As we show, evidence indicates that transitions to
economic liberalization cluster in time and space. The
question is,What can account for these tides of foreign
economic policy liberalization and restriction? A crucial
explanation, we believe, lies in policy diffusion,1 in
which the decision to liberalize (or restrict) by some governments influences the choices made by others.2
We theorize two broad classes of diffusion mechanisms:
one in which foreign policy adoptions alter the benefits
of adoption for others and another in which these
adoptions provide information about the costs or benefits
of a particular policy innovation. In developing
these arguments, we explicitly acknowledge the alternatives.
For example, liberalization patterns could be a
response to commonly experienced phenomena (currency
crises, economic recession) rather than the result
of interdependent state behavior. Similarly, economic
liberalization may simply be the preference of liberal
democracies; such preferences alone may lead governments
to respond similarly, but independently, to the
conditions they face. Both of these processes could lead
to highly clustered policy making, but we would not
classify either of them as a diffusion process.3 For our
purposes, they constitute null hypotheses against which
accounts of interdependent decision making must compete