Agencies’ formal independence and credible commitment in the Latin American regulatory state: A comparative analysis of 8 countries and 13 sectors

This article tests functional and institutional explanations for the different levels of formal independence of regulatory agencies in Latin America. The analysis is grounded in an original database of the formal independence level of 104 regulators in 8 countries and 13 regulatory sectors. The results challenge a central claim of the credible commitment hypothesis as they indicate that privatization is not a significant determinant of agency independence nor are utility regulators more likely to be independent than other economic regulators. Veto players are positively correlated with formal independence, indicating that in developing countries they operate together as credibility‐enhancing mechanisms, rather than as functional equivalents, as previous studies on developed countries have shown. Democratization is positively correlated with formal independence, whereas trade opening and vulnerability to international pressures has no significant impact. Hence, this article enhances the understanding of the delegation of regulatory powers to formally independent agencies in developing countries.     

Public policy's bibliography: The use of research in US regulatory impact analyses

Major US federal regulatory decisions are developed and justified using regulatory impact analyses (RIAs) mandated by executive order. We examine the scientific citation activity in RIAs, a unique effort that we believe holds significant potential for understanding the use of science in policymaking. This paper reports preliminary findings from collecting and examining scientific citations in 104 RIAs from 2008–2012. We present evidence indicating that some agencies make extensive use of science in RIAs, that there is substantial variation in use across agencies, and show variation across journals and disciplines cited by regulatory agencies. Finally, we present analysis showing that regulatory policymakers make greater use of research published in highly cited scholarly journals. We conclude by outlining several future directions for research using these data.     

Judicial review of regulatory decisions: Decoding the contents of appeals against agencies in Spain and the United Kingdom

Despite the important role that courts play to supervise the legality of regulatory agencies' actions, only few comparative studies analyze the contents of judicial appeals against regulatory decisions within European countries. This paper builds on the comparative administrative law scholarship and administrative capacities literature to analyze the content of 2,040 rulings against decisions issued by competition and telecommunications regulators in Spain and the United Kingdom. To understand the substance of the appeals, the study classifies cases according to the alleged administrative principles under breach and the regulatory capacities under challenge. Findings show a clear country-sector variation regarding the information contained in judicial disputes for both dimensions of analysis, which can be explained as a result of existing differences between the institutional settings of courts. These results offer a more in depth understanding of the political role of judicial oversight over regulatory agencies embedded in different institutional arrangements and policy sectors.     

The regulatory state in developing countries: Redistribution and regulatory failure in Brazil

Following the traditional doctrine of the “regulatory state”, regulatory agencies should be given very focused mandates and stay away from the politicized realm of distributive policies and decisions. An opposing perspective would state that if regulatory agencies can contribute to economic redistribution, positive results such as network expansion, economies of scale, and fiscal efficiency will ultimately lead to lower levels of regulatory failure. This article tests whether, in countries of high socio-economic inequality, such as Brazil, the active incorporation of distributive considerations by regulatory agencies leads to lower levels of failure. Through the analysis of the activities of seven Brazilian network regulatory agencies, the article develops theory-driven expectations and tests these expectations using crisp set Qualitative Comparative Analysis (csQCA). It concludes that not prioritizing redistribution is a necessary but not a sufficient condition for regulatory agencies' failure. In most types of failure, a lack of priority to redistribution leads to failure when combined with low regulatory capacity and low levels of competence.     

Building organizational reputation in the European regulatory state: An analysis of EU agencies' communications

Organizational‐reputation literature has advanced our understanding about the U.S. regulatory state and its agencies. However, we lack contributions on what a reputational account can add to our knowledge about the European regulatory state, the strategic behavior of supranational agencies, and their endeavors to legitimize themselves in a multilevel political system. We know little of how reputation‐management strategies vary across EU agencies and why. The study offers the very first mapping of organizational‐reputation‐management patterns across all EU agencies, as well as the first empirical assessment on how reputational considerations guide supranational agencies' legitimation strategies. The results indicate that EU agencies facing higher reputational threats revert to their avowed raison d'être (i.e., technical conduct). We find that regulatory agencies utilize a more diverse set of reputational strategies by emphasizing the technical, procedural, and moral reputations more than nonregulatory agencies, whereas social‐policy agencies foster their technical reputation more than economic‐policy agencies.     

Domestic regulatory reform and transgovernmental networks: Brazil and China in the global competition regime

Developing countries increasingly participate in transgovernmental networks of global regulatory governance, but they do so in different ways. This article aims to provide an explanation for this variation for two of the major emerging powers in the world economy, Brazil and China, in their transition toward more active players in the global competition regime. Distinguishing between bilateral and multilateral transgovernmental networks and examining the domestic factors conditioning the transition of their national competition agencies from rule-takers to rule-promoters or rule-makers through these networks, the article makes theoretical contributions to the linkage between transgovernmentalism and the regulatory state. I argue that differing political needs and the incomplete process of regulatory state formation push domestic agencies to join transgovernmental networks, with a need for greater legitimacy steering the Brazilian regulators to multilateral networks and facilitating their transition from rule-takers to rule-promoters. The Chinese agencies' primary need for expertise rather than legitimacy, by contrast, led them to pursue technical assistance and cooperation via bilateral relationships. The Chinese approach has slowed its transition from rule-taker to rule-promoter where its norms and practices are aligned with the established powers. Such approach will further impede its transition into a global rule-maker in areas of competition law and policy where China's preferences diverge.     

De facto independence after delegation: A fuzzy‐set analysis

The phenomenon of delegating public authority from elected politicians (or ministries headed by elected politicians) to formally independent regulatory agencies (RAs) is becoming increasingly widespread. This paper examines the relation between formal independence, as prescribed in the constitutions of agencies, and de facto independence. Toward this end, it conceptualizes and assesses de facto independence of RAs, and discusses organizational, institutional, and political explanations for divergence from formal independence. The complex relations between de facto and formal independence are examined with a cross‐national, cross‐sectoral comparison of 16 Western European RAs using fuzzy‐set analysis. The results show that formal independence is neither a necessary nor a sufficient condition for explaining variations in the de facto independence of agencies. Other factors, such as the lifecycle of agencies, veto players, and European networks of agencies, have a decisive impact.     

Explaining variations in enforcement strategy: A comparison of the Swedish health care,eldercare, and compulsory school sector

This article analyzes whether, and if so, why, national inspectorates adopt different enforcement strategies when controlling the provision of welfare services, such as health care, eldercare, and the compulsory school. The findings show that the Swedish Schools Inspectorate uses a predominantly strict strategy, while the Health and Social Care Inspectorate relies on a more situational strategy. To explain this variation in enforcement strategy, the article tests four hypotheses derived from the literature on regulatory enforcement. The findings suggest that the variation between the agencies is not primarily the result of differences in resources or the authority to issue punitive decisions, as suggested by previous research. Instead, we find support for the hypothesis that the definition of quality can explain variation in adopted strategies, and partial support for the hypothesis that differences in regulatory mission can account for a variation in the agencies' formal enforcement strategies.     

Understanding the rise of the regulatory state of the South*

This paper, and the special issue it introduces, explores whether, and how, the rise of the regulatory state of the South, and its implications for processes of governance, are distinct from cases in the North. With the exception of a small but growing body of work on Latin America, most work on the regulatory state deals with the US or Europe, or takes a relatively undifferentiated “legal transplant” approach to the developing world. We use the term “the South” to invoke shared histories of many countries, rather than as a geographic delimiter, even while acknowledging continued and growing diversity among these countries, particularly in their engagement with globalization. We suggest that three aspects of this common context are important in characterizing the rise of the regulatory state of the South. The first contextual element is the presence of powerful external pressures, especially from international financial institutions, to adopt the institutional innovation of regulatory agencies in infrastructure sectors. The result is often an incomplete engagement with and insufficient embedding of regulatory agencies within local political and institutional context. A second is the greater intensity of redistributive politics in settings where infrastructure services are of extremely poor quality and often non‐existent. The resultant politics of distribution draws in other actors, such as the courts and civil society; regulation is too important to be left to the regulators. The third theme is that of limited state capacity, which we suggest has both “thin” and “thick” dimensions. Thin state capacity issues include prosaic concerns of budget, personnel and training; thick issues address the growing pressures on the state to manage multiple forms of engagement with diverse stakeholders in order to balance competing concerns of growth, efficiency and redistribution. These three themes provide a framework for this special issue, and for the case studies that follow. We focus on regulatory agencies in infrastructure sectors (water, electricity and telecoms) as a particular expression of the regulatory state, though we acknowledge that the two are by no means synonymous. The case studies are drawn from India, Colombia, Brazil, and the Philippines, and engage with one or more of these contextual elements. The intent is to draw out common themes that characterize a “regulatory state of the South,” while remaining sensitive to the variations in level of economic development and political institutional contexts within “the South.”     

