Showing papers in "Governance in 2005"

The institutionalization of private governance: How business and nonprofit organizations agree on transnational rules

Abstract: This article assesses the recent trend of cooperation among antagonistic private actors that results in the creation and implementation of issue-specific transnational norms and rules and the subsequent shift from public to private forms of governance. Many political scientists agree that authority also exists outside of formal political structures. Private actors increasingly begin to make their own rules and standards that acquire authority beyond the international system. This observation is often referred to as private transnational governance as opposed to public or international governance. Although the concept of private governance gains prominence in academic debates, it is not clear how private governance on the global scale is constructed and maintained or what specific or general conditions are necessary for private governance to emerge. Based on the review of common theoretical propositions, this article develops an integrated model along which the necessary conditions for the emergence of private governance can be assessed and understood. As most research has hitherto focused on institutionalized cooperation between business actors (self-regulation), this article takes a closer look at those transnational systems of rule that result out of the enhanced cooperation between profit and nonprofit actors (coregulation).

Jurisdictional Integrity, Polycentrism and the Design of Democratic Governance

Abstract: Political and managerial processes are creating polycentric networks that transcend the traditional ideas of jurisdictional integrity in state-centric systems. Jurisdictional integrity refers to the political and legal competence of a unit of government to operate within a spatial and functional realm. An intrinsic element of jurisdictional integrity in a democratic system is that citizens are enabled to give consent to and pass judgment on the exercise of authority by that governmental entity. The concept of jurisdictional integrity is shown to apply differentially in relation to the traditional institutions of government in comparison with the emergent complex of quasi-governmental agencies, special purpose bodies and multi-organizational collaborations. Distinctions are drawn between club, agency and polity entities within this emergent organizational field. Problems to be faced in the design of institutions for network governance under conditions of polycentrism are identified and solutions reviewed. The potential of consociationalism to enable collective decision making across a polycentric system is highlighted. Informal norms are shown to be essential in enabling such a system for network governance to operate effectively.

Institutional Implications of Interactive Governance: Insights from Dutch Practice

Abstract: Nowadays all kinds of processes of citizen involvement can be observed in practice. We label them as interactive governance in this article. Interactive governance brings with it new proto-institutions that can conflict with existing institutions of decision making. We analyze these institutional tensions in several Dutch local governments through comparative research. Our main conclusion is that there is a “missing institutional link” between the interactive process and the formal municipal decision-making process. Interactive governance needs better institutional embeddedness in order to prevent the interactive process from becoming meaningless and useless in formal decision making.

Rules that Many Use: Standards and Global Regulation

Abstract: Global regulation increasingly relies on alternatives to legal rules, variously termed “soft law,”“best-practice rules,” or “standards.” Such voluntary best-practice rules can be highly effective. Standards influence users by virtue of the expertise on which they are based and because of their enforcement by public and private actors. Standards globally proliferate because they are more compatible with regulatory autonomy of states than binding directives. When global standards are effective, the question of how to subject them to democratic control often arises. The prospects for holding global standard setters accountable largely depend on how decisions on standards are made. These insights are illustrated by examples of the global regulation of financial markets. The preliminary evidence suggests that standards need to be taken more seriously by students of global regulation.

The Politics of Administrative Reforms in Asia: Paradigms and Legacies, Paths and Diversities

Abstract: Many Asian governments have embarked on administrative reforms of one kind or another, engaging in rhetoric that resonates with the global paradigms of “new public management” and “good governance.” This article seeks to understand Asian administrative reforms against the background of international influence, policy diffusion, domestic politics, institutional dynamics, and administrative traditions and legacies. It is impossible to capture the whole range of national reform types within any neat and tidy Asian paradigm, but some common strands of national reform paths in the region can still be traced. Different problems and failures are found to be addressed by Asian reforms, reflecting diverse motives and resulting in varied outcomes. The “old” public administration regime has largely coexisted with the “new” public management approaches and tools.

