By Kurt Weyland
Why do very various nations frequently emulate an identical coverage version? years after Ronald Reagan's income-tax simplification of 1986, Brazil followed the same reform although it threatened to exacerbate source of revenue disparity and jeopardize nation sales. And Chile's pension privatization of the early Nineteen Eighties has unfold all through Latin the United States and past even if many negative nations that experience privatized their social safeguard structures, together with Bolivia and El Salvador, lack a few of the preconditions essential to achieve this successfully.
In an enormous step past traditional rational-choice money owed of coverage decision-making, this ebook demonstrates that bounded--not full--rationality drives the unfold of suggestions throughout nations. while looking options to household difficulties, decision-makers frequently examine international versions, occasionally promoted through improvement associations just like the international financial institution. yet, as Kurt Weyland argues, policymakers follow inferential shortcuts on the threat of distortions and biases. via an in-depth research of pension and future health reform in Bolivia, Brazil, Costa Rica, El Salvador, and Peru, Weyland demonstrates that decision-makers are captivated via neat, daring, cognitively on hand types. And instead of completely assessing the prices and merits of exterior types, they draw excessively enterprise conclusions from restricted info and overextrapolate from spurts of luck or failure. symptoms of preliminary good fortune can hence set off an upsurge of coverage diffusion.
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Extra resources for Bounded Rationality and Policy Diffusion: Social Sector Reform in Latin America
Thus, the initially gradual, but then rapid spread of reforms that is captured in the S-shaped curve of cumulative frequencies is observable in health care. Neighborhood effects have also been signiﬁcant. For instance, Chile’s partial health privatization had an impact primarily on other Latin American countries, such as Argentina, Colombia, and Peru. Similarly, Colombia’s health reform affected its neighbor Peru, which also learned from Bolivian innovations. Thus, geographical proximity stimulates emulation efforts in health care.
To guarantee a reasonable standard of living in old age and forestall a stark income drop upon retirement, these beneﬁts were calculated as a ﬁxed percentage of a worker’s last few salaries. This predictability of beneﬁts, combined with the PAYG ﬁnancing scheme, meant that any resource shortfalls had to be covered by increased contributions from current workers. To enforce this intergenerational contract, the state mandated afﬁliation and monopolistically administered the pension system, mostly via more or less autonomous social security institutes.
As chapter 3 documents, my ﬁeld research casts further doubt on the explanatory power of external pressures. Despite their seemingly impressive arsenal, the IFIs often do not exert effective inﬂuence. Problems of compliance are particularly pronounced when broad institutional issues are at stake; when reforms require parliamentary deliberation and approval; and when numerous sociopolitical forces can therefore gain access to decision making (Naı´m 1995; Nelson 1997; Pastor and Wise 1999). Under those circumstances, all of which apply to pension reform, IFI conditionality often carries little weight.
Bounded Rationality and Policy Diffusion: Social Sector Reform in Latin America by Kurt Weyland