New Institutionalism and Economic Globalization: The Case of

Capital Account Liberalization in Latin America1

Jeffrey M. Chwieroth

London School of Economics

Alexander Hicks

Tarbutton Hall

Emory University

Department of Sociology

Atlanta, GA 30322

Email:ahicks@emory.edu

TEL: +1 404 727 0832

FAX: +1 404 727 7532

Diogo Pinheiro

Emory University

*

1 We acknowledge the incisive substantive comments of John Boli, Samuel Cohn, Timothy

Dowd, David Frank, Marcus Kurtz, Cheol-Sung Lee, John Stephens and three anonymous AJS

reviewers. We also acknowledge the generous provisions of data by Sarah Brooks and Marcus

Kurtz; Menzie Chinn and Hiro Ito; Witold Henisz, Mauro Guillén, Bennett A. Zelner, and,

Srividya Jandhyala; Evelyne Huber and John Stephens; Amanda Murdie; Charles Ragin; York

Bradshore; Evan Schofer; and James Raymond Vreeland. The coauthors of this paper are truly

co-equal contributors to it.

New Institutionalism and Economic Globalization: The Case of

Capital Account Liberalization in Latin America

ABSTRACT

How can the new institutionalist theory of institutional change and analysis of capital account

liberalization in Latin America inform each other? To address these questions, we advance the

idea of ―climatic mimesis.‖ This refers to cultural climate for policy making that results from

the INGO ties of nations. We also examine neoliberal pressures on capital account policy

making, in particular ―coercive‖ pressure from International Monetary Fund (IMF) agreements

and ―normative‖ ones from neoliberal economists, both pressures for liberalization. Our

analysis of data on 16 Latin American countries, 1983-1998 reveals that INGO-ties largely

drove policies that discouraged financial globalization, while IMF programs, and neoliberal

policy teams --and to an extent the neoliberal reform precedents of trade competitors-- advanced

capital account liberalization. Furthermore INGO ties moderated other effects, inhibiting

liberalizing effects of neoliberal policy teams and neoliberal reform precedents of trade

competitors. The broad pattern of findings reconfirms the importance of transnational influences

on capital account liberalization, especially when viewed though New Institutionalist lenses for

Latin American nations. The INGO finding underscores the emergence during the last two

decades of the twentieth century of a transnational civil society largely critical of neoliberal

financial opening, at least in Latin America.

The New Institutionalism and Economic Globalization: The Case of Capital Account Liberalization in Latin America

The financial crisis that originated in advanced market economies in summer 2007 and that

deepened and gained global scope following the collapse of Lehman Brothers in September 2008

has prompted a number of governments to impose capital controls. Situations like this make

apparent the risks and the political importance of liberalizing controls on the cross-border flow of

capital – a process known as capital account liberalization. Some critics of financial globalization

claim that financial openness leaves countries vulnerable to abrupt shifts in market sentiment that

produce large capital outflows and sharp declines in exchange rates, equity markets and output.

Although such risks have provoked some resistance from some governments, especially in Latin

America (Walton and Ragin 1990; Chiriboga 2002: Keane 2004), financial globalization has

proceeded. Indeed, its advance was especially seminal and far reaching in Latin America. It is

on Latin America that we focus here, not only as an influential region with regard to capital

account policy, but as a broadly relevant, coherent and researchable research domain as well.

We achieve our focus with a stress on transnational actors through New Institutionalist lenses

and place a stress on International Nongovernmental Organizations (INGOs).

Explanatory Focus and Research Domain

To explain the rise of capital account liberalization, economists have typically

pointed to macroeconomic determinants, while political scientists have primarily turned their

attention to domestic institutions and interest groups (Brooks and Kurtz, 2007). Yet these studies,

while offering important insights, fail to take into account the possibility that similar policy

choices across disparate countries could be driven as much by exogenous forces in a national

policy maker‘s international environment as nation-specific domestic forces. Only recently have

researchers started to view the trend toward openness as a result of policy diffusion (Simmons,

Dobbin, and Garrett 2008). Such policy has increasingly been viewed as driven by mechanisms

and processes that New Institutionalists DiMaggio and Powell (1983, 1991) have termed

―isomorphic,‖ more specifically ―coercive,‖ ―normative‖ and ―mimetic.‖ Despite leads in

Chiriboga (2002) and Powell (2007), systematic cross-national multivariate analysis of the role

of INGOs in the in the diffusion of economic openness has never been pursued. We offer such an

analysis of the INGO impact on economic opening, Latin American capital account liberalization

in particular, as our foremost contribution to the literature on economic globalization.

INGOs, professional and domestic NGO (Loya and Boli 1999), social movement (Tarrow

2005) and state policy (Frank, Hironaka and Schofer 2000). Their impacts, which may come

from either advocacy or service INGOs (Barnett, 2009), have been theoretically addressed in a

range of literatures. These include ―transnational advocacy network‖ (Keck and Sikkink 1998),

―transnational civil society‖ (Keane 2003), ―global social movement‖ (Tarrow, 2005), ―World

Polity‖ (Boli and Thomas 1999) and global New Institutionalism literatures (Henisz, Zelner, and

Guillén 2005). Although a substantial literature exists on the effects of INGOs on state policies,

this literature principally addresses the roles that INGOs play in empowering reform movements

via the provision of international linkages and allies (Keck and Sikkink; Keane 2003; Smith and

Wiest 2003; Tarrow 2005) and in the transmission of norms that shape such inward looking state

policies as repression, environmental stewardship, human rights, and utility privatization (Boli

and Thomas 1999). What literature exists on the INGO in national economic policies

engineering economic opening has emerged only recently. As already suggested, this literature

is methodologically qualitative and case-centered. Although often comparative, it frequently is

often unsystematic in its coverage of cases (see Chiriboga 2002; Bello, Bullard, and Malhotra

2000; Porter 2005:145-146).

Besides illuminating the INGOs impact on economic opening, we provide the most

comprehensive and integrated analysis to date of New Institutionalist mechanisms of policy

diffusion and adoption shaping international aspects of globalization. In the last decade New

Institutionalist scholars have turned from a focus on the diffusion processes operating principally

within national economies via mimetic mechanisms stressed by Mizruchi and Fein (1999) to

assessments of the transnational operation of a full range of ―isomorphic‖ mechanisms (Henisz et

al., 2005; Polillo and Guillén 2005; Kogut and MacPherson 2008). True, these scholars have

tended to concentrate their attention on domestic aspects of globalization like the adoption of

independent central banks (Polillo and Guillén 2005) and privatization of previously state or

mixed-economy institutions and practices (Henisz et al. 2005; Kogut and MacPherson 2008).

No joint empirical investigation into the three ―isomorphic‖ processes has addressed core

international aspects of globalization such as capital account liberalization.2

Here, we bring to the explanation of capital account liberalization, what is perhaps the

fullest operational articulation and empirical investigation to date of the three ―isomorphic‖

mechanisms to the explanation of capital account liberalization. We accomplish this by

differentiating among diffusion mechanisms that are tied to trading and treaty linkages with other

nation and mechanisms that are tied to transnational organizations and professions. We focus

2 A partial exception to this trend is provided by Halliday and Carruthers (2009: xxiii, 31)

who draw on the three ―isomorphisms‖ in their Asia-focused comparative case study of

bankruptcy.

our theoretical specification and empirical investigation on Latin America between the early

1980s advent of debt crisis and the onset of the global financial crisis of the late 1990s.

We focus on Latin America for a few reasons. Theoretically, it provides an investigative

domain that is relatively homogenous and distinctive and relevant to capital account

liberalization and its prospective New Institutional causes. Empirically, it provides a domain

relatively accessible to study. We focus specifically on Latin America, not Latin America and

the Caribbean in order to skirt a deep divide between Iberian and non-Iberian institutional

legacies (Reuschemeyer, Stephens and Stephens, 1992, Chs. 5 and 6, esp. pp, 236-244, 262-264)

as well as to the avoid extensive missing data a Caribbean focus would bring.

We value a homogenous and distinctive domain because we share the belief of middle-

range and area scholars that that institutional legacies and structures largely ground the macro

regularities essential to explanatory internal validity at the macroscopic level (Hicks, 1999;

Mann and Riley, 2006); and we value Latin America as such a domain (Mann and Riley 2006;

Centeño and Cohen, 2010). For one thing, twentieth century Latin America was marked by a

nearly pervasive importance of primary product export sectors in the shaping of domestic society

and its external linkages and, in turn, for such political matters as extensively clientelistic and

radical popular parties (Reuschemeyer, Stephens and Stephens, 1992, PP.63-166). In addition,

during the half century or so preceding our 1980-2000 period of investigation, Import

Substitution Industrialization (ISI) – singularly pervasive and important in Latin America-- was

important for Latin American industrial-sector linkage to the world economy, the state and

capital account policy (Frieden, 2006). Finally, Baumol‘s (2007, pp. 71-79) ―oligarchic

capitalism‖ – economic control by the few–was pervasive within Latin America (Centeño and

Cohen 2010, p. 14; Mann and Riley 2006). Indeed, the combination of oligarchy and ISI (ca.

1982) provides a nice example of Latin American distinctiveness as well as homogeneity: a very

disproportionate, share of nations that are both ―oligarchic‖ and that practiced ―ISI‖ circa 1982

are Latin American.3

As regards our final focus on neoliberal policy, the historical importance of primary

product export sectors grounds a tradition of Latin American dependence on foreign

organizations (i.e., states and corporations) that goes back before the late twentieth century era

we study. ISI exacerbated the debt crisis of the 1980s in two ways: it both generated high debt

and became a prime target for neoliberal structural adjustment policies of the IMF (Frieden,

2006). Further, it shaped responses to the debt crisis by creating a swath of societal interests

quite uniform to the region: inefficient protectionist import competing industrial sectors;

protectionist domestic industrialists and bankers; and protectionist welfare-privileged formal

sector workers (Baer 1972; Brooks and Kurtz 2007). As regards our focus on foreign sources of

policy diffusion, Latin America provide a useful ―best case‖ analysis: factors inoperative here are

unlikely to be inoperative elsewhere (Eckstein 1975). Specifically, the INGO presence was

especially high in Latin America, as well as marked there by such globally prominent

transnational associations such as Via Campesina and Asociación Latinoamericana de

3 Binary data are available on ISI from the appendix to Sachs and Warner (1995), and

93% of our Latin American countries with ISI data (all but the recently transformed Chile)

practiced ISI in 1982. Binary data on 1982 income inequality available from Solt (2009-2010)

allow us to identify nations characterized by ISI and inequality/oligarchy. (Baumol, admitting

that his judgmental coding of ―oligarchic‖ capitalist nations is coarse suggests income inequality

as a measure of ―oligarchy,‖ and we comply by operationalizing ―oligarchy‖ as ―nations with

―net income‖ Gini index values of at least 0.40, or not. If we stick to data available in Sachs and

Warner (1995) and Soltz (2009), the probability of one of the 12 Latin American nations (for

which we have data) being both ―oligarchic‖ and an ISI practitioner is also 92 %, that of one of

the 57 non-Latin American nations for which this data is only 21%,. If we add in the four of our

Latin American countries that are not covered by Stolt‘s state-of-the art data set but that are

indicated as highly ineqalitarian by multiple alternative sources, percentage rises to 94%.

