Global networks and domestic policy convergence: A network explanation of policy changes

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Abstract

National economies are embedded in complex networks such as trade, capital flows, and intergovernmental organizations (igos). These globalization forces impose differential impacts on national economies depending on a country's network positions. This article addresses the policy convergence-divergence debate by focusing on how networks at the international level affect domestic fiscal, monetary, and regulatory policies. The author presents two hypotheses: first, similarity in network positions induces convergence in domestic economic policies as a result of peer competitive pressure. Second, proximity in network positions facilitates policy learning and emulation, which result in policy convergence. The empirical analysis applies a latent-space model for relational/dyadic data and indicates that position similarity in the network of exports induces convergence in fiscal and regulatory policies; position similarity in the network of transnational portfolio investments induces convergence in fiscal policies; and position proximity in igo networks is consistently associated with policy convergence in fiscal, monetary, and regulatory policies.

Original languageEnglish (US)
Pages (from-to)375-425
Number of pages51
JournalWorld Politics
Volume64
Issue number3
DOIs
StatePublished - Jul 2012

All Science Journal Classification (ASJC) codes

  • Sociology and Political Science
  • Political Science and International Relations

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