the United States, Japan, and Germany. Boston: Kluwer Academic.

KahnemanDaniel, SlovicPaul, and TverskyAmos 1982 Judgment Under Uncertainty: Heuristics and Biases. Cambridge: Cambridge University Press.

KingGary. 1989Event Count Models for International Relations: Generalizations and Applications.” International Studies Quarterly 33: 12347.

La PortaRafael, Andrei ShleiferFlorencio Lopez-De-Silanes, and RobertW. Vishny. 1997 Legal determinants of external finance. Journal of Finance 52 (3): 113150.

LeblangDavid A. 1997Domestic and Systemic Determinants of Capital Controls.” International Studies Quarterly 41: 43554.

MarsdenPeter, and FriedkinNoah 1993Network Studies of Social Influence.” Sociological Methods and Research 22: 12751.

MeyerJohn W., and RowanBrian 1977Institutionalized Organizations: Formal Structure as Myth and Ceremony.” American Journal of Sociology 83: 34063.

MizruchiMark S. 1989Similarity of Political Behavior among Large American Corporations.” American Journal of Sociology 95: 40125.

O'LaughlinJohnet al. 1998The Diffusion of Democracy, 1946–1994.” Annals of the Association of American Geographers 88 (1): 54574.

QuinnDennis P. 1997The Correlates of Change in International Financial Regulation.” American Political Science Review 91: 53151.

QuinnDennis P., and InclanCarla 1997The Origins of Financial Openness: A Study of Current and Capital Account Liberalization.” American Journal of Political Science 41: 771813.

ReinhartCarmen M., and RogoffKenneth S. 2002The Modern History of Exchange Rate Arrangements: A Reinterpretation.” NBER Working Paper No. 8963.

Risse-KappenThomas. 1994Ideas Do Not Float Freely: Transnational Coalitions, Domestic Structures, and the End of the Cold War.” International Organization 48: 185214.

RuggieJohn Gerhard. 1975International Responses to Technology: Concepts and Trends.” International Organization 29 (3): 55783.

SimmonsBeth A. 2000International Law and State Behavior: Commitment and Compliance in International Monetary Affairs.” American Political Science Review 94: 81935.

SotoMarcelo. 2000Capital Flows and Growth in Developing Countries: Recent Empirical Evidence.” OECD Development Center, Technical Paper No. 160.

StarrHarvey. 1991Democratic Dominoes: Diffusion Approaches to the Spread of Democracy in the International System.” Journal of Conflict Resolution 35 (2): 35681.

StrangD. 1991Adding Social Structure to Diffusion Models—An Event History Framework.” Sociological Methods and Research 19: 32453.

TolbertPamela, and ZuckerLynne 1983Institutional Sources of Change in the Formal Structure of Organizations: The Diffusion of Civil Service Reform, 1880–1935.” Administrative Science Quarterly 28 (1): 2239.

WahbaJackline, and MohieldinMahmoud 1998Liberalizing Trade in Financial Services: The Uruguay Round and the Arab Countries.” World Development 26 (7): 133148.

WalkerJack L. 1969The Diffusion of Innovation among American States.” American Political Science Review 63: 88099.

WassermanStanley, and FaustKatherine 1994 Social Network Analysis: Methods and Applications. Cambridge: Cambridge University Press.

WestneyD. Eleanor. 1987 Imitation and Innovation: The Transfer of Western Organizational Patterns to Meiji Japan.3 Cambridge, MA: Harvard University Press.

WilliamsonJohn. 1993Democracy and the Washington Consensus.” World Development 21 (8): 132936.

Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

American Political Science Review
  • ISSN: 0003-0554
  • EISSN: 1537-5943
  • URL: /core/journals/american-political-science-review
Please enter your name
Please enter a valid email address
Who would you like to send this to? *


Altmetric attention score

Full text views

Total number of HTML views: 15
Total number of PDF views: 301 *
Loading metrics...

Abstract views

Total abstract views: 743 *
Loading metrics...

* Views captured on Cambridge Core between September 2016 - 23rd June 2017. This data will be updated every 24 hours.