Brooks, Sarah M. (2005). "Interdependent and Domestic Foundations of Policy Change: The Diffusion of Pension Privatization Around the World". International Studies Quarterly, 49(2), 273-294. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=16719702&site=ehost-live
This article examines the diffusion of pension privatization programs globally. It initially explains why there was such a need for pension reform: increased life expectancy and decreased birth rates have produced a strain on the funding mechanisms that worked historically. Brooks claims that the long-term effects of pension privatization were not known and wonders why policy measures were taken to liberalize pensions in the face of this insecurity (274).
She deploys a statistical method of 59 countries to examine how policy diffusion took place.
Brooks explores some explanations of policy diffusion: globalization requires that countries become more attractive to capital. Also, some argue that IOs have a unique, independent influence on this situation. This can take place either through hard power or soft power. These “downward” pressures on countries may not go very far in explaining why they make neoliberal reforms. The answer may lie in horizontal pressures.
An empirical model is then deployed to examine where the greater driver lies. Her dependent variable is the, “…adoption of some degree of private structural reform to a mandatory national old age pension system,” and is measured as a binary (284).
Her results, “…reveals a significant interdependent logic shaping the decision to privatize national pension systems, while also confirming the importance of domestic political and economic correlates of this deep institutional change” (285). “Peer dynamics thus powerfully shape the risk of privatization among nations in EECA and Latin America, increasing dramatically the risk of adoption as more peers turn to market-orientated pension reforms” (286). Demographics and domestic political institutions are significant while IFI influence is not. “Overall, the empirical model provides evidence of a forceful interdependent logic of domestic policy-making decisions” (289).