Between 48% to 54 % of cases that fit the combination are Latin American. Latin America

appears very homogeneous and quite distinctive in these simple but relevant terms.

Organizaciones de Promoción (McMichael 2005 pp. 600-604; Chiriboga 2002). The phenomena

of influential foreign-trained economist studied here is prominently Latin American (Fourcade-

Gourinchas and Babb 2002; Centeño and Silva, 1998; Kogut and McPherson 2008). The

particular intensity of IMF involvement in Latin America has alreadywidel been noted (e.g.,

Vreeland, 2004, p.23).4

We stress Latin America as empirically ―accessible‖ for a few reasons. Data availability

is good. As a focus for area studies and locus of relatively homogeneous institutions, Latin

America facilitates multiple-case analysis with a degree of contextual sensitivity. Indeed, as a

relatively cohesive research domain, Latin America is rich in work that attend to region

specificities in ways that can help alert the investigator against the omission of highly relevant

variables (e.g., domestic banking strength in Brooks and Kurtz 2007; the ideological balance of

parties in Huber, et al. 2008) in a way that world-wide research domain cannot.

Finally, Latin American capital account deregulation has been both seminal (e.g.,

Fourcade-Gourinchas and Babb 2002) and wide ranging (see Figure 1). As such, it promises to

cast some light on later, more wide-ranging capital account deregulation.

[INSERT FIGURE 1 ABOUT HERE]

To preview the results of this investigation, we find, most importantly, that INGOs matter

for capital account liberalization and matter in a manner that counters the neoliberal influences of

the IMF and economic professionals upon national policy making. Further, we uncover evidence

4 Regarding a high INGO presence in Latin America, the mean number of INGOs per 10,000

inhabitants per Region for 1982-1999 (or 1982-91 or 1991-99) is higher in Latin America than for any of

the regions of Figure 1 (data as documented in our ―Data‖ section). Regarding regional heterogeneity, we

further address some of that variability when we look at effects of partisan difference in government,

differential domestic banking strength, and ―interaction‖ effects (e.g., contingent effects of variable

neoliberal economic insertion in policy making (Centeño and Silva, 1998)). As for the strikingly high

levels of Middle Eastern/Northern African capital account openness in Figure 1, British colonial legacies,

heavy FDI in petroleum, and a glut of dollars from a oil sales (entailing a degree of currency

convertibility into dollars incompatible with current account control) help explain these.

for ―coercive‖ effects of IMF programs and ―normative‖ effects of neoliberal economic policy

making teams. Indeed, we find that New Institutionalist pressures on capital account

liberalization sometimes operate interdependently, reinforcing or moderating each other‘s

effects. Finally, we uncover evidence that additional factors such domestic banking interests and

economic vulnerability helped shape capital account policy.

Theoretical Framing: The New Institutionalism

The process by which organizations such as states or firms are environmentally pressured

to adopt similar practices is the central concern of new institutionalism (DiMaggio and Powell

1983; 1991). The process has roots in time honored idea that societal institution arise from

diffusion (Kroeber, 1940). It has gained sociological currency with rise of the World Polity

literature (Kroeber, 1940; Meyer et al. 1997). With the new millennium, New Institutionalist

attention to policy adoption has branched out to address international and transnational

organizations and processes (e.g., Mizruchi and Fein, 1999; Henisz et al. 2005).

DiMaggio and Powell stressed the ecological concept of isomorphism whereby

organizations become more similarly structured over time by incorporating institutional rules

into their own structures.5 Institutional ―isomorphism‖ occurs not simply due to rational

5 In DiMaggio and Powell‘s original formulation, any ―isomorphic‖ mechanisms pressures outcomes

toward a single convergence. We come to see their original use of ―isomorphism‖ as unnecessarily

restrictive; and detail why further below when we think the it most opportune to do so. Until then, we

signal our uneasiness with the term by sometimes writing the word in quotation marks or using

―diffusion‖ or ―adaption‖ in its stead.

responses to competitive pressure, but rather due to less ―optimizing‖ processes. But what of its

distinct mimetic, normative and coercive mechanisms.

DiMaggio and Powell (1991, p. 67) associate ―mimetic isomorphism‖ with ―responses to

uncertainty‖ in which ―organizations model themselves upon other organizations‖ (DiMaggio

and Powell 1991 pp.67, 69). In particular, organizations imitate ―similar organizations in their

field that they perceive to be more legitimate or successful‖ for example, thriving competitors —

or cultural authorities, or such combinations of the two as Japanese automobile producers

(DiMaggio and Powell, 1991, p. 69-70; Martin and Florida 1993).

―Normative isomorphism‖ focuses on how organizational personnel, professionals in

particular, bring along particular innovations, or inclinations toward them, when they enter

organizations (DiMaggio and Powell 1991, p. 67). In international economic policy-making

literature, such agents of innovation are well represented by the economic professionals, their

cognitive frames and their transnational training histories and networking (Babb 2001;

Chwieroth 2007a; Dezalay and Garth 2002; Fourcade-Gourinchas and Babb 2002).

―Coercive isomorphism‖ is a regulative ingredient of institutions by which organizations

adopt structures or procedures because of their dependence on external actors (DiMaggio and

Powell 1991: pp. 65-66) Much research on ―coercive isomorphism‖ examines international

governmental organizations (IGOs) like the IMF, which control financial resources and bestow

―seals of approval‖ that countries might need for good economic performance or to enhance their

legitimacy (Henisz et al. 2005; Kogut and MacPherson 2008; Polillo and Guillén 2005).

We focus here on ―isomorphic‖ causal mechanisms in the context of the

international economic policy making of nations, in particular on mimetic mechanisms carried

by INGOs. However, we also address mimetic mechanisms with origins in the international

environments of nations, as well as coercive and professional-normative mechanisms. In

discussing the three mechanisms, we differentiate each in terms of a distinction that seems

instructive for the international economic policy making arena. This is a distinction between state

and civil society – a distinction between organizations with authority over nation-state territories

and other organizations, non–profits and voluntary associations in particular, that are oriented

toward ‖mediating relations between citizens and the state‖ (Janoski, 1998, p. 12). This is a key

distinction in literatures on the political sociology of transnational as well as national politics

(Keane, 2003; Janoski 1998). In particular, we focus on two types of determinants of the

international economic policy making of nations: the one state-centered grounded in nation

states the international system; the other transnational in orientation grounded in the

transnational institutions and agency of INGOs, IGOs and mobile professionals. In Table 1, we

cross tabulate the state-centric / transnational distinction with the three ―New Institutionalist‖

mechanisms.

[TABLE 1 ABOUT HERE]

Mimetic mechanisms: Climatic mimesis. At the intersection of mimetic mechanisms and

transnational civil society (TCS) that is connoted by Table 2, cell 1, we have at least three

distinctly theorized sources of policy-relevant action. That is, we have INGOs as described as

policy influences in literatures on (1) the World Polity (Boli and Thomas, 1999a), on (2)

transnational advocacy networks (TANs) (Keck and Sikkink, 1999; Price 2003) and on (3)

transnational civil society or TCS (Keane 2003; Porter 2005). We especially focus on INGOs

because they are a critical and yet unstudied influence on national economic policy, and capital

account liberalization in particular. The influence of INGOs has more to do with the

atmospherics surrounding policy makers than on pointed appeals to them. As we shall further

discuss below, we dub the mechanism of INGO influence ―climatic‖ mimesis.

World Polity theory stresses a world cultural order, a ―world polity‖ of ―cultural models,

standards, discourses and principles‖ that constitutes state political actors (Boli and Thomas

1999a, p. 7-8; 1999b, 17). It views this culture as both constituted by and constituting a series of

transnationally operative organizations (Boli and Thomas 1999b, pp. 17-18), INGOs in particular

(Boli and Thomas 1999a, pp. 3-7). Although marked by a strain toward cultural consensus in the

world polity (Boli and Thomas 1999a, p.p. 3-5), this theory warns against seeing ―the process

whereby world governance is constructed‖ as ―smooth, harmonious or functionally beneficial in

any unambiguous sense‖ (Boli 1999, p, 298). Rather, conflicting voices‖ and ―disagreements

conflicts and struggles are endemic‖ to the process (Boli 1999, p. 292. 298).

Transnational advocacy network (TAN) theorists (Keck and Sikkink 1999; Price 2003)

conceptualize INGOs somewhat differently than World Polity theorists. For example, rather than

stress an ―embeddedness of INGOs, IGOs and state in the global cultural and moral order‖ (Boli

1999, p. 294), they underscore an embeddedness of INGOs in national society and in specific

national issue sectors (wherein they often operate in conjunction with domestic NGOs). Perhaps

what TAN scholars most stress are a number of important paths whereby INGOs affect policy.

These most importantly include the ―boomerang‖ effect whereby INGOs link up with other

transnational actors via advocacy networks to press for policy change at home.

