China's rise, public opinion, and growing interventionism in South America's electricity industry

Abstract

China's ascent as an economic powerhouse has sparked debates over the effectiveness of dirigisme versus liberalization in key economic sectors. We study whether the modest progress in and reversals of neoliberal reforms in South America's electricity markets can be connected to China's rise as a global actor and its unique form of state capitalism. We propose that countries in which public opinion favored China over the United States were more likely to tilt from regulatory to state capitalism in governing their electricity sectors. We find robust support that increased favorable public opinion of China vis-a-vis the United States precedes the reversal of neoliberal reforms in electricity markets, shifting energy policy in those countries towards increasing interventionism. We demonstrate that the public does not need to hold specific opinions about a sector's governance to influence it. Public opinion, shaped by a role model exemplifying a particular form of capitalism, can impact the governance structure of strategic industries, such as the electricity sector.