The Third Force? Independent Regulatory Agencies and Elected Politicians in Europe

Abstract: Governments and legislatures in Europe have created or greatly strengthened independent regulatory agencies (IRAs). Yet they also retain many formal controls over those agencies. The article analyzes whether elected politicians have used their powers to create IRAs in their own image and kept IRAs under tight control or whether they have allowed IRAs to become a distinct set of actors, hence a "third force" in regulation. Principal–agent (PA) theories, largely based on U.S. experience, emphasize the importance of certain formal controls for elected politicians to limit "agency losses." However, an analysis of four European nations between 1990 and 2001 shows that elected politicians did not use their powers to appoint party politicians, force the early departures of IRA members, reverse IRA decisions, or reduce IRA budgets and powers. Using PA theory, two interpretations of this apparent puzzle are offered, each with differing implications for agency autonomy. One is that elected politicians used alternative methods of control, hence they suffered low "agency losses" and IRAs in practice had little autonomy. The other is that elected politicians found that the benefits of IRA autonomy in practice and the costs of applying their formal control outweighed agency losses, and hence accepted agency autonomy.

Corporate Governance and Corruption: A Cross-Country Analysis

Abstract: Because the empirical literature on the causes of corruption has focused primarily on the demand side of corruption, that is, the corrupt officials who receive bribe payments, the role of the private sector as the supply side of corruption has not been examined thoroughly in this literature. In this article, it is argued that corporate governance is among the important factors determining the level of corruption. Using a cross-country data set, hypotheses that explicitly link various measures of corporate governance to the level of corruption are tested. The results show that corporate governance standards can have profound impacts on the effectiveness of the global anticorruption campaign.

Accountability in Accounting? The Politics of Private Rule‐Making in the Public Interest

Abstract: Over recent decades governments have increasingly delegated domestic and international regulatory functions to private-sector agents. This article examines the reasons for such delegation and how private agents differ from public ones, and then analyzes the politics of regulation post delegation. It argues that the key difference between delegation to a public agent and delegation to a private one is that in the latter case a multiple-principals problem emerges that is qualitatively different from the one usually considered in the literature. An agent's action will be determined by the relative tightness of competing principal–agent relationships. This tightness is a function of the relative importance of each principal for the agent's financial and operational viability as well as its effectiveness in rule making. Further, the article posits that exogenous changes in the macro-political climate can deeply affect the nature of principal–agent relationships. The authors test their hypotheses about the politics of regulation in the postdelegation period through the study of accounting standards setting in the United States, a case of delegation of regulatory authority to a private agent that goes back to the New Deal era and has received renewed public attention in the wake of recent corporate financial scandals.

Agency Escape: Decentralization or Dominance of the European Commission in the Modernization of Competition Policy?

Abstract: The “modernization” reforms of European antitrust are summarized and interpreted. The article uses principal–agent analysis enhanced by socio-institutional insights. The reforms in policy implementation are of historic importance. While they appear to promise decentralization to national competition authorities, more sophisticated analysis points to an increase in the centralized power of the Commission. The novel instrument of a supranational European Competition Network creates a redesigned relationship between the Commission and the member states that carries high risks of incoherence. Modernization driven by a legal epistemic community carries a less obvious risk that increased power of competition policy will unduly reinforce liberal market disciplines through a juridification of the European competition regime.

Negotiating International Food Standards: The World Trade Organization's Impact on the Codex Alimentarius Commission

Abstract: The article presents an empirical account of how the role, position, and perception of the intergovernmental food standardization body, Codex Alimentarius Commission, has changed after being referred to by the World Trade Organization (WTO) as the “central reference point for the elaboration of international food standards.” Both the Sanitary and Phytosanitary Measures Agreement and the Technical Barriers to Trade Agreement include provisions that encourage WTO members to base their national regulations on international standards. The article focuses on key issues in the Codex that may have a significant impact on international food trade. The overall conclusion is that the WTO has contributed to constraining the activity and shaping the expectations of Codex members. Governments participating in Codex activities have changed their behavior after 1995 due to increased uncertainty with respect to how decisions in Codex may be binding for them under the WTO Agreements.

Appropriateness and Consequences: The Logic of Neo-Institutionalism

Abstract: Skeptical questions may be raised about the neo-institutionalist approach of James G. March and Johan P. Olsen, in which a “logic of expected consequences” is set against a “logic of appropriateness”: (1) it is difficult to determine what kind of constructs the so-called logics are—whether they are to be seen as perspectives, theories, or ideal types; (2) the logics, far from being mutually excluding, overlap very considerably; (3) analytical utility is debatable not only in the case of the “logic of expected consequences” but also when it is a matter of the “logic of appropriateness”; (4) the normative virtue of substituting a “logic of appropriateness” for a “logic of expected consequences” is less obvious than March and Olsen's readers may be led to think. It is tempting to conclude that March and Olsen’s approach has proven compelling because of its consequences for the scholarly community rather than by virtue of its analytical appropriateness.

