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

Abstract

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.

Explaining regulatory autonomy in EU network sectors: Varieties of utility regulation?

“…Previous research has observed national and sectoral patterns in the diffusion of regulatory agencies (Jordana et al, 2011;Jordana & Levi-Faur, 2005). Thus, our findings confirm Gilardi's (2002Gilardi's ( , 2005aGilardi's ( , 2008 notion of veto players' role as a functional equivalent to delegation, although some recent research indicates that this relationship may be reversed in economically less developed countries (Mediano, 2018). Finally, Model 7 includes further controls for the rule of law and length of EU membership, economic resources (GDP per capita) and size of countries (population) as well as other characteristics of the political system that might impact upon the level of regulatory autonomy granted, such as parliamentarism and the electoral system.…”

“…In Model 6, a hypothetical move from a country without any veto player to a country with full political constraints on policy change is associated with a 0.663-unit decrease (on a zero to one scale) in regulatory autonomy. Thus, our findings confirm Gilardi's (2002Gilardi's ( , 2005aGilardi's ( , 2008 notion of veto players' role as a functional equivalent to delegation, although some recent research indicates that this relationship may be reversed in economically less developed countries (Mediano, 2018). At least for European countries, the number of veto players seems to reduce the need not only for formal independence but also for the subdimension of regulatory autonomy.…”

“…While the establishment of IRAs and their formal political independence have received relatively broad attention (Elgie & McMenamin, 2005;Gilardi, 2002Gilardi, , 2005aGilardi, , 2008Guardiancich & Guidi, 2016;Guidi, 2014Guidi, , 2016Hanretty & Koop, 2012;Mediano, 2018;Wonka & Rittberger, 2010), we know surprisingly little about the set of competencies exercised by network regulators and the degree of decision-making independence with which granted competencies are applied in practice. While the establishment of IRAs and their formal political independence have received relatively broad attention (Elgie & McMenamin, 2005;Gilardi, 2002Gilardi, , 2005aGilardi, , 2008Guardiancich & Guidi, 2016;Guidi, 2014Guidi, , 2016Hanretty & Koop, 2012;Mediano, 2018;Wonka & Rittberger, 2010), we know surprisingly little about the set of competencies exercised by network regulators and the degree of decision-making independence with which granted competencies are applied in practice.…”

“…This article is a first attempt to study in more detail the set of competencies and decision-making independence granted to regulatory authorities responsible for the supervision of European network industries. While the establishment of IRAs and their formal political independence have received relatively broad attention (Elgie & McMenamin, 2005;Gilardi, 2002Gilardi, , 2005aGilardi, , 2008Guardiancich & Guidi, 2016;Guidi, 2014Guidi, , 2016Hanretty & Koop, 2012;Mediano, 2018;Wonka & Rittberger, 2010), we know surprisingly little about the set of competencies exercised by network regulators and the degree of decision-making independence with which granted competencies are applied in practice. More recently, the literature has mainly focused on the relationship between formal independence and accountability or aspects of agencies' de facto independence during the post-delegation phase (Hanretty & Koop, 2013;Maggetti, 2007Maggetti, , 2012.…”

“…The measurement of IRAs' formal independence has been crucially advanced by Gilardi (2002Gilardi ( , 2005aGilardi ( , 2008, who applied and adjusted a measure of central bank independence (Cukierman, Webb, & Neyapti, 1992) to regulatory authorities more broadly. Composed of five dimensions (status of agency head, status of the members of the management board, relationship with government and parliament, financial and organizational autonomy, and regulatory competencies), his continuous scale of formal independence became a model for the collection of further indexes that are either based on the manual coding of statutory provisions (Elgie & McMenamin, 2005;Koop & Hanretty, 2018;Mediano, 2018;Wonka & Rittberger, 2010) or the use of surveys sent to regulatory authorities (Guidi, 2014(Guidi, , 2016Hanretty & Koop, 2012;Johannsen, 2003). While existing indexes of formal independence usually include a dimension related to the competencies of regulatory authorities, they either focus only on a very limited number of regulatory functions performed by regulators or cover only single economic sectors.…”