Scholars of ―transnational civil society‖ (TCS) stress INGO formation of the general civil-

societal climate, public opinion, and the like (Keane 2003 pp. xi, 6). In Keane‘s (2003, pp. 10-

92) account of TCS, such atmospheric forces are marked by dissensus and by certain foci of

conflict and controversy. Perhaps the most prominent account of these is what Keane terms

―turbocapitalism‖ (Keane 2003, pp. 57-65). This is a conception of free market capitalism as the

dynamic but somewhat disruptive system that one might expect of a skeptical viewer of

neoliberal globalization (Keane 2003, pp. 57-65). Keane‘s politics of ―turbocapitalism‖ involve

a left-of-center reformist thrust such as that of the Association for the Taxation of Financial

Transactions for the Aid of Citizens, a global platform for pluralist support for taxation the Tobin

tax (Keane, 2003, pp. 57-65; Porter, 2005, pp. 138 -152). Indeed, since the late 1980s TCS actors

have specifically criticized limited competition in some financial sectors and the crisis-prone

nature of financial globalization, which they also see as endangering the environment,

engendering inequality and poverty, excluding ―bottom-up‖ participation and consultation, and

constraining social policy (Chiriboga 2002; Keane 2003; Powell 2007). Thus, for TCS scholars,

INGO opposition to neoliberal policy meshes with a general view of Transnational Civil Society

as a mobilization for the interests of the everyday people against those of elites.

Importantly, when the policy influence of INGOs is considered, World Polity scholars

also stress the effects of INGO construction of the cultural climate, or atmosphere, for policy

making rather more than they focus on direct INGO persuasion of policy makers (Boli and

Thomas, 1999b, pp. 294, 297-298). They stress, in effect, why we dub the specific type of

mimetic mechanism enacted by INGOs, ―climatic mimesis‖ (see Table 1, Cell 4).

With regard to Latin America, Chiriboga (2002) documents a rise in the 1990s of Latin

America-tied INGOs like ALOP (Asociación Latinoamericana de Organizaciones de

Promoción) and APRODEV (Association of World Council of Churches Related Development

Organizations) as well as globally active Latin American NGOs networks like RMALC (Red

Mexicana de Acción Frente al Libre Comercio) and REBRIP (Rede Brasileira pelo Integração

de Povos) critical of the Washington Consensus. These manifestations of TCS often combine a

critical focus on financial globalization with support for policies, such as the Tobin tax, that seek

to rein it in (Bello, Bullard, and Malhotra 2000; Porter 2005:145-146).

Opposition to globalization from INGOs often comes from a broad coalition of actors

representing an array of interests. The aforementioned REBRIP, for example, is a network of

INGOs which includes OXFAM, ATTAC Brasil, ActionAid Brasil and Doctors Without

Borders, among others, with the explicit goal of ―seeking alternatives of hemispheric integration

that are opposed to the logics of commercial and financial liberalization that dominate current

economic treaties‖ (translated from REBRIP, 2009). The organizations participating in it address

a range of issues, including the environment, race and gender, unions and labor conditions; but

they are all engaged in the struggle to define an alternative form of global and regional

integration. Indeed, a general tilt of INGOs toward resistance to capital account liberalization is

evident from the prominence of INGOs critical of neoliberalism, such as environmental ones, as

a share of the global INGO population (see Keck and Sikkink, 1999, pp. 10-12 and Chs. 3-4;

Powell 2007). We hypothesize (1) that countries more closely associated with such

organizations have a greater propensity to restrict international capital flows.

This hypothesis diverges from the original position of DiMaggio and Powell (1991) in

which effects of ―isomorphic‖ mechanisms taken one type at a time or collectively across all

types converge on a single outcome. DiMaggio and Powell (1991) do not address the possibility

that pressures from one mechanism might pressure institutions in a different direction than

pressures from other mechanisms. They anticipate nothing like an influence of INGO culture

that diverges from the influences of the IMF and neoliberal economists. However, once one

considers divergent effect across mechanisms, or instances of mechanisms, one must revise or

replace ―isomorphic‖. One might regard mechanisms like vectors that may pressure outcomes in

distinct directions; in so doing one might partition ―isomorphic‖ mechanisms by the outcomes

they promote, and one might solely stipulate a summary equilibrium outcome as ―isomorphic.‖

More incisively, one can replace ―isomorphic‖ with ―diffusion‖ or ‖adoption,‖ reserving the

original ‖isomorphic‖ for cases free of divergent pressures, as we do here.6

Still, as Boli and Thomas (1999, pp. 297-299) among others suggest, INGO policy and

ideological orientation will tend to be heterogeneous (Beckfield 2008; Boli and Thomas, 1999b).

Alongside the likes of anti-neoliberal INGOs like ALOP are ones whose advocacy aligns more

closely with neoliberalism. Freedom House, for instance, campaigns not only for political

freedom but also for economic freedom defined in terms of property rights and unfettered free

markets (Freedom House 1996). A prevailing INGO orientation toward dissent from neoliberal

dicta on capital account liberalization cannot be unequivocally assumed for Latin America. The

possibility of a net, anti-liberalizing INGO tilt for Latin American remains.

Mimetic mechanisms: Competitive mimesis. For the intersection of mimetic mechanisms and

national or intergovernmental organizations, we are assisted by the specification of competitive

imitation in Henisz et al.‘s (2005), Polillo and Guillén (2005) and Kogut and MacPherson

(2008). We refer to mimetic mimesis as an imitation of successful competitor (DiMaggio and

Powell, 1991, pp. 67-71), what we shall term ―competitive mimesis‖ (see Table 1, cell 2).

Competitive mimesis occurs when actors cope with uncertainty by imitating their competitors in

an effort to prevent erosion of their market positions and statuses. Imitation becomes a viable

6 To better assess the impact of heterogeneous INGO populations, we look at the effects of INGO ties for two types

of advocacy INGOs, environmental INGOs and human rights INGOs in Section III of our Electronic Appendix.

strategy for promoting economic and institutional survival because it limits search costs and

legitimizes action (Henisz et al. 2005:877-888). In line with Henisz et al. (2005, pp. 887-888), it

is ―especially important to take competitive pressures into account when attempting to measure

the coercive influence of multilateral lenders. Borrower nations are in distributive conflict with

each other‖ for ―resources such as export markets and import sources.‖

Henisz et al. (2005) conceptualize competitive mimicry in terms of ―role equivalence.‖

They ―focus on the nature of the relationship between nodes‖ in network, defining such

relationships in terms of ―trade in a particular type of product.‖ They ―define a country‘s role set

to include the total amount of each different product that it exports and each different product

that it imports. Role equivalence is the overlap between two countries‘ role sets, applying a

concept of ‗role equivalence,‘‖ whereby two countries are role equivalent ―that face present and

potential competition with each other in the same category of products.‖ (Henisz et al. 2005, pp.

878). Such countries‘ trade competitors are judged likely to adopt similar patterns of behavior

for two mutually reinforcing reasons. First, role equivalent countries are more likely to monitor

and learn from each other by engaging in ―comparison, communication, and mimicry‖ (Henisz et

al 2005:878) Second, because the adoption of market-friendly reforms sends a positive signal to

the official and private international financial community, trade competition (i.e., ―role

equivalence‖) will induce policy convergence as states mimic one another to maintain their

economic status and social prestige within a given network of trade. We therefore hypothesize

that (2) capital account liberalization by a given country will be positively associated with the

extent to which its trade competitors have liberalized their capital accounts.

Normative mechanisms : Professional-normative diffusion. As regards non-mimetic

mechanisms of policy diffusion with transnational origins, professional-normative mechanisms

are central (see Table 1, cell 3). We refer in particular to the role of economists – the key group

of professionals with broadly recognized expertise in matters of economic policy. As Fourcade–

Gourinchas and Babb (2002) document, economic theory varies across time and space as, among

other things, an expression of economists‘ histories, values and clout. Moreover, much of the

economics profession became increasingly neoliberal and well situated in policy making

positions in the 1980s and 1990s – in particular in Latin America (Babb 2001). Indeed, the

geographic spread of neoliberal economists has roughly coincided with the rise of neoliberal

economic globalization (Peck 2004). Chwieroth (2007a) has found for a range of countries that

increasing incumbency of neoliberal economists in positions of policymaking clout has

contributed to the rise of capital account liberalization across emerging markets. This finding

has a close fit with the idea of normative diffusion that should give it enough theoretical

grounding for it to apply to a relatively homogenous sample of Latin American countries as

much as to a multi-regional sample of developing nations. Indeed, the region showed signs of a

pronounced ascent of neoliberal economists, who tended to argue for the liberalization of capital

(Babb 2001; Fourcade-Gourinchas and Babb 2002; Dezalay and Garth 2002).

Our definition of the term neoliberalism in the context of views about capital account

liberalization is stipulative. It differs from the term‘s popular usage. Following Chwieroth

(2007a; 2007b; 2008; 2010), we consider neoliberal views about capital account liberalization as

ones arrayed along a continuum of beliefs; and define ―neoliberal‖ ones as those that range from

the neoclassical synthesis through monetarism to new classical economics. Although

economists from each of these schools of thought offer contrasting views about the desirability

and efficacy of government interventionism and the efficiency with which market actors use

information, they generally share the view that the capital account liberalization is desirable, at

least in the long run. Until the wave of emerging market crises in the late 1990s, debates

persisted within the economics profession about how to proceed toward liberalization (i.e.,

sequencing) and whether to make allowances for temporary capital controls, but few questioned

the long-run desirability of capital account openness. This neoliberal consensus stood in sharp

contrast to Keynesian and post-Keynesian schools of thought that view unfettered capital

mobility as undesirable and permanent controls as essential. We hypothesize that (3) the greater

the number of neoliberal economists in positions of economic policymaking prominence, the

greater propensity for a country to liberalize international capital flows.

Normative Mechanisms: Normative Emulation. For the intersection of normative-professional

mechanisms and transnational civil society, we have Henisz, et al.‘s (2005) conception of

―normative emulation‖ and Polillo and Guillen‘s (2005) kindred ―normative imitation‖ (Table 1,

Cell 4). These build, write Henisz et al. (2005), on the Durkheimian insight that social density is

a determinant of social cohesion and behavioral similarity, The insight is consistent with the

idea that policy-relevant ‖connections‖ will involve professionals, both in broad sense of

experienced, career-committed state professionals and in a more precise sense of state policy

makers as degree- or license-vetted professional, such as economists and lawyers‖ (see Henisz et

al, 2005; and see Fourcade-Gourinchas and Babb, 2002, on the Chilean and Mexican states).

According to Henisz et al. (2005), ―actors embedded in a social structure may adopt similar

behaviors as they seek to conform to shared norms‖ of valued peer groups. Indeed, ―World-

society scholars have long applied the concept of normative policy diffusion or adoption to the

country level of analysis, finding that policymakers emulate each other as a way to conform to

shared norms and appear legitimate‖ and case study and historical research ―document that

government officials and bureaucrats constantly assess policy and organizational developments

in other countries.‖ Henisz et al. (2005, p. 877) propose that ―countries exhibiting more cohesive

trade relationships are more likely to adopt similar patterns of behavior.‖ Although Henisz et al.