Holding Global Regulators Accountable: The Case of Credit Rating Agencies

Abstract: Credit Rating Agencies (CRAs) are private nonmajoritarian regulators (NMRs) of international capital markets. Ratings of creditworthiness are ubiquitous in financial markets, and in this way they exercise considerable control over the flow of credit. CRAs entail a puzzle for the question of the legitimacy of global regulation. As profit seeking firms, they lack a formal element of coercion. Yet, CRAs are often criticized for wielding illegitimate power. Furthermore, the broad demand for accountability has not had a great effect on how CRAs operate. Thus, there is a persistent mismatch between demand and supply of accountability, an “accountability gap.” By analyzing the accountability gap, this article seeks to enhance the understanding of the nature and the scope of the legitimacy problems of global NMRs. CRAs suggest that the legitimacy problems of global governance extend beyond formal NMRs to informal NMRs and that solutions sometimes are elusive.

Business–Regulatory Relations: Learning to Play Regulatory Games in European Utility Markets

Abstract: Although regulation is on the rise in the European Union, the liberalization of the telecommunication and energy markets has not created a uniform European Regulatory model. The principle focus of this article is to examine the interaction and regulatory learning between national regulatory authorities and business in the U.K. and German utility markets to assess the degree of convergence and demonstrate how the regulatory relationship has evolved beyond that envisaged in the initial delegation of powers to the regulator. The article shows that independent regulatory authorities have moved from distant and often confrontational relationships with business to strategic working relationships driven by exchanges of information and reputation building and that regulatory learning and trust have evolved at distinct speeds in sectors and countries depending on the number of regulatory authorities in a market place, the degree to which there are concurrent powers between authorities, their discretion in the consultation process, and the length of time that regulatory authorities had existed. Consequently, significant variance is continuously seen in the business—regulator relationships in comparing the young legalist German regulatory authorities with the established independent and discretion-based regulators in the U.K.

Reshaping the state: administrative reform and new public management in France

Abstract: This essay examines the administrative reform process in France since the late 1980s. The key reforms undertaken during this period have sought to delegate greater managerial autonomy to the ministerial field-service level. We undertook semistructured interviews with officials in the field services of three French ministries (Education, Agriculture, and Infrastructure) in the Champagne-Ardennes region, as well as with members of the wider policy communities. The capacity of the field services to adopt a proactive approach to management reform depended on five key variables: internal organizational dynamics; the attitude of the central services to mesolevel autonomy; the degree of institutional receptivity to change; the type of service delivery, and the extent of penetration in local networks. The Infrastructure Ministry was more receptive to management change than either Education or (especially) Agriculture, a receptivity that reflects the institutional diversity of the French administrative system, and that supports new institutionalist arguments. The essay rejects straightforward convergence to the New Policy Management norm. Changes in public management norms require either endogenous discursive shifts or else need to be interpreted in terms of domestic registers that are acceptable or understandable to those charged with implementing reform.

Metropolitan Institutions and Policy Coordination: The Integration of Land Use and Transport Policies in Swiss Urban Areas

Abstract: The article addresses the question of how different metropolitan institutional settings affect the quality of political negotiation processes and their subsequent policy decisions. Starting from the theoretical controversy of the two metropolitan reform traditions, two opposing ideal types of metropolitan government institutions are conceptualized: on the one hand the public choice model that stands for a decentralized, nonprofessional, and politically dependent administration in fragmented urban areas, and on the other hand the neoprogressive model that stands for direct public service production by centralized and professionalized bureaucracies within consolidated municipalities. A qualitative comparative analysis of nine decision cases in four Swiss urban areas uncovers three main results: voluntary, positive, and policy-driven coordination as well as well coordinated policy solutions are found in centralized rather than decentralized institutional settings, in fragmented rather than consolidated metropolitan areas, and in project structures with a strict separation of the political sphere of negotiating from the technical sphere rather than in negotiations without such clear distinction. However, it is only under very specific institutional conditions that these well-coordinated solutions are also being implemented. The findings must be put into perspective in two respects. On the one hand, the positive effect of fragmentation on the quality of deliberation is supposedly unique to Switzerland due to its very strong federalism. On the other hand, the importance of bureaucratic autonomy is probably due to Switzerland's marked tradition of a weak state. The results from the nine test cases in general, however, substantiate the hypotheses derived from the neoprogressive model of metropolitan government institutions rather than the public choice model.

