The political determinants of liberalization: do ideological cleavages still matter?

Article

Abstract

We investigate the political determinants of liberalization in OECD network industries, performing a panel estimation over 30 years, through the largest and most updated sample available. Our results contrast with the traditional wisdom according to which right-wing governments do promote market-oriented policies more intensively than left-wing ones. Our findings reveal a neglected role of the so-called neoliberalism in promoting left-wing market-oriented policy. As a result, we claim that ideological cleavages ceased to act as determinants of the liberalization wave observed in network industries. This result is confirmed when controlling for the existing regulatory conditions that executives find when elected. Furthermore, we find that the country’s exposure to other countries’ policy initiatives acts as a positive stimulus for liberalization policies.

Keywords

Liberalization Network industries Partisanship 

JEL Classification

D72 L50 P16 

References

  1. Alesina A (1988) Macroeconomics and politics. In: Fisher S (ed) NBER macroeconomics annual. MIT Press, Cambridge, pp 17–52Google Scholar
  2. Alesina A, Giavazzi F (2007) Il Liberismo è di Sinistra. Il Saggiatore, MilanoGoogle Scholar
  3. Alesina A, Rosenthal H (1995) Partisan politics, divided government, and the economy. Cambridge University Press, CambridgeCrossRefGoogle Scholar
  4. Arellano M, Bond S (1991) Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. Rev Econ Stud 58(2):277–297CrossRefGoogle Scholar
  5. Arin K, Ulubasoglu M (2009) Leviathan resists: the endogenous relationship between privatization and firm performance. Public Choice 140(1):185–204CrossRefGoogle Scholar
  6. Armingeon K, Engler S, Potolidis P, Gerber M, Leimgruber P (2010) Comparative political data set 1960–2008. Institute of Political Science, University of BerneGoogle Scholar
  7. Armstrong M, Sappington D (2006) Regulation, competition and liberalization. J Econ Lit 32(2):353–380Google Scholar
  8. Besley T (2007) Electoral strategy and economic policy. Unpublished manuscriptGoogle Scholar
  9. Besley T, Case A (2003) Political institutions and policy choices: evidence from the United States? J Econ Lit 41(1):7–73CrossRefGoogle Scholar
  10. Besley T, Persson T, Sturn DM (2010) Political competition, policy and growth: theory and evidence from the United States. Rev Econ Stud (forthcoming)Google Scholar
  11. Biais B, Perotti E (2002) Machiavellian privatization. Am Econ Rev 92(1):240–258CrossRefGoogle Scholar
  12. Biørnskov C, Potrafke N (2009) Political ideology and economic freedom across Canadian provinces. Université Libre de BruxellesGoogle Scholar
  13. Blanchard O, Giavazzi F (2003) The macroeconomic effects of regulation and deregulation of goods and labor markets. Q J Econ 118(3):879–907CrossRefGoogle Scholar
  14. Boix C (1997) Political parties and the supply side of the economy: the provision of physical and human capital in advanced economies, 1960–90. Am J Polit Sci 41(3):814–845CrossRefGoogle Scholar
  15. Bortolotti B, Pinotti P (2008) Delayed privatization. Public Choice 136(3):331–351CrossRefGoogle Scholar
  16. Butler T, Savage M (1995) Social change and the middle class. UCL Press, LondonGoogle Scholar
  17. Castaldo A, Nicita A (2007) Essential facility access in Europe: building a test for antitrust policy. Rev Law Econ 3(1). doi:10.2202/1555-5879.1078
  18. Conway P, Nicoletti G (2006) Product market regulation in the non-manufacturing sectors of OECD countries: measurement and highlights. OECD Economics Department Working Papers No. 530Google Scholar
  19. Cukierman A, Tommasi M (1998) When does it take a Nixon to go to China? Am Econ Rev 88(1):180–197Google Scholar
  20. Dinc S, Gupta N (2007) The decision to privatize: the role of political competition and patronage. MIT, unpublished manuscriptGoogle Scholar
  21. Dobbin F, Simmons B, Garrett G (2007) The global diffusion of public policies: social construction, coercion, competition, or learning? Annu Rev Sociol 33:449–472CrossRefGoogle Scholar
  22. Duso T (2002) On politics of the regulatory reform: evidence from the OECD countries. WZB Discussion Paper No.FS-IV-02-07Google Scholar
  23. Duso T, Seldeslachts J (2009) The political economy of mobile telecommunications liberalization: evidence from OECD countries. J Comp Econ 38(2):199–216CrossRefGoogle Scholar
  24. Dutt P, Mitra D (2005) Political ideology and endogenous trade policy: an empirical investigation. Rev Econ Stat 87(1):59–72CrossRefGoogle Scholar
  25. Esping-Andersen G (ed) (1993) Changing classes: stratification and mobility in post-industrial societies. Sage, LondonGoogle Scholar