(2005) stress neoliberal domestic policy, we think that their view of the origins of such policy is

readily extended to more outward looking policies like capital account liberalization. As such,

we hypothesize that (4) the greater a country A’s degree of trade with other countries that have

adopted a policy like financial liberalization, the greater country’s adoption of the policy.

Coercive Mechanisms: IGO Dependence. As regards coercive mechanisms rooted in

transnational society, coercive ones that involve ―IGO dependence‖ are central (see Table 1, cell

5). In the mid-1980s, the IMF emerged as a leading advocate of capital account liberalization

vis-à-vis its member states. IMF loan programs may have constituted key sources of less

developed nations‘ material dependency on an external, international organizations.

While we stress the importance of material dependence on IMF programs, we also

recognize that this influence bleeds into the mimetic and normative cells of Table 1 to the extent

that IMF‘s advocacy of capital account liberalization, particularly during the 1980s and 1990s,

shaped cultural expectations and orientations toward policy and policy making (see Chwieroth

2008; 2010). Indeed, DiMaggio and Powell (1991 p. 67), write that their types of mechanisms

are ‗analytical‖ and ―not always empirically distinct.‖ Notably, the IMF was legally prohibited

from requiring capital account liberalization as a formal condition or loans: it could not insist

that governments liberalize in the same manner it could for other policies. Processes of

constitution and persuasion thus became an important mechanism through which the Fund

advocated liberalization. Yet in line with our placement of IMF programs in cell 5, this

constitution and persuasion typically took place in the shadow of material dependence on the

IMF for financial support. This shadow tends to enhance the impact of IMF policy advice, even

in areas where there is no formal conditionality (e.g., see, International Evaluation Office 2007).

There are a couple of reasons for this tendency.

First, some recalcitrant governments may initiate IMF-supported policy changes in order

to ingratiate IMF officials and gain their material and symbolic support (Woods 2006; Chwieroth

2010:200). In addition to unlocking IMF financial resources, the IMF ―seal of approval‖ may

engender a catalytic effect among private investors and creditors that induces capital inflows into

the economy. Conversely, rejection by the IMF could engender a paralytic effect with investors

and creditors fleeing an economy. The IMF seal of approval also may prove critical for

unlocking financial resources or triggering debt rescheduling from official creditors.

Further, the shadow of material dependence can enhance the impact of IMF policy advice in

more subtle ways. While the above discussion presents the conventional view that IMF

programs can be a vehicle to coerce recalcitrant governments to liberalize, an alternative

approach sees IMF programs as a vehicle that domestic reformers employ against their

opponents (Vreeland 2003). Reformers who wish to liberalize, but fear the domestic political

costs of being labeled ―sellouts‖ who weaklings who lack the political power to overcome

opposition, often will participate in IMF programs so that the costs of non-compliance (i.e.

failure to unlock financing from the official and private financial community) with their

preferred policies increases. Thus, the IMF often offered financial support to domestic

initiatives to liberalize capital so as to tip the domestic power balance toward reformers. IMF

programs also served as a channel to provide rhetorical arguments, technical support and

legitimacy to domestic reformers, which, when enhanced by material dependence, provided

All this suggests that DiMaggio and Powell‘s ―invitation(s) to join in collusion‖ can arise

is the context of IMF programs (Babb and Buira 2005; Woods 2006). Thus, IMF pressures on

policy makers may obtain compliance by mobilizing opportunists and convincing listeners as

well as by the brunt of incentive.7 Overall, we hypothesize (5) that countries that participate in

IMF programs will have a greater propensity to liberalize international capital flows.

Coercive isomorphism: Bilateral dependence. With regard to coercive ―isomorphic‖

mechanisms and state-rooted sources of policy templates, what we call ―bilateral dependence‖ is

central (see Table 1, cell 6). The United States stands out as a leading advocate of capital

account liberalization, both globally and within Latin America. Following the collapse of the

Bretton Woods exchange rate system, U.S. policy toward capital controls abroad changed from

accommodation to hostility (Helleiner 1994; Chwieroth 2005; Abdelal 2007; Chorev 2007). In

the 1990s hostility heightened as U.S. policy, particularly in context of negotiations over trade

and investment, became increasingly focused on improving market access and establishing

favorable foreign treatment for American financial firms. As the literature on interdependence

has long recognized, interdependent relationships between states are rarely symmetrical

(Hirschman 1945; Keohane and Nye 2000;). A key variable influencing the degree of leverage

one state has over another is the extent to which one state is unable to avoid the influence of the

policies and demands of another within the extant network of transactions, indeed is unable to

overcome this influence except at an extremely high cost to itself (Gilpin 2001).

For the case of Latin American nations, dependence on the United States for trade and

investment is generally high. In particular, national signatories to trade as well as investment

agreements with the United States are usually obliged to maintain capital account openness with

7 Just as the coercive my bleed into the mimetic and normative, these last two types of mechanisms may

overlap as well. There is blurry boundary between the transportation of action shaping norms into policy

making arenas via ―normative‘ mechanisms and the emanation of scripts for imitative,―mimetic‖ action

respect to certain classes of U.S investment (Anderson, 2009).8 Provisions in bilateral

investment treaties (BITs) with the United States typically require each party to uphold long lists

of investor rights, including the right to transfer capital ―freely and without delay.‖ Trade

agreements with the United States have included similar investment requirements, most

prominently NAFTA. Like a BIT, Chapter 11 of the NAFTA accord provides foreign investors

with a direct means for redress against states for breaches of such treaties. As such, we

hypothesize that (6) countries with trade or investment agreements with the United States are

more likely to liberalize their capital accounts.

Theoretical elaboration: interactions. Mizruchi and Fein (1999) stress the need to attend

concurrently to all three of DiMaggio and Powell‘s mechanism, particularly in light of

similarities and overlaps among the three. Echoing DiMaggio and Powell (1991, p. 67),

Mizruchi and Fein (1999), note ―the difficulty of distinguishing mimetic and normative

processes‖ (p. 667). For example, mimetic and normative processes focus, respectively, on the

adoption of kindred ―schema‖ and ―norms.‖ Mizruchi and Fein‘s (1999) discussion suggests

other affinities among the mechanisms. For example, ―coercive isomorphism is driven‖ by

pressure on a focal organization to conform its polices to those of ―the organizations on which a

focal organization is dependent‖; and focal organization‖ are under pressure to conform to

expectations‖ to come institutionally ―in line with the demands of powerful alters‖ (657). Thus,

we have an affinity of mimesis to coercion via the importance of dependence based pressures for

imitation, as well as the previously mentioned similarity between the mimetic and normative via

8 Four of the five Latin American nations with ―investment‖ treaties by 2001 had over 40 percent of their

trade with the United States. Despite its economic scale and entwinement with the even larger Brazil,

Argentina did over 15% of it trade with the U.S .

their imitative adoptions of schemas and norms, respectively. These entanglements suggest not

only that use of the three mechanisms not be artificially segregated in the sense of omission of

one or the other from a given study; they also suggest that the operation of one mechanism might

be conditional upon the presence of another. In short, Mizruchi and Fein (1999) suggest that we

consider statistical interactions. To investigate possible interdependence among new

institutional variables, we hypothesize statistical interactions among these variables. We

hypothesize that (7a) pairs of new institutional variables reinforce each other’s effects, or

interact positively, at least where climatic mimesis (operationally INGO ties) is not one of the

mechanisms. When it is one of them, we hypothesyze that (7b) the higher the level of climatic

isomorphism (i.e., INGOs), the lower the effects of another New Institutional variable.

Data and Methods

Data. The sample comprises annual data from 16 Latin American countries from 1982-1998. 9

Our dependent variable is openness to international capital movements. Government

restrictions on international capital movements can apply to the both the capital account and the

financial current account. The former covers payments and receipts for assets (direct investment

and portfolio flows), while the latter pertains to payments and receipts for tradable goods

(imports and exports) and payments and receipts for invisibles, such as services and

subscriptions, profits, remittances, gifts, taxes, and licenses. Governments may also employ

multiple exchange rates, with a separate discriminatory arrangement for capital and financial

9 These are Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador, El Salvador,

Guatemala, Honduras, Mexico, Panama, Paraguay, Peru, Uruguay, Venezuela, all of the most commonly

regarded Latin American countries except the data-poor Belize and Nicaragua. Details on the data used in

sample selection equations are presented in Section I of the Electronic Appendix.

account flows as well as introduce compulsory surrender requirements on foreign exchanges, to

restrict capital flows.

To measure our dependent variable, we use two variants of measures from Chinn and Ito

(2008). One, KAOPEN, is an index of indicators based on information documented in the IMF‘s

Annual Report on Exchange Arrangements and Exchange Restrictions (AREAER).

Specifically, KAOPEN, is an index composed of the scores of the first principal component of

three indicators that summarize regulation –restrictions on the current account, multiple

exchange rates, and the compulsory surrender of export receipts – plus a five-year moving

average of a summary indicator for capital account regulation that is included to tap

implementation lags in the essentially de jure underlying indicator and thus augment the de facto

quality of KAOPEN. KAOPEN ranges from -1.8 at TO 2.7 with lower values indicating

restriction and higher values openness. We employ this widely used measure because it

provides a continuous measure of openness and covers a large number of countries for an

extensive time period. Table 2 summarizes the 1980s and 1990s variation in KAOPEN.

Although uneven and variable, the Latin American trend accelerated early and took on a

dramatically liberalizing trajectory in the 1990s, pausing only briefly following contagion from

the Mexican peso crisis in 1994-95. Among the regional liberalizing leaders in the 1990s are

Argentina, Mexico, and Jamaica; among the laggards are Brazil, Chile and Colombia, each of

which relied extensively on taxes on capital inflows during the 1990s, with Chile‘s encaje

system attracting the greatest attention (see Gallego et al. 2002 for a review of the literature).

