What Drives the Diffusion of Privatization Policy? Evidence from the Telecommunications Sector

Abstract

This paper examines the extent to which diffusion mechanisms have been important for the privatization of telecommunications in the OECD world. It analyzes a panel dataset for 18 OECD countries between 1980 and 2007 using spatial econometric techniques. The sample includes 18 OECD countries between 1980 and 2007. The empirical findings strongly suggest that spatial interdependencies are significant for privatization policies. First, closely related countries from a geographical or economic perspective influence each other to a greater extent than non-related countries. Second, there is no evidence that governments adopt policies of countries with a similar cultural background or the policies of those countries where privatization has been shown to lead to the intended economic results at the company level. Third, the importance of diffusion is highly influenced by national characteristics such the openness of the economy.