When risk‐based regulation aims low: Approaches and challenges

Risk‐based regulation is becoming a familiar regulatory strategy in a wide range of areas and countries. Regulatory attention tends to focus, at least initially, on high risks but low‐risk regulatees or activities tend to form the bulk of the regulated population. This article asks why regulators need to address low risks and it outlines the potential difficulties that such risks present. It then considers how regulators tend to deal with lower risks in practice. A body of literature and survey‐based research is used to develop a taxonomy of intervention strategies that may be useful in relation to low‐risk activities, and, indeed, more widely. In an article to be published in the subsequent issue of this journal, we will then develop a strategic framework for regulators to employ when choosing intervention strategies and we will assesses whether, and how, such a framework could be used by regulatory agencies in a manner that is operable, dynamic, transparent, and justifiable.     

Do parties matter in delegation? Partisan preferences and the creation of regulatory agencies in Europe

The ideological orientation of parties in government has not been prominently featured in explaining the rise of regulatory agencies. This paper argues that theories based on political uncertainty and credible commitment can yield meaningful predictions regarding the relationship between government preferences and the establishment of regulatory agencies, when ideological orientation is linked with notions of party competence and issue ownership. The empirical section tests three such hypotheses with data on the establishment of 110 regulatory agencies in 20 European democracies between 1980 and 2009, thus providing one of the most comprehensive cross‐national analyses of agency creation to date. The results show that ideologically extreme cabinets are more likely to establish regulatory agencies and that right‐wing governments create more agencies in the economic than in the social domain. These findings partly qualify the view on the scarce relevance of government preferences in explaining the rise of the agency model in regulation and that the emulation mechanism of the diffusion process is the dominant force behind agencification.     

Agency Autonomy Actually: Managerial Strategies,Legitimacy, and the Early Development of the European Union's Agencies for Drug and Food Safety Regulation

ABSTRACT

In recent decades, a series of regulatory agencies has been created at the European Union (EU) level. The existing literature on EU agencies focuses either on autonomy as a reason for the creation of such agencies or on the autonomy that they are granted by design. As a result, we do not know much about how EU agencies' actual autonomy comes about. This article therefore probes into the early development of two specific agencies. On the basis of document analysis and interviews with agency staff members, national experts, EU officials, external stakeholders, and clients, it explores why, in practice, the European Medicines Agency (EMA) seems to have developed a higher level of autonomy than the European Food Safety Authority (EFSA), even though on paper EMA appears to be as autonomous as, or if anything, less autonomous than EFSA. The article demonstrates the importance of investigating the managerial strategies of EU regulatory agencies to understand the actual practice of their autonomy and points to legitimacy as a key condition affecting the early development of such agencies.     

Implementing independent regulatory agencies in Brazil: The contrasting experiences in the electricity and telecommunications sectors

This paper explores hypotheses that could explain both the creation of independent regulatory agencies (IRAs) in Brazil, and the differences in the design of the Brazilian IRAs in the telecommunications and electricity sectors. To formulate specific hypotheses that make sense of the Brazilian case, the paper critically interrogates the “weak state” hypothesis and the “political bias” hypothesis. The first argues that countries with flawed governance structures, such as Latin American countries, are less likely to establish independent regulators than European countries. The second argues that “political bias” is a determinant factor in predicting the implementation of IRAs in Latin America. The first part of the paper uses these two general hypotheses as a basis to formulate specific hypotheses to explain the creation of IRAs in Brazil. The second part of the paper formulates specific hypotheses that could explain why institutional guarantees of IRA independence are stronger in the telecommunications sector, than in the electricity sector. In particular, the paper argues in support of a revised version of the “political bias” hypothesis to explain sectoral divergence, suggesting that bureaucratic resistance to reform may be the cause for the variations observed in Brazil between regulatory reform in electricity and in telecommunications.     

Are they really so different? Climate change rule development in the USA and UK

Climate change is an increasingly complex and global environmental issue. As a result, scholars have begun to compare the efforts of specific countries such as the UK and the USA in dealing with climate change. However, missing within this comparative literature is a discussion of the important role that administrative agencies play in implementing climate change policy through rulemaking. More specifically, it is unclear how administrative processes may impact or explain variations in the policy implemented within a given country. In fact, it has been over 25 years since Vogel's work compared the regulatory processes of the USA and UK. As a result, this paper's interviews with agency rule writers in both countries provide an updated comparison of their rulemaking processes, which is essential to understanding why countries may vary in the climate change policy they implement. Copyright © 2014 John Wiley & Sons, Ltd.     