[TABLE 2 ABOUT HERE]

However, use of KAOPEN may be problematic because of the assumption of temporally

distributed rather than instantaneous implementations of de jure policy change; and because the

moving average component is perhaps more appropriate for use as an explanatory variable than

as a dependent variable. Thus, following Karcher and Steinberg (2010), we also use a second,

modified version of KAOPEN, which we call CKAOPEN, that contains the same elements but

that uses an annual measure of capital account regulation rather than a MA component.10

Our central hypotheses focus on the effects of various diffusion processes and we seek to

capture these processes in the following manner. To assess the role of ―IGO dependence‖ on the

IMF, we use a dichotomous indicator of program participation (where 1 = program participation,

0 – otherwise) taken from Vreeland (2003).

To measure ―professional-normative diffusion,‖ we use a measure from Chwieroth

(2007) of the professional training characteristics of the finance minister and the head of the

central bank to code for the presence of neoliberal economists (where 1 = present, 0 =

otherwise). Following the lead of Chwieroth (2007a), where the validity of the measure is

assessed, we define such economists as those individuals who received professional training in

economics in select academic departments where neoliberal norms were likely transmitted to

10

Although the original KAOPEN and CKAOPEN correlate 0.9643, Karcher and Steinberg

(2010) argue that the high correlation between Chinn-Ito with and without a moving language component

underestimates the potential for divergent relations to prospective causes of openness. For additional

checks on robustness check, we employ additional measures in ancillary analyses available as electronic

E2 at <ww...>. One is a measure developed by Abiad et al. (2008. pp. 4-6) that uses scores from the first

principal component of seven items, which tap interest rate controls, entry barriers, state ownership in the

banking sector, capital account restrictions with regard to exchange rates, prudential regulations and

supervision of the banking sector, and securities market policy. A second is a new variant of the Chinn-

Ito index that uses a led rather than a lagged MA (CKAOPEN2). This means that, insofar as the scale one

moving averaged item (out of four) is concerned, effect of an explanatory variable X on the index impact

the item t, t+1,..., t+5 of rather than at t, t-1,..., t-5. Finally we also consider annual data on capital

accounts regulation from Quinn and Inclán (1997), although this data has typically been used in the past

for five-year

graduate students.11

Scores ―neoliberal policy team‖ express percentages of finance minister

and heads of central banks with ―neoliberal-training.‖ .

We measure ―competitive mimicry‖ for a country in terms of the policy precedents of

the country‘s trade competitors following procedures and data of Henisz et al (2005) and Polillo

and Guillén (2005). More specifically, we measure pressures for competitive mimicry for each

nation by constructing an annual measure that weights capital account liberalization scores of all

of a focal nation‘s trading partners by an index of all the trading partners‘ ―trading role

equivalence‖ (each lagged one period), nation by nation and year by year, In a few cases where

data had one year gaps, we used the average of the immediately preceding and following years,

which we feel is justified given the remarkable stability of trade networks over time. Here

―trading role equivalence‖ taps the extent to which two nations compete in similar international

export and import markets (excluding petroleum markets). Following the lead of Henisz et al

(2005) and Polillo and Guillén (2005), we also construct a measure of ―normative emulation.‖ In

particular, we reconstruct a variant of their measure of normative pressures for policy emulation

that focuses on capital account policy using their trade data matrices and the Chinn and Ito

data.12

Note that while the measure of competitive mimesis is one of policy precedents in

11

Chwieroth (2007a) relies on qualitative research that documents cultures that prevailed in various

economic departments as well as publication frequency in the American Economic Review to identify

departments that were likely transmitters of neoliberal norms. Chwieroth (2010) provides a survey of

economists that offers further empirical support for the validity of this measure.

12 The number of nations is very similar for ―normative emulation.‖ With matrices and procedures used

for the analyses of Henisz et al. (2005) and Polillo and Guillén, 2005), we construct annual weights of the

share of a focal country‘s total trade for a year that is comprised by trade with a given trade partner. We

use these weights to generate a weighted sum of capital liberalization scores of a focal nation‘s trade

partners for all such partners. Thus, we have an index of extant capital account liberalization of nation‘s

trade partners that is weighted by trade ties to partners. (See Polillo and Guillen 2005, pp. 784-85 for

operational formulas.)

trading partner‘s weighted for their trade competitiveness (i.e., concentration in the same

markets) with regard to the focal nation, this measure of ―emulation‖ is one of policy precedents

of trading partners weighted for their shares of a focal Latin American nation‘s trade.

In the empirical studies of INGO influence on state policy, the effect of large sets of

INGOs, whether comprehensive or sector-specific, is typically operationalized as a nation‘s

numbers of ties to the INGO population. To operationalize and assess the role of INGO

influence, we follow the operational precedents and data developed by David Frank and co-

authors and use the contemporaneous number of INGOs that have any membership among the

citizens of a particular country (e.g., Frank and McEneaney, 1999; Frank, Hironaka and Schofer

2000; Schofer and Hironaka 2005). Specifically we use the natural logarithm of the number of

INGO ties, since the raw number is skewed. Our use of such counts for total INGO ties extends

the ample past use of aggregate measures of INGO ties in the analysis of institutional and policy

diffusion (e.g., Frank and McEneaney, 1999; Frank, Hironaka and Schofer 2000; Schofer and

Hironaka 2005) to the analysis capital account liberalization.

We measure bilateral dependence with a dummy variable coded one for nations in years

when they are under bilateral investment treaties (BITs) with the U.S. or other treaties with the

U.S. that act as, or encompass, equivalent provisions (e.g., NAFTA with its Chapter Eleven).

The data are taken from Anderson (2009).

A standard set of control variables from the literature on capital market liberalization is

also included in the analysis. On the political side, we look at several measures. We take into

account the role of partisanship and legislative fragmentation. Left governments, due to pressures

from the core constituents (labor) and basic ideological conviction, should be less likely to

liberalize. Ordinal measures of leftist partisanship of the chief of government and of the

legislature (where higher values indicate greater leftism) are taken from Huber, Mustilla, and

Stephens (2008). Following Brooks and Kurtz (2007), we look at legislative fragmentation,

which may also affect the potential for liberalization. Because the ex ante consequences of

capital account liberalization are not well understood by the mass public, political concerns

surrounding policy decisions are likely to center on avoiding the allocation of blame ex post

rather than overcoming ex ante veto dynamics. Capital account liberalization therefore may be

more likely in countries where legislative fragmentation enables political responsibility to be

spread more widely should the economy experience a downturn. We measure legislative

fragmentation using the Herfindahl index provided by the Database of Political Institutions [DPI]

(Beck, Clarke, Groff, Keefer, and Walsh 2001). This index, which runs from zero to one, takes

on lower values for maximum fragmentation and takes on higher values for complete unity.

We also take into account the role that the key political interest of domestic banking

could shape policy outcomes. As Brooks and Kurtz (2007) argue and find for Latin America, a

country may be dominated by trade and banking interests resistant to liberalization, for example

by financial intermediaries with vested interests in the status quo ante (see also Baer 1972). This

view is compelling given Brooks and Kurtz‘s (2007) Latin American focus. However, a country

also may be dominated by trade and banking interests supporting liberalization, for example by

financial intermediaries seeking stronger international ties (Haggard and Maxfield 1996).

Following Brooks and Kurtz (2007), we proxy the role of these interests using domestic money

bank assets as a proportion of gross domestic product (GDP); and we measure openness as total

trade as a proportion of GDP World Development Indicators (2007). Following Brooks and

Kurtz (2007), we hypothesize that domestic money bank assets will induce less liberalization.

However, in light of Haggard and Maxfield (1996) we proceed alert to the possibility that greater

domestic money bank assets might induce greater, not less, capital account openness.

On the economic side, we take into account a number of conditions. Because of the risk

of financial crisis is greatest when the macroeconomic environment is weak, politicians will tend

to liberalize capital in good times; that is, when the economy is strong and vulnerability to

speculative attack and financial crisis is low. We assess vulnerability to speculative attack and

capital flight through public and publicly-guaranteed debt as a proportion of GDP. We take the

natural log of the variable capturing a country‘s overall debt because this debt is positively

skewed. We also control for the level of development (GDP per capita in thousands of constant

$US of 2000). All of these data are from the WDI. We also include annual global foreign

borrowing measured in $US billion to proxy the role of systemic forces, such as advances in

communication and information technologies, that may have rendered capital controls

increasingly ineffective and potentially obliged governments to liberalize. These data are taken

from the OECD‘s International Capital Market Statistics. Finally, we also include a linear time

trend to account for the possibility of spurious correlation among the data series that are trended.

All economic variables are lagged one year to curtail any problems of endogeneity.

Methods. This paper relies on time-series cross-sectional data. Accordingly, we undertake

several .steps to deal with the issues of heteroskedasticity, contemporaneous correlation,

temporal dependence, and unmeasured heterogeneity. In assessing the influence of neoliberal

policy teams and IMF programs, we also take into account the endogeneity of cabinet

appointments and IMF program participation. To safeguard against sample selection bias, the

analysis include sample selection procedures for two key variables prone to sample selection

bias, IMF program (see Vreeland 2003) and neoliberal teams (Chwieroth 2007a). Procedures are

detailed in Section I of our Electronic Appendix

Turning squarely to the outcome equation, we include fixed effects to address unmeasured

heterogeneity.13

Because public policies tend to be path dependent, we also include a lagged

dependent variable (LDV) to account for temporal dependence. Unfortunately, a complication

arises in that inclusion of a LDV and fixed effects in the same model can produce biased and

inconsistent estimates. Nonetheless, as the time-series for a particular data set lengthens, the bias

declines. Moreover, recent evidence from Monte Carlo simulations suggests that the bias, where

it exists, is largely confined to the estimate of the coefficient of the LDV, which is of little

substantive interest (Wilson and Butler 2007:107-108). We therefore proceed with a

specification that uses OLS regression, an LDV, and panel-corrected standard errors (PCSEs) to

account for heteroskedasticity.14

[INSERT TABLES 3 AND 4 ABOUT HERE]

Results and Discussion

Synopsis. Table 3 presents descriptive statistics for variables in our regression analyses of

capital accounts policy. Table 4 presents the results for these regression.15

In analyses, run with

13

A F-test reveals the presence of unit heterogeneity, indicating a need for fixed or random effects

estimation; and a Hausman test reveal s that the unit effects and the regressors are correlated, a violation a

key assumption for the random effects model.

14 In ancillary analyses we ran to help assess the robustness of foregrounded analyes (see Section III of

Electronic Appendix), we include equations that address error autocorrelation through the use of an

AR(1) adjustments instead of LDVs. (see Plumper, Troeger and Manow, 2004).

