Ideas Versus Resources

Abstract

This article examines the rapid spread of pension privatization and the flat tax in former communist countries to understand why new policy ideas take hold and to elucidate the role played by material resources in the diffusion of new policy ideas. Unlike previous liberalizing reforms, these second-generation reforms spread without direct or indirect EU pressure. Rather, policy entrepreneurs in both instances succeeded in arguing that these reforms would serve to make former communist economies more competitive in a highly integrated global economy. Yet the policy network advocating pension privatization, centered around the World Bank, commanded far greater resources than the network of right-wing think tanks supporting the flat tax. To what extent did these superior resources matter? This article concludes that resources may accelerate the diffusion of policy ideas and encourage their adoption in larger states, but policy networks armed with ideas can nonetheless spread reforms quickly in competitive environments even in the absence of significant financial resources or membership conditionalities.