Continuity,change, and priorities: The quality and use of regulatory analysis across US administrations

This paper compares the quality and use of regulatory analysis accompanying economically significant regulations proposed by US executive branch agencies in 2008, 2009, and 2010. We find that the quality of regulatory analysis is generally low, but varies widely. Budget regulations, which define how the federal government will spend money or collect revenues, have much lower‐quality analysis than other regulations. The Bush administration's “midnight” regulations finalized between Election Day and Inauguration Day, along with other regulations left for the Obama administration to finalize, tended to have lower‐quality analysis. Most differences between the Bush and Obama administrations depend on agencies' policy preferences. More conservative agencies tended to produce better analysis in the Obama administration, and more liberal agencies tended to do so in the Bush administration. This suggests that agencies more central to an administration's policy priorities do not have to produce as good an analysis to get their regulations promulgated.     

Policy coherence versus regulatory governance. Electricity reforms in Algeria and Morocco

The diffusion of independent regulatory agencies (IRAs) in utilities sectors in developing countries is underpinned by the idea that IRAs are highly effective institutional devices to signal policy credibility to private investors. But is it really so? Institutional economists tend to confirm the effectiveness of IRAs, while also highlighting the many factors that condition its positive impact on investments. Acknowledging the importance of interaction effects, this paper proposes to shift the level of analysis, moving away from IRAs to look at the overall complementarity between policy objectives, instruments, and the wider political context. In sum, it argues that IRAs are, as such, irrelevant. What matters instead is policy coherence. A comparison between two case studies on electricity policy reforms in Algeria and Morocco lends credit to the policy coherence approach. It shows that policy incoherence may deprive IRAs from any impact on sectoral evolution and that there are effective alternatives to IRA to signal policy credibility and attract investors. The paper concludes by suggesting practitioners to relax the focus on preconceived policy solutions, to be open to alternative policy approaches and to focus on helping developing countries designing coherent policies.     

SOME EXPLANATIONS FOR DISPARITIES IN LIFESAVING INVESTMENTS1

Recent cost-effectiveness studies have uncovered substantial disparities in lifesaving investments between federal agencies. An examination of OSHA and NHTSA policies suggests that such disparities are not necessarily the result of arbitrary or inadvertent decision making. The disparities may reflect both conscious social judgments about priorities in lifesaving policy and systematic patterns of political and bureaucratic behavior. The hypotheses advanced in this paper suggest that, while these cost-effectiveness studies ignore important social values, they are also useful in exposing systematic imperfections in political and regulatory decision making.     

Homogeneous National Management Policies or Autonomous Choices by Administrative Units? Inter- and Intra-Country Management Tools Use Variations in European Central Government Administrations

ABSTRACT

This article presents an original research on the use of management tools in central government departments and agencies in 16 European countries. It is based on a survey conducted among senior managers (n?=?5,998). The analysis shows that the use of management tools results from a combination of top-down implementation of a list of management tools at the national level, combined with a bottom-up independent selection of tools by administrative units. The variation in management tool use depends on the type of tool. While the uses of a HRM tool, such as performance-related pay, or a financial tool, such as risk management, are heavily influenced by national public management policies, service quality-type tools, such as user surveys or quality management systems, tend to be chosen in a more autonomous manner by different administrative units, especially agencies.     

Pharmaceutical regulation in Denmark and the UK: Reformulating interest representation to the transnational level

Abstract. Common elements are recognised across Denmark and the UK in regulation of the pharmaceutical industry, which are attributed to the impact of associational action at the sector level. Our examination of arrangements for regulating medicine prices and information displays many of the hallmarks of neo-corporatism – namely negotiation with state agencies, compliance seeking among members, and policy implementation through acting as a Private Interest Government. During a period of economic internationalisation and directive international agencies, we show how business interests have reformulated to transnational levels, with associations, despite facing a greater complexity of interests to represent, having a strong impact upon regulatory outcomes. These have been neither wholly deregulatory or reregulatory, but partly reflect events at national levels. This may predict regulatory developments at the European level in other sectors.     

Presidential priorities,congressional control,and the quality of regulatory analysis: an application to healthcare and homeland security

Elected leaders delegate rulemaking to federal agencies, then seek to influence rulemaking through top-down directives and statutory deadlines. This paper documents an unintended consequence of these control strategies: they reduce regulatory agencies’ ability and incentive to conduct high-quality economic analysis to inform their decisions. Using scoring data that measure the quality of regulatory impact analysis, we find that hastily adopted “interim final” regulations reflecting signature policy priorities of the two most recent presidential administrations were accompanied by significantly lower quality economic analysis. Interim final homeland security regulations adopted during the G.W. Bush administration and interim final regulations implementing the Affordable Care Act in the Obama administration were accompanied by less thorough analysis than other “economically significant” regulations (regulations with benefits, costs, or other economic impacts exceeding $100 million annually). The lower quality analysis apparently stems from the confluence of presidential priorities and very tight statutory deadlines associated with interim final regulations, rather than either factor alone.