  26. Garrett G (1998) Global markets and national politics: collision course or virtuous cycle? Int Organ 52(4):787–824CrossRefGoogle Scholar
  27. Giuliano P, Scalise D (2009) The political economy of agricultural market reforms in developing countries. BE J Econ Anal 9(1). doi:10.2202/1935-1682.2023
  28. Guriev S, Megginson W (2007) Privatization: what have we learned? In: Bourguignon F, Pleskovic B (eds) Beyond transition, proceedings of the 18th ABCDE. World Bank, WashingtonGoogle Scholar
  29. Høj J, Galasso V, Nicoletti G, Dang T (2006) The political economy of structural reform: empirical evidence from OECD countries. OECD Economics Department Working Papers 501, OECD, Economics DepartmentGoogle Scholar
  30. Hout M, Brooks C, Manza J (1995) The democratic class struggle in the United States. Am Sociol Rev 60:805–828CrossRefGoogle Scholar
  31. Krause S, Méndez F (2005) Policy makers’ preferences, party ideology, and the political business Cycle. South Econ J 71(4):752–767CrossRefGoogle Scholar
  32. Kriesi H (1989) New social movements and the new class in the Netherlands. Am J Sociol 94(5):1078–1116CrossRefGoogle Scholar
  33. Levy B, Spiller P (1996) A framework for resolving the regulatory problem. In: Levy B, Spiller P (eds) Regulations, institutions and commitment: comparative studies in regulation. Cambridge University Press, Cambridge, pp 121–144Google Scholar
  34. Li W, Xu LC (2002) The political economy of privatization and competition: cross-country evidence from the telecommunications sector. J Comp Econ 30(3):439–462CrossRefGoogle Scholar
  35. Manza J, Brooks C (1999) Social cleavages and political change: voter alignments and US party coalitions. Oxford University Press, OxfordGoogle Scholar
  36. Meggison WL, Netter JM (2001) From state to market: a survey of empirical studies on privatization. J Econ Lit 39(2):321–389CrossRefGoogle Scholar
  37. Newbery DM (1997) Privatization and liberalization of network utilities. Eur Econ Rev 41(3–5):357–383CrossRefGoogle Scholar
  38. Newbery DM (2002) Problems of liberalising the electricity industry. Eur Econ Rev 46(4–5):919–927CrossRefGoogle Scholar
  39. OECD (2008) Indicators on employment protection. Available at http://www.oecd.org, Dec 2009
  40. OECD (2009) ETCR indicators. Available at http://www.oecd.org, Feb 2010
  41. Perotti E (1995) Credible privatization. Am Econ Rev 85(4):847–859Google Scholar
  42. Persson T (2002) Do political institutions shape economic policy? Econometrica 70(3):883–905CrossRefGoogle Scholar
  43. Persson T, Tabellini G (2000) Political economics: explaining economic policy. MIT Press, CambridgeGoogle Scholar
  44. Pitlik H (2007) A race to liberalization? Diffusion of economic policy reform among OECD economies. Public Choice 132:159–178CrossRefGoogle Scholar
  45. Potrafke N (2010) Does government ideology influence deregulation of product markets? Empirical evidence from OECD countries. Public Choice 143(1–2):135–155CrossRefGoogle Scholar
  46. Rodrik D (2003) Growth strategies. Technical Report Working Paper 10050, NBER, CambridgeGoogle Scholar
  47. Ross F (2000) Beyond left and right: the new partisan politics of welfare. Gov Int J Policy Adm 13(2):155–183Google Scholar
  48. Roy RK, Denzau AT, Willett TD (eds) (2006) Neoliberalism: national and regional experiments with global ideas. Routledge, New YorkGoogle Scholar
  49. Schneider V, Häge FM (2008) Europeanization and the retreat of the state. J Eur Public Policy 15(1):1–19CrossRefGoogle Scholar
  50. Schneider V, Fink S, Tenbucken M (2005) Buying out the state: a comparative perspective on the privatization of infrastructures. Comp Polit Stud 38(6):704–727CrossRefGoogle Scholar
  51. Simmons B, Elkins Z (2004) The globalization of liberalization: policy diffusion in the international political economy. Am Polit Sci Rev 98(1):171–189CrossRefGoogle Scholar
  52. Steger MB, Roy RK (2010) Neoliberalism: a very short introduction. Oxford University Press, New YorkGoogle Scholar
  53. Vickers J, Yarrow G (1991) Economic perspectives on privatization. J Econ Persp 5(2):111–132Google Scholar
  54. Wooldridge JM (2002) Econometric analysis of cross section and panel data. The MIT Press, CambridgeGoogle Scholar
  55. World Bank (2008) World development indicators. WashingtonGoogle Scholar
  56. World Bank (2009) Database of political institutions. Available at http://econ.worldbank.org, Feb 2010

Copyright information

© Springer-Verlag 2011

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of SienaSienaItaly
  2. 2.European University Institute, RSCAS-FSRFlorenceItaly

Personalised recommendations