The International Diffusion of Public-Sector Downsizing

We examine change in government employment among OECD countries between 1980 and 1997, with particular attention to the international spread of ideas about organizational downsizing. Network models of diffusion show linked annual rates of employment change among nations that are geographically close to each other and which trade extensively. Sub-analyses demonstrate that downsizers but not upsizers are imitated, and that high rates of economic growth among downsizers stimulate downsizing elsewhere while the outcomes experienced by upsizers have little effect. These results suggest a incremental sharing of policy experience facilitated by the growing power of neoliberal and managerialist discourse. Analysis of alternative diffusion mechanisms locates no general pattern of mimicry among trade competitors, and evidence of learning from outcomes is modest. Major internal sources of public sector downsizing include low rates of economic growth and the parliamentary power of rightist parties.