A race to liberalization? Diffusion of economic policy reform among OECD-economies

Most OECD economies witnessed a liberalization of economic policies over the past thirty years. The present paper examines to what extent this development is caused by domestic political and economic factors on the one hand, and international policy diffusion via competitive interaction of governments on the other. Employing a comprehensive index of economic reform it can be shown that policy diffusion is a driving factor for economic liberalization. Especially in the fields of regulatory, monetary and trade policies we find significant interdependence of policy choices, as suggested by theories of policy diffusion.