Institutional Choice and the Diffusion of Policy Paradigms: Brazil and the Second Wave of Pension Reform

Abstract

This article discusses current explanations of issues of institutional change and innovation in the global environment, with specific reference to the diffusion of pension-policy paradigms. It argues against explanations which stress unilaterally the role of external actors and shows the limitations of approaches based on diffusion models in which the actor’s choice space is not examined. It argues that domestic factors are crucial in determining the outcomes of policy-diffusion processes. Although current policy ideas and models are important, the extent to which they are influential and shape concrete policy choices are primarily determined by domestic political institutions and pathdependent domestic factors. Ideas and policy paradigms provide a possibility set for an institutionally and path-dependent constrained choice. Drawing on a case study of the diffusion of the reform model advocated by the World Bank, the article argues that Brazil’s non-reform can be best explained by path dependency and by the “politics of loss imposition” that characterizes pension reform. Brazilian reformers copied a model from an existing policy template, but this emulative behavior can be best viewed as an instance of a path-dependent, constrained, institutional choice, rather than a mimetic behavior associated with a cultural, linguistic, or regional pattern as suggested by strands of the diffusion literature.