15 Table EA1.1 of the Electronic Appendix presents specifications and full results for the neoliberal team

and IMF program participation selection equations used to adjust for possible sample selection bias for

these variables. Summarizing the results for the selection equations we find that both political interests and

credibility concerns drive cabinet appointments. We also find that external imbalances and the level of development

shape IMF program participation.As for Table 4 results for selection instruments, although these are

infrequently significant at conventional test levels, more often than not their estimates frequently are

larger than the absolute values of their standard errors, That is, their estimates have absolute t values

>1.0, a criterion for regressor retention and avoidance of specification bias (Rao and Miller 1971) .

Specifically, t values > |1.0| obtain most of the time in Tables 4 and 5 for the ―FM‖ and ―CB‖

instruments. They emerge for the IMF once in the ancillary regressions of Table EAIII.1.

fixed effects for countries, slopes estimates are based on overtime covariation (purged of cross-

sectional variation) and are safeguarded against bias from effects of unmeasured, temporally

invariant traits of countries To preview our findings for our principal outcome analyses, we

find strong support for the ―transnational‖ subset of New Institutionalist variables, that is, for

hypotheses 1, 3 and 5. Lagged values of capital account openness are highly significant across

all the columns, indicating policy inertia (see Table 4). In addition, increases in domestic

money bank assets – indicative of a strong domestic banking sector-- have a significant negative

effect on capital account liberalization for both outcome measures, as is in line with the argument

that vested financial interests resist financial reform (Brooks and Kurtz 2007). Further, debt

levels, significant for one capital accounts policy measure and nearly so the second, appear to

induce policymakers to place greater restrictions on the flow of capital. However, findings are

dominated by the ―transnational‖ subset of New Institutionalist variables telegraphed by in the

left-hand column (cells 1, 3 and 5) of Table 1. These are the variables involving hypotheses 1, 3

and 5 and INGOs, the IMF and neoliberal economists. INGOs bring our biggest news.

New Institutional Variables. “Transnational‖ New Institutional variables always attain some

level of statistical significance in these analyses of 16 latn Amercan contres over the 19843-1998

period. New Institutional variables involving international political economic relations between

nations, in particular competitive mimesis, normative emulation and investment treaty variables

have no significant estimates in the baseline models of Table 4, cols 1-2. Although we find no

statistically significant additive linear effects of competitive mimesis and normative emulation in

the basic equations of Table 4, interaction analyses reveal significant competitive mimesis

effects when IMF programs are in place.16

Results for neoliberal policy teams provide a measure of support for relevance of the

professional-normative mechanism, although slopes estimates for policy teams are never

statistically significant at better than one-tailed 0.05 test level (see Table 4, cols 1-2). However,

slope estimates for IMF programs are always significant at that the 0.05 ( two-tailed) test level

or better. IMF program participation entails about 0.28 points more of capital account openness

for KAOPEN and 0.319 more for CKAOPEN). These are a significant impact for measures with

standard deviations of 1.38 (KAOPEN) and 0.94 (CKAOPEN).

Turning to climatic mimesis, we find similarly robust evidence for our novel

consideration of the consequences of INGO ties for capital account policy. Specifically, we find

that total ties to INGOs a have negative effects on openness (all significant at the two tailed 0.05

test level). Because we take the natural log of INGO ties, the coefficient should be interpreted

as lin-log model. Thus, a one percent increase in INGO ties exerts an inhibiting effect on

liberalization, effects of 2.59 (column 3) on the original Chinn-Ito index (KAOPEN) and of

1.896 on the Chinn-Ito index revised by the deletion of the original‘s moving average component

as suggested by Karcher and Steinberg (2010). A mere one percent shift up the INGO tie count,

these are even more striking effects on outcome measures with standard deviations around 1.0

than the IMF effects were. This finding stands out as an important contribution to the literature,

16

Although we find but one linear effects of investment treaties that is statistically significant additive

before until we turn to the ancillary regressions of the Electronic Appendix, ―treaty‖ does have at least

marginally significant estimates for all KAOPEN equations of Tabled 5. Estimations of equations with

sample selection instruments for investment treaties variable yield no significant effects of investment-

treaty-instruments and no notable difference in investment treaty slope estimates when such instrument are

included in an equation.

for to the best of our knowledge, this study is the first to theorize and statistically investigate a

possible effect of INGO ties on capital account policy, indeed any international economic policy,

whether in Latin America or elsewhere. 17

Supplementary regressions not reported here illustrate

a specific instance of conflicting effects of two varieties of INGO ties that when summed

together yield an overall negative effect.18

So far New Institutional variables, or at least their transnational subset involving

international organizations and internationally mobile professional, appear to significantly

impact on capital account liberalization. However, do they interact with each other reinforcing

or moderating each other‘s effects on capital account policy as we hypothesize? To evoke our

hypotheses, do most New Institutionalist variables reinforce each other‘s effects? Do INGO

perhaps reduce liberalizing effects of the effects of the other variables?

To address these questions we test for interactions between all pairs of the New

Institutional variables highlighted in Table 1. In Table 4, we present selected results of all

interactions involving pairs of pair of New Institutional variables (plus estimates for key

17

Ancillary analyses of the basic equations of Table 4 that were executed to better assess robustness are

present in Section II of the Electronic Appendix. These yield very similar results to those of Table 4, cols

1 and 2, especially where transnational New Institutional variables are concerned This is true when we

re-estimation the KAOPEN and CKAOPEN equations of Table 4 using AR(1) adjustments for

autocorrelation instead of an LDV adjustments. It is also true for CKAOPEN2 and (with one-tailed tests)

for Abiad and Quinn measures.

18 To illustrate the realism of a conception of INGO-tie effects in which total INGOs have anti-

liberalization tilt while subsets of INGOs have contrary impacts, we perform analyses with separate

measures for Human Rights and Environmental INGOs substituted for our original single measure. We

argue that whereas Environmental INGOs should inhibit capital account deregulation because of tensions

between free market ideals and environomental strains toward regulation, Human Rights INGOs advocate

ideals that are neoliberal as well a Progressive Liberal and might have ambiguous or positive effects on

capital accounts policy. Analyses yield negative effects of Environmental INGOs and positive ones of

Human Rights INGOs. Consistent with our stress on hetereogeneous INGO effects with a negative

overall valence, we find that the effect of combined Environmental INGOs and positive ones of Human

Rights INGOs is negative. We detail the illustration in Section III of the electronic appendix.

variables in equations in which the interactions are estimated). In particular, we present results

for pairs of interacting variables for which slopes for interaction product terms are significant at

the 0.10 level for at least one of our two principal outcome measures (KAOPEN or CKAOPEN).

There are four such interactions. Two of these involve INGO dampening or n reversal, of

liberalizing effects (see Table 5, cols. 2-3 and 6-7). One involves negative interactions between

INGO ties and Henisz et al.‘s measure of competitive mimeses, that for KAOPEN significant at

the .05 level, that for CKAOPEN falls just short of significant at the one-tailed, 0.10 level (with a

one-tailed probability value of 0.102). The other is a negative interaction between INGO ties

and neoliberal teams (see Table 5, cols. 3 and 7). Again, that for KAOPEN is significant at the

.05 level, and that for CKAOPEN falls just short of significant at the one-tailed, 0.10 level (with

a one-tailed probability value of 0.110). Figure 2 provides graphic illustration of these

interactions as contingent effects for the more emphatic results for the original Chinn-Ito index

(KAOPEN). Figure 2, Panel A shows the liberalizing effects of competitive mimesis are present

at low levels of INGO ties but indicates that these decline into statistical insignificance as INGO

ties increase. Consistent with our idea of climatic mimesis, INGOs ties to a nations can be read

to foster an anti neoliberal (e.g., progressive liberal or socialistic) climate about the nation‘s

policy makers. This moderates contrary neoliberal normative pressures diffused out from

liberalizing trading partners, especially ones in relatively intense trade relations. Figure 2,

Panel B reveals that neglect of the INGO and neoliberal team interaction actually suppresses a

substantively as well as theoretically interesting pattern of effects. The liberalizing effect of

neoliberal teams is far more significant than any in Table 4 exists at low levels of INGO ties but

this effect declines, eventually fading into insignificance as INGO ties increase. Apparently,

INGO conveyed anti-neoliberal winds moderate the policy-shaping actions of actors who have

brought neoliberal norms with them from their overseas training. Another interaction involving

neoliberal teams attains significance at the two-tailed 0.10 level for both Chinn-Ito measures (see

cols. 4 and 8). Here, the impact of IMF programs are enhanced as neoliberal economists move

into top positions in finance ministries and central banks (see Figure 2, Panel C). Apparently,

neoliberal economists in domestic economic policy making positions are consequential allies for

IMF pressures. A fourth significant interaction, a positive one between IMF agreements and the

reform precedents of trade competitors (―competitive mimesis‖), appears (see cols. 1 and 5).

This attains high levels of statistical significance for both the original and the revised Chinn-Ito

measures. The extent of IMF promotion of greater capital account openness increases as the

reform precedents of trade competitors rise.19

IMF pressures for more open capital accounts are

reinforced when national policy makers experience neoliberal trade competitors. In short,

impacts of international organizations and professionals on capital account policy are vary across

Latin American nations as presences of international organizations and professionals do.

Conclusions and Discussion

Many treat the decision to open nations up to cross-border capital flows as an endogenous (or

domestic) political development, but we treat the decision as a consequence of exogenous

19

In other terms, the impact of competitors‘reform precedents ratchets up when IMF agreements

are in place. However, this second, seemingly straight forward view of this interaction is complicated by

the fact that the significant upward shit in the impact of competitive mimesis is from a an insignificant

negative impact (-.00855; t= -.72) to a insignificant positive (.01136, t= 1.16). (Reestimating the

interaction with IMF agreements coded zero and their absence coded 1 yield us the second, positive

estimate. Effects of Competitive mimesis shift significantly but are never significantly different from

zero. Interactions aside, Table 5 reveals positive treaty effects that are at least marginal in the first three

equations of Table 5.

processes driven by processes of policy diffusion, perhaps most strikingly by previously little

studied ones whereby INGOs shape the policy culture or climate in which capital account policy

is made. We find strong evidence for INGO influence. In terms of our New Institutionalist

framing of processes of policy diffusion and adaption, this finding affirms an imitative or

―mimetic‖ process because INGOs model policy making action. The mimetic influence of

INGOs appears to be complemented by other influences also exerted by transnational conduits.

These include ―coercive‖ influences accompanying IMF loan programs, whereby the IGO in

question subject nation states to economic dependence as well as persuasion. They include

―normative‖ influences whereby foreign trained economists import neoliberal policy rules

conducive to capital account deregulation and opening. Indeed, ―mimetic,‖ ―coercive‖ and

―normative‖ appear to operate entwined with each other.

In particular, processes of ―climatic‖ mimesis brought in on INGO winds appear to

inhibit or delay capital account liberalization. This is contrary to the neoliberal valence of both

pressures from IMF programs and foreign trained economists and the thrust of overall capital

account policy, although it is consistent with much literature on transnational civil society and

social movements (Keane, 2003) and some strands of World Polity writing (Boli and Thomas,

2002b, p. 292). This divergence in INGO ideological thrust form IGO and other ―world cultural‖

ideological norms, is at least the case for capital account policy change across 1980s and 1990s

Latin America that we study here. This divergence of INGO pressures requires that we recognize

that diffusion mechanisms such as New Institutionalists have theorized and studied are not

necessarily ‗‗isomorphic‖ and are poorly dubbed as such when discussion of them in terms of

―diffusion‖ and ―adoption‖ will do. INGO conclusions merits pride of place here for reasons

beyond the novelty of the quantitative evidence and anti-isomorphic formulation already noted.

INGO conclusions also extend to INGO functions in the entwining of diffusion processes.

Consistent with leads in Mizruchi and Fein (1999), the overall anti-neoliberal thrust of INGO

policy influence moderates other pressures for policy diffusion. In particular, it moderates policy

pressures exerted by neoliberal capital account policy precedents of a nation‘s trade competitors,

and it moderates pressures exerted by neoliberal economists in positions of policy making

prominence. This is to say that, at least in Latin America, imitative compliance with anti-

neoliberal policy models spread or reinforced by INGOs moderates ―competitive mimesis,‖ or

imitation of trade partners, and moderates the ―normative‖ impact of neoliberal economists.

Because influences of INGOs are not convergent with those of IMF agreements and of

neoliberal economists, this is all quite un-isomorphic. Moreover, the divergence of INGO

influences from those of IMF agreements and of neoliberal economists has implications not only

for New Institutional theory, which should no longer confine influences of the sorts of

mechanisms it articulates to isomorphic influences. It has implications for broader conceptions

of neoliberal globalization. Although the new Institutionalism is not typically regarded as very

politically engaged, previous New Institutionally framed research done by Henisz, Zelner, and

Guillén (2005), Polillo and Guillén (2005) and Kogut and MacPherson (2008) on domestic

economic policy has provided evidence for the politically charged view that neoliberal

globalization has proceeded as part of political project advanced by Intergovernmental

Organizations (McMichael 2005). The current finding that International Nongovernmental

Organizations (INGOs) have tended to inhibit neoliberal globalization affirms claims for a

popular, contested transnational politics put forward by theorists of transnational civil society,

global social movements and counter-hegemonic globalization.

Moving further beyond a New Institutionalist frame, we note that INGO resistance to

neoliberal policy prescriptions quite likely is paralleled by more domestic forms of anti-

neoliberal political effort, some of it quite likely quite effective. Collective action by social

movement and established interests, domestic, foreign and truly transnational, all seem may have

impacted upon Latin America economic policies (e.g., see Walton and Ragin 1990 on IMF riots;

Lee 2007 on unions and ―good governance‖; Keck and Sikkink 1999 on the interpenetration of

domestic and international action; Keane 2003 on the progressiveness of transnational civil

society).20

Accordingly, scholars should turn to complementing the sort of systematic

quantitative examination of extra-national pressures for diffusion offered here with the

quantitative examination of domestic forms of ―resistance‖ and transformation. Attempt to

address impacts of mass domestic politics on economic policy should be complemented by

efforts to address changes in elite politics, in particular the emergence of the Chilean neo-Social

Democracy (Sandbrook, Edelman and Heller 2007) and the new Boliviarismo of Chavez, Lula,

Morales and others (Powell 2007). ―Counter-hegemonic‖ globalization not only bridges

domestic and transnational realms as Evans (2005) has signaled.21

In Latin America it appears to

have risen to the highest levels of power during the new millennium. (Powell 2007).

Looking outward beyond the borders of less developed nations, scholars should also turn

to the political economic forces behind transnational founts of diffusion. For example, they

elaborate the politics of economic interests, financial powers, and professional factions behind

changes in economic theory as Dezalay and Garth (2002) have done on the etiology and export

20

The promise of systematic quantitative research into such effects, brought home by an

anonymous reviewer, led to analyses with measures of political events from data compiled by the Arthur

S. Banks and colleagues (2010). Although results yielded no remotely significant impacts on capital

accounts policy, further data collection and analysis along these lines seems a priority for future research.

21 Indeed, the current research‘s combination of anti-liberalization effects of the strength of the domestic

banking sector and of the extent of INGO ties documents this bridging of the domestic and transnational.

of ―Chicago School.‖ They might address the changing situations and action of great state and

banking powers behind IGO policy (Sklair 2002; Tabb, 2004; Abdelal 2007; Chwieroth 2010).

They might begin the systematic study of the internationalization of NGOs. In each case they

might analyze developments in the professional and organizational carriers of mimetic, coercive

professional-normative mechanism in policy diffusion and adaptation in Latin America, other

investigative domains and worldwide.

However important the diffusion forces studied here under the common rubric of New

Institutional diffusion mechanisms may be for Latin America, the relevance of these forces for

economic neoliberal globalization worldwide is unclear. True, Fourcade-Gourinchas and Babb

(2002) see Latin America, Chile foremostly, as an origin of neoliberal policy. Further, Chwieroth

(2007a; 2007b) uncovers extensive liberalizing effects of neoliberal teams and IMF programs in

a broad sample of emerging markets and developing countries; and Centeño (2007) sees

―isomorphic‖ forces similarly at work in Latin America and the larger world However, Latin

America need not be representative of some single universal global process. Diffusion of

neoliberal globalization may have been heterogeneous in the pace and distribution of its spread

in ways that only attention to particular regions and other subsets of countries can uncover.

Scholars should clearly turn to studying other regions like Africa, East and South Asia and post-

Soviet Europe, each marked by institutional and historical particularities that may differentiate

their histories and destination with regard to capital account openness.

What is clear in this study of the New Institutionalism, INGOs and capital account

liberalization extends evidence for the theoretical relevance New Institutionalist conceptions of

institutional change and transnational politics more generally to the evolution and the devolution

of neoliberal economic globalization in late twentieth century Latin American. It extends it not

only into the domain of transnational civil society and social movements, but into a domain

where, at least in Latin America, local and global, mass and elite politics may all meet.

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Table 1: Specification of Transnational Institutionalist Mechanisms based on Elementary Mechanisms in DiMaggio and Powell and Origins of Policy Template

Origins of Policy Template

Elementary Mechanism Transnational Society (e.g.,

organizations and individual

agents)

Nations or nation state

system

Mimetic (transmission due to

mimicry of successful, similar

or authoritative models)

1.Climatic mimesis (via

absorption of INGO targeted

and diffuse cultural influence)

[INGO ties]

2. Competitive Mimesis (via

imitation of successful

competitor nations)

[Policy precedents of trade

competitors]

Normative (via absorption of

INGO targeted and diffuse

cultural influence)

3.Normative Professional

diffusion (transmission

due to professional policy

makers in Transnational

Society

[neoliberal economists]

4.Normative Eemulation (via

imitation of professional of

closely tied nations)

[Policy precedents of trade

partners]

Coercive (transmission due

to professional policy

makers and policy maker)

5.IGO Dependence

(transmission due to adopter

IGO dependence)

[IMF programs]

6. Bilateral Dependence

(transmission due to adopter

dependency on primary

national policy advocate(s))

[U.S. Aid and/or trade

dependence ]

Table 2: Capital Account Openness (KAOPEN): 17 Latin American countries, with extreme values, 1982-

2001.

country

1982-

86

1987-

91

1992-

96

1997-

01 low value (year)* peak value(year)*

Argentina -1.1 -1.1 1.102 1.312 -1.08879 (82-92) 2.09238 (95, 97)

Bolivia -1.04 0.586 0.574 1.56 -1.79269 (1985) 1.624822 (97-99)

Brazil -1.77 -1.77 -1.77 -1.234 -1.79269 (80-97) -1.08879 (1998-1999)

Chile -1.77 -1.77 -1.304 -0.902 -1.79269 (83-94) 0.542112 (1995)

Colombia -1.77 -1.502 -1.502 -1.1 -1.79269 (80-89, 93-95) -1.08879 (90-91, 96-99)

Costa Rica -1.384 -1.636 -0.312 1.146 -1.79269 (86-90) 2.374504 (1999)

Ecuador -0.446 -0.886 0.004 -0.03 -0.94631 (87-90) 1.353635 (1999)

El Salvador -1.77 -1.77 0.044 2.272 -1.79269 (81-87) 2.374504 (1999)

Guatemala -1.338 -0.546 0.992 1.568 -1.65191 (1984) 1.353635 (94-99)

Jamaica -0.06 -0.192 -0.06 1.23 -1.08879 (80-91) 2.09238 (1999)

Mexico -1.218 -0.588 0.972 1.23 -1.79269 (1986) 2.656628 (1980-81)

Panama 2.6 2.6 2.6 2.6 2.656628 (80-99) 2.656628 (80-99)

Peru -1.274 -1.312 -0.214 1.228 -1.79269 (88-90) 2.656628 (97-99)

Paraguay -0.306 -1.58 1.568 2.6 -1.39771 (1984) 1.342698 (1999)

Uruguay 1.31 1.31 1.076 2.272 0.789387 (1980, 1994) 2.374504 (1981, 1999)

Venezuela -0.256 -0.61 -0.63 2.272 2.374504 (1999) -1.51056 (1987)

*Low and peak values are for reported

Table 3: Descriptive Statistics and Correlations for Dependent and Explanatory Variables for Capital Account Equations (see Table 4).

Capital account opennessCapital account openness (alt)IMF ProgramNeoliberal TeamPolicy of Role Equiv NationsPolicy of Comp. NationsLn(INGOs) treaty Left Exec. Legislative Balance of PowerLegislative FragmentationDomestic Bank AssetsTrade Debt GDP per capita at 2000 US$Int. Borrowing

Capital account openness 1

Capital account openness (alt) 0.9546 1

IMF Program 0.3442 0.3713 1

Neoliberal Team 0.0488 0.0776 -0.1105 1

Policy of Role Equiv Nations 0.4693 0.4468 -0.0166 0.4465 1

Policy of Comp. Nations -0.0536 -0.0771 0.0069 0.2142 0.3807 1

Ln(INGOs) 0.0139 0.0299 -0.0092 0.5382 0.4144 0.0722 1

treaty 0.2263 0.2167 0.0902 0.2131 0.3026 0.2968 0.0796 1

Left Exec. -0.1207 -0.1531 -0.0013 -0.106 -0.0787 0.1484 -0.1483 -0.1425 1

Legislative Balance of Power -0.0222 -0.0618 0.0762 0.0062 -0.0343 0.0618 0.2869 -0.045 0.4524 1

Legislative Fragmentation -0.1438 -0.0953 -0.1476 -0.0603 -0.2473 0.016 -0.2469 0.2188 0.0194 0.0685 1

Domestic Bank Assets 0.2198 0.1686 0.0137 0.2299 0.2686 0.0365 0.2656 0.0835 0.0743 0.109 -0.2412 1

Trade 0.2508 0.1899 0.0517 -0.1364 0.1295 0.274 -0.5234 0.1795 0.1749 -0.0883 0.1599 0.0819 1

Debt -0.0561 -0.085 0.3075 -0.5154 -0.319 -0.0277 -0.4978 0.1248 0.335 0.2237 0.0821 -0.1329 0.3394 1

GDP per capita at 2000 US$ 0.159 0.1751 0.0787 0.3928 0.1964 -0.1164 0.7243 -0.0239 -0.0739 0.3472 -0.0058 0.2654 -0.2899 -0.4531 1

Int. Borrowing 0.5368 0.5385 0.0291 0.3669 0.8116 0.3444 0.3141 0.3101 -0.2219 -0.1525 -0.2036 0.2445 0.2242 -0.3434 0.1396 1

Obs 198 198 198 198 198 198 198 198 198 198 198 198 198 198 198 198

Mean -0.28345 -0.03517 0.60101 18.68687 -0.6398 1.22736 6.520892 0.080808 0.138889 -0.12534 0.336285 0.22047 48.33709 3.640138 7.748231 13.01988

Std. Dev. 1.378923 0.939075 0.490932 34.96616 7.818964 0.521582 0.45835 0.273231 0.224519 0.268304 0.113059 0.127743 19.51741 0.615321 0.647854 0.574345

Table 4: Regressions of Capital Account Openness on Hypothesize Causes and Control

(Panel Corrected Standard Errors in Parentheses)

COEFFICIENT KAOPEN CKAOPEN

LDV 0.545*** 0.507***

(0.0844) (0.0921)

counter 0.151** 0.105**

(0.0670) (0.0529)

IMF Program 0.280*** 0.319***

(0.0918) (0.0784)

Neoliberal Team 0.00370* 0.00310*

(0.00212) (0.00187)

Policy of Trade Competitors 0.00380 0.00146

(0.00928) (0.00750)

Policy of Trade Partners -0.187 -0.172

(0.212) (0.238)

Ln(INGOs) -2.590** -1.896**

(1.064) (0.831)

treaty 0.314 0.143

(0.250) (0.236)

Domestic Bank Assets -1.016** -1.051**

(0.510) (0.426)

Leg. Bal. of Power -0.407 0.494^

(0.401) (0.345)

Selection Inst.- FM 0.190^ 0.101

(0.120) (0.0997)

Selection Inst.- CB -0.184* -0.0551

(0.103) (0.0825)

Selection Inst.- IMF 1.382 0.0868

(2.039) (1.622)

Constant 24.45** 17.08**

(10.40) (7.748)

Number of observations 198 198

R-squared 0.886 0.840 *** p<0.01, ** p<0.05, * p<0.1;

^ <.1(1-tail). Nation-dummy, and never-significant variables, Left Exec., Legislative Fragmentation, GDP,

Trade and International borrowing unreported for briefer presentation

Table 5 Regressions of Capital Account Openness on Hypothesize Causes and Control

Including Selected Interactions (Panel Corrected Standard Errors in Parentheses)

1 2 3 4 5 6 7 8

COEFFICIENT KAOPEN KAOPEN KAOPEN KAOPEN CKAOPEN CKAOPEN CKAOPEN CKAOPEN

LDV 0.531*** 0.485*** 0.515*** 0.527*** 0.488*** 0.478*** 0.498*** 0.494***

(0.0843) (0.0905) (0.0855) (0.0863) (0.0894) (0.0981) (0.0940) (0.0946)

counter 0.163** 0.163** 0.156** 0.156** 0.114** 0.107** 0.103** 0.110**

(0.0688) (0.0669) (0.0647) (0.0669) (0.0532) (0.0523) (0.0522) (0.0532)

IMF Program 0.289*** 0.210** 0.221** 0.220** 0.257*** 0.292*** 0.296*** 0.278***

(0.0922) (0.0956) (0.0932) (0.0920) (0.0828) (0.0825) (0.0820) (0.0838)

Neoliberal Team 0.00393* 0.0935*** 0.00435** 3.06e-06 0.00332* 0.0434* 0.00342* 0.000704

(0.00212) (0.0332) (0.00218) (0.00285) (0.00187) (0.0259) (0.00195) (0.00235)

Policy of Trade -0.00855 0.00539 0.237*** 0.00570 -0.00918 0.00477 0.0789^ 0.00123

Competitors (0.0118) (0.00908) (0.0890) (0.00936) (0.00845) (0.00788) (0.0561) (0.00746)

Policy of Trade -0.167 -0.255 -0.284^ -0.190 -0.112 -0.239 -0.233 -0.171

Partners (0.211) (0.222) (0.219) (0.209) (0.238) (0.250) (0.241) (0.235)

Ln(INGOs) -2.913*** -2.670** -3.193*** -2.708** -2.144** -1.860** -1.953** -1.972**

(1.092) (1.083) (1.078) (1.078) (0.839) (0.831) (0.820) (0.840)

Treaty 0.335^ 0.484** 0.351^ 0.284 0.160 0.203 0.155 0.123

(0.249) (0.243) (0.247) (0.248) (0.233) (0.226) (0.235) (0.235)

Competitor*IMF 0.0199**

0.0175**

(0.00992)

(0.00744)

INGO*nlteam

-0.0131***

-0.00596

(0.00479)

(0.00379)

Competitors*INGO

-0.0341***

-0.0112^

(0.0132)

(0.00817)

IMF*nlteam

0.00525*

0.00345

(0.00304)

(0.00216)

Domestic Bank -1.040** -0.993** -0.892* -0.900* -1.129*** -1.057** -1.009** -0.977**

Assets (0.492) (0.484) (0.520) (0.507) (0.403) (0.422) (0.431) (0.421)

Debt -0.456** -0.507** -0.466** -0.464** -0.206^ -0.223* -0.209^ -0.223*

(0.208) (0.207) (0.205) (0.211) (0.133) (0.132) (0.132) (0.135)

Leg. Bal. Power 0.329 0.345 0.375 0.309 0.424 -0.223^ 0 .483^ 0.413

(0.395) (0.380) (0.392) (0.397) (0.337) (0.132) (0.341) (0.336)

Leg. Fragmentation -0.515 -0.764 -1.04^ -0.342 -0.206 -.213 -0.314 -0.088

(0.796) (0.765) (0.751) (0.759) (0.133) (0.636) (0.659) (0.611)

Selection Instrument- FM 0.150^ 0.169^ 0.182^ 0.155^ 0.0682 0.0918 0.0964 0.0728

(0.122) (0.120) (0.119) (0.117) (0.101) (0.0994) (0.1000) (0.0989)

Selection Instrument- CB -0.158 -0.269** -0.232** -0.156^ -0.0267 -0.0924 -0.0714 -0.0309

(0.104) (0.114) (0.105) (0.101) (0.0824) (0.0905) (0.0855) (0.0803)

Constant 25.62** 26.51** 28.95*** 23.79** 17.70** 17.99** 17.72** 16.45**

(10.42) (10.45) (10.71) (10.42) (7.742) (7.745) (7.754) (7.662)

R-squared 0.888 0.891 0.889 0.888 0.844 0.842 0.841 0.842

*** p<0.01, ** p<0.05, * p<0.1;

^ <.1(1-tail).

Nation-dummies, the never-significant variables, Left Exec., GDP, Trade openness, International borrowing, Selection instrument –IMF,

and the always significant constant are all unreported for briefer presentation.

Figure 1: Average Latin American Capital Account Openness Across Time and Region*

* Values of Chinn and Ito’s (2008) KAOPEN rescaled for clearer plotting by setting minimum vales to 0.0

.51

1.5

22.5

3

Avera

ge C

apita

l O

pen

ness

1985 1990 1995 2000year

East Asia & Pacific Europe & Central Asia

Latin America & Caribbean Middle East & North Africa

South Asia Sub-Saharan Africa

4

0.1

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Marg

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ip

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0 2 4 6 8lnngo

Dashed lines give 95% confidence interval.

0

.05

.1.1

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Marg

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0 2 4 6 8lnngo

Dashed lines give 95% confidence interval.

-.5

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Marg

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ct of im

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-20 -10 0 10 20Policy of Role Eq. Nations

Dashed lines give 95% confidence interval.

Figure 2: Plots of Interactions as Contingent Effects

Solid lines indicate effects of Y axis variable contingent on X axis variable, dashed lines give

95% confidence intervals

Panel A: Effects of Competitive Mimesis Contingent on INGO Ties.

Panel B: Effects of Neoliberal Teams

Contingent on INGO Ties.

5

0.5

11.5

Marg

inal E

ffe

ct of im

fpro

g

on

ka

op

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0 20 40 60 80 100nlteam

Dashed lines give 95% confidence interval.

Panel C: Effects of IMF Agreements Contingent on Neoliberal Teams.

Panel D: Effects of IMF Agreements Contingent on Competitive

Mimesis (Policy Precedents of ―Role Equivalent nations).