Bounded Rationality and Policy Diffusion: Social Sector Reform in Latin America by Kurt Weyland (review)

The Latin Americanist, June 2009 BOUNDED RATIONALITY AND POLICY DIFFUSION: SOCIAL SECTOR REFORM IN LATIN AMERICA. By Kurt Weyland. Princeton: Princeton University Press, 2006, p. xii+297, $24.95. Kurt Weyland’s important and timely new book asks the question, “Why do dissimilar countries adopt similar policy innovations?” (1). The author examines this phenomenon for a range of Latin American countries : small, very poor countries such as El Salvador and Bolivia; a small, middle-income country, Costa Rica; and large, wealthier, South American counties including Argentina and Brazil. What ties the book’s selected country case studies together is a shared period of experimentation with sweeping reforms of social policies during the last twenty-plus years. In its examination of social policy reform, the book concentrates on reforms in pension and health sectors. Unusual for a full professor, the author undertook long periods of fieldwork in each of the countries and conducted numerous interviews with many of the leading figures in each of the policy reforms. Explanations proffered by the decision-makers allow the author to reconstruct the reform designers’ decision process and to identify patterns of influence and input for those reforms and produce a compelling explanation for the similarities (and dissimilarities) across each of the countries’ reform experiences. Weyland’s approach, an innovative combination of political science analysis and cognitive psychology, fruitfully addresses how policy makers in different countries learn from existing modules to make cognitive shortcuts to formulate and implement social policy reform. Weyland begins his investigation from a commonly held perspective that international financial institutions (IFIs) imposed a ‘one-size-fits-all’ blueprint for social policy reform on policy makers in less developed countries . Many authors have tackled this aspect of the puzzle for similar social and economic policies popping up across Latin America and pointed out the limited powers of IFIs to force democratic governments of economically troubled, less developed countries. Weyland acknowledges much of this work and notes that in discrete economic issues, such as exchange rate policies that can be unilaterally determined by the executive, IFIs have influence, but he rejected the IFI conditionality explanation as being “not decisive” (27) and substitutes his own explanation that is informed by bounded rationality. He notes that in the complex arena of social policy, where numerous domestic political actors have vested interests in the outcome of the reforms, IFIs “cannot compel Third World governments to adopt complex institutional changes in the social sectors” (216), not even the most indebted, weakest countries. Weyland’s alternative explanation for the diffusion of social policy reforms is that domestic policy makers base their reform decisions on existing reform examples in other countries. In the case of pension reform, for example, Chile’s radical reforms of the late 1980s and 100 Book Reviews 1990s served as the starting point for many other countries’ reform efforts . It was, though, decision makers’ lack of training in pension planning and reform that led them to concentrate on the economic rather than the equality aspects of the Chilean model when designing reform projects for their own countries. Weyland argues that the pension reform designers necessarily relied on cognitive shortcuts including “few adaptations to their own countries needs” (123). Thus, he argues, it is only possible to understand the diffusion of policy reforms across Latin America through an examination of the cognitive factors that influence how policy makers learn from other countries’ examples and adapt them to their own circumstances . It is this approach to understanding the reform process that makes the book more than just a series of detailed case studies on Latin American policy making. Rather, the book also makes a major contribution to an important theoretical debate concerning how policy makers design and implement major policy reforms. The book is divided into seven chapters, starting with an introductory chapter containing the book’s central puzzle and a theory chapter in which the author presents a new theory of policy diffusion. The following two chapters first examine the evidence of external pressures and international norms for pushing pension policy reform across the region. Then Weyland uses a cognitive heuristic to explain the same policy area. Chapters five and six follow a similar pattern in...