Toward Good Governance and Sustainable Development: The African Peer Review Mechanism

Abstract: To accomplish the objectives and the outcomes of the New Partnership for Africa's Development (NEPAD), African leaders have agreed, among other things, to subject their countries to peer review through the use of a unique and innovative African Peer Review Mechanism (APRM). This paper analytically describes and assesses the APRM. It contends that peer review represents a sea of change in the thinking of African leaders as they seek to reverse the trend of lack of accountability, political authoritarianism, state failure, and corruption to embrace and consolidate democracy as well as effect sound and transparent economic management. It is further argued that peer review would provide a number of benefits to those countries that subject themselves to it and that, in turn, would have positive multiplier effects on Africa's development performance.

Homeland Security and the U.S. Public Management Policy Agenda

Abstract: The US has been described as an “uninteresting laggard” in comparative public management policy The passage of the Homeland Security Act in 2002 demands a reevaluation of this label The Act created the Department of Homeland Security, but also marked a dramatic shift toward greater public personnel flexibility, both for the new Department and the entire federal government It is tempting to suggest that the Act is an effort to “catch up” with the New Public Management benchmark countries However, such an argument is overly simplistic and misleading This article argues that the Act represents a triumph of a preexisting management agenda that was successfully tied to the issue of security during a political window of opportunity The management agenda of the Bush administration pursues many of the concerns of the Clinton era, but does so with a more top-down and centralized interpretation of flexibility, reflecting an executive-centered philosophy toward government and a willingness to tackle the dominant stakeholder in this area, public service unions

The WTO's Appellate Body: Legal Formalism as a Legitimation of Global Governance

Abstract: The creation of the Appellate Body (AB) of the WTO entails an unprecedented delegation of power to an international adjudicator, since the WTO requires states to ensure compliance of their domestic regulations with the sweeping obligations in WTO agreements. This is legitimized in some academic analysis and much political rhetoric in terms of the rule of law, suggesting that the role of the adjudicator is merely to apply the precise words of the texts agreed by states, according to their natural meaning. The AB has supported this, by adopting a formalist approach which combines an objectivist view of meaning with a legalistic style of judgement. However, both the general structure and many of the specific provisions of the WTO agreements are indeterminate and raise issues of interpretation which were known to be highly contestable. Although the delegation of adjudication in its early phase was considered to be of a narrow technical function, in the current phase interpretation is more clearly seen to involve a flexible application of principles to cases in the light of the policies involved. The AB’s role would be better legitimized by adopting a more open epistemology and reasoning which could be accessible to a wider constituency. However, it is constrained by fear of usurping the political legitimacy of the governments to which it is primarily accountable, and they in turn are motivated by a reluctance to admit to their domestic constituencies how much power has been transferred to supranational instances such as the AB.

Where Did the Bureaucrats Go? Role and Influence of the Public Bureaucracy in the Swedish and French Pension Reform Debate

Abstract: This article has two key objectives. First, despite having been considered as a key element to favor the expansion and elaboration of the welfare state in industrial countries, bureaucrats have been largely ignored by the “New” Politics of the Welfare State. This article demonstrates that bureaucrats still matter in times of retrenchment, because they can facilitate or obstruct various phases of the policy process. The degree of independence of the bureaucracy vis-a-vis the government, the government's level of dependency and trust on public expertise, the locus of ministerial power, and political deadlocks contribute to either accentuate or decrease the influence of the bureaucracy in the retrenchment of social policies. Second, these elements are analyzed via a comparison of the pension reform processes in France and Sweden. This article argues that the French bureaucracy, despite its high degree of centralization and powers, has been far less successful than its Swedish counterpart. The Swedish institutional structure, the predominance of social ministries in pension affairs, and the trust given to an independent agency account for this puzzling outcome.

New-Style Councils, New-Style Councillors: From Local Government to Local Governance

Abstract: The aim of this article is to contrast an empirical study on the changes in the attitudes and behaviors of local politicians with recent literature on local governance. To undertake this task, the article brings together the results of about two hundred in-depth interviews with local councillors from nine Catalan local councils over two different periods of time: 1986–1987 and 1998–1999. Through comparison with the results of the interviews carried out in the ’80s and ’90s, the work confirms a tendency toward change, which with a few slight adjustments, can be made to fit with those academic contributions that claim the appearance of certain strategic, pluralist, and relational styles of government.

Deregulation and Participation: An International Survey of Participation in Electricity Regulation

Abstract: Amidst the wave of privatization and “deregulation” across the globe, a new set of regulatory structures is being created. The fact that deregulation actually involves “re-regulation” has been acknowledged in the recent literature, but the tension between regulation and public participation has been understudied in these new structures. While some private markets need effective regulation to reduce transactions costs and ensure stable market rules, consumers need regulation that is responsive to, and protective of, their interests. Consumer participation, therefore, is an important component of effective regulation. Effective regulation must also consider collective national or public interests, including the well-being of corporations. Therefore, regulatory agencies need to be both independent from, and responsive to corporate, consumer, and public interests. This article will briefly examine the tension among the competing goals of regulatory independence and responsiveness, and then conduct a broad survey of the status quo of public participation in national regulatory structures for electricity in the Americas. Our case studies demonstrate a wide variety of institutional mechanisms for participation, yet we find that no existing system seems to embrace direct participation by a wide set of consumers. The problems are even more acute in developing countries. We conclude by looking at recent experiments and proposals to improve the levels of participation in regulatory decision making.

From Chicago to Santiago: Neoliberalism and Social Security Privatization in Chile

Abstract: This article examines the ideology and principles that inspired the privatization of social security in Chile during the Pinochet regime. The article highlights the role of the state in the establishment of a fully funded, defined contribution system, as well as the importance of the transmission of ideas from the halls of the University of Chicago to Chile's centers of power. In the case of Chile, the ideas of freedom espoused by Milton Friedman and Frederick von Hayek were applied by a repressive authoritarian regime that violated human and political rights. Furthermore, these ideas served to legitimize a political and economic system based on the deprivation of freedom. Although social security reform was a critical component of a revolution going on in Chile in the 1970s, the ultimate purpose of this article is to show that the effects of this reform are by no means limited to Chile. The Chilean reform has been adopted by countries in Latin America and other parts of the world, and it has critically affected those societies as well. The article shows that the establishment of the fully funded, defined contribution system has been very costly, both for the state and the insured, while coverage has dramatically declined. The article concludes that the market economic reforms have enhanced only the freedom of those who could take advantage of the new economy, and that few of the promises made during the Pinochet regime by the neoliberal economists came true.

Coordinating the Government Bureaucracy in Hong Kong: An Institutional Analysis

Abstract: The change in sovereignty of Hong Kong in 1997 has brought about an interesting puzzle: despite a high degree of institutional continuity, the Hong Kong bureaucracy that was considered highly efficient during the colonial era has appeared to turn into an inept administrative structure generating blunder after blunder. The bureaucracy seems to face greater difficulties in horizontal coordination under the new governance, and has lost the ability to produce coherent policy actions. Drawing upon a literature of institutional analysis, this article examines the institutional design for coordination in the Hong Kong government. The article argues that the bureaucracy in Hong Kong is designed upon a logic of colonial rule. Like any institutional arrangements, the colonial administrative system has inherent coordination limitations. During the colonial era, some smoothing mechanisms were developed as the lubricant for the bureaucracy's operation, but the new governance has inevitably impinged upon some of these—making the bureaucracy more prone to coordination problems.

Civil Servants, Economic Ideas and Economic Policies: lessons from Italy

Abstract: Building on theoretically oriented and empirically grounded research on two key macroeconomic institutions in Italy, this article explains how and why civil servants can engineer major policy changes, making a difference in a country's trajectory. Italy provides a challenging testing ground for this kind of analysis, as it is generally portrayed as a highly politicized system in which political parties and politicians fully control public policies. Three general lessons can be learned, the first being that the role of civil servants in changing modes of economic governance depends on the resources that they master in the system in which they operate. Intangible assets are of primary importance in complex and perceived technical policies, such as monetary and exchange rate policy, which have high potential for technocratic capture. Second, in these policies, certain intangible assets, such as specific bodies of economic knowledge or policy paradigms, have a considerable impact on policy making. Third, besides interactions in international fora, the professional training of civil servants is a mainstream way through which economic policy beliefs circulate and gain currency, laying the foundations for policy shifts. By highlighting the importance of the intangible assets of macroeconomic institutions, this research makes an unorthodox contribution to the primarily economic literature on central bank independence.

Institutional Dynamics in Environmental Corporatism: The Impact of Market and Technological Change on the Dutch Polder Model

Abstract: This article describes how market and technological change can be conceived to affect corporatist politics in the area of waste management. The article adopts a political economy approach to institutