Worldwide Diffusion of Market-Oriented Infrastructure Reform PDF

Memos

Date: 5 November 2018
To:
From:
Subject: The Worldwide Diffusion of Market-Oriented Infrastructure Reform, 1977- 1999
The major purpose of this memo will be to understand the Worldwide Diffusion of Market-
Oriented Infrastructure Reform between the years 1977-1999. The market oriented reforms in
an economy is the one in which, most of the companies from important industries are not
owned by the state. Henisz, Zelner, and Guillen (2005) in their study focused on the
diffusion of a market -oriented trend in the economy specifically between 1977- 1999. The
authors in the study indicated that in the past two decades, the number of neoliberal policies
i.e. policies of economics that transfer the economic factors control from public sector to
private sector have increased considerably. The number of countries implementing the neo
liberal policies has increased significantly in the past decades [ CITATION Lee06 \l 1033 ].
The major industries that witnessed the implementation of market -oriented reforms include –
water, electricity, transportation and sanitation etc. These are the sectors in which the state
owned companies once enjoyed the monopoly[CITATION Rem98 \l 1033 ]. There are four
important elements of market- oriented reforms and if any one of them is adopted by the
industry, it is known as the market oriented - the privatization of the firms that are state
owned separation of regulatory authority and the executive branch, depoliticization and
liberalization[CITATION The \l 1033 ]. The market- oriented reforms are supported with the
claim that privation and liberalization reforms help in improving the service standards and
efficiency. The authors in their study have focused on the question that why there are
differences between the countries in context of the extent of adopting the neoliberal, market-
oriented reform for their infrastructure industries[CITATION Meh00 \l 1033 ]. In order to

seek an answer for this question, they conducted a multivariate probit analysis of adoption of
the reforms in the industries such as electricity and telecommunication in 71 countries from
1977 and 1999. The findings of the study indicated that the adoption or the diffusion of
market- oriented reforms in an economy are influenced by the factors such as, normative
emulation, international pressures of coercion and the competitive mimicry[CITATION
Fer91 \l 1033 ]. In addition to identification of the factors that affect the adoption of market -
oriented reforms, the authors have also focused on the impact of the pressures on the adoption
of market -oriented reforms. The authors in their study indicated that there is a difference
between leading countries and other countries in terms of adoption of market- oriented
reforms. The leading countries adopt market- oriented reforms in comparison of other
countries. The increased International coercive pressures have resulted in an increase in the
regulatory separation and privatization [CITATION Tre00 \l 1033 ]. The liberalization in
telecommunication and regulatory separation has increased. Lastly, the Competitive mimicry
has led to an increase in the regulatory depoliticization. One of major reasons behind the
adoption of market- oriented approach is the poor performance of important industries as per
the demands of the customers [CITATION Hen05 \l 1033 ].
One of my personal experiences associated with the market -oriented reforms is that the
overall services that have been privatized are improved in terms of quality and efficiency.
One of my friends from India helped in realizing the need and importance of market -oriented
reforms for the economy. My friend stated that the quality of service of telecommunication
industry has significantly improved after the privatization of the telecommunication industry.
The privatization has helped in improving the performance of the industry along with
fulfilling the needs of customers effectively. On the basis of my personal experience with the
performance of industry after the privatization or the adoption of market -oriented reforms, I