The International Diffusion of Public-Sector Downsizing: Network Emulation and Theory-Driven Learning

We examine change in the size of the public sector between 1980 and 1997 across twenty-six Organization for Economic Cooperation and Development (OECD) member nations, with particular attention to diffusion dynamics. General method of moments (GMM) analyses demonstrate imitation of shifts in government employment within the United States and mutual influence among nations that are geographically proximate and that trade extensively. Disaggregated analyses show that downsizing is contagious while upsizing is not: proximate downsizers but not upsizers are imitated, and states act on evidence that downsizing is economically beneficial while ignoring evidence that it is harmful. We argue that these asymmetries in emulation and learning are a product of the dominance of neoliberal and managerialist discourses that legitimate and theorize shrinking the public sector.An earlier version of this article was given at the International Diffusion of Political and Economic Liberalization Conference, Harvard University, October 2003. We thank Frank Dobbin, Geoffrey Garrett, and Beth Simmons for organizing the conference and this symposium; Sarah Babb, Jeeyang Baum, Torben Iversen, Michael Mann, Steve Morgan, Fred Pampel, Deok-Seob Shim, conference participants, and IO's editor and reviewers for their helpful comments; and Thomas Cusack for his generosity in sharing public employment data.