Contentious Implementation and Retrenchment in Neoliberal Policy Reform: The Global Electric Power Industry,1989–2001

We develop theory about the effect of domestic and global institutional forces across countries and over time, following a national government's adoption of a globally diffusing policy, on retrenchment—the degree to which a government reinstates the objectives of a policy's predecessor without repealing the new policy to balance conflicting institutional forces. World political culture legitimates and supports the new policy, while the policy's domestic opponents seek to mobilize opposition to it. Peer country governments' behavior and intergovernmental organizations may help or hinder domestic opponents' efforts. We tested our model by examining governments' renegotiation of the terms of private electricity generation projects in 62 countries in 1989–2001. Although no country formally repealed electricity liberalization during that period, governments selectively renegotiated the terms of private investment in roughly 20 percent of private power generation projects in countries that liberalized. Results support our hypotheses about the effects of domestic and global institutional forces—the former of which we measure through automated natural language parsing of 8.52 million newspaper articles—and the idea that domestic audiences' preexisting cognitive constructs and normative beliefs shape governments' implementation of globally diffusing policies.