Privatization policy - Learning from best practice and mimicking policy fashions? Empirical evidence from the telecommunication sector

This working paper examines the question whether the privatization of network based utilities results from policy diffusion across the OECD world, and if so which diffusion mechanisms have been relevant. Therefore, a completely new panel data set on privatization in the telecommunication sector is introduced which offers a unique opportunity for a broad-based international comparison. The sample includes 18 OECD countries between 1980 and 2007. In order to analyze the hypotheses empirically, spatial econometric techniques are used. The paper shows that governments do not implement privatization policies independently of each other. Second, the relevant spatial interdependencies are determined by geographical proximity and economic relationships. Countries clearly tend to privatize when trading partners or countries that are geographically close to them do so. Third, there is no evidence that governments adopt policies of countries with similar cultural backgrounds or simply where privatization leads to the intended outcomes at the company level. Fourth, the diffusion of privatization policy is highly influenced by the openness of the economy. Open economies are more receptive to diffusion mechanisms than economies that are only moderately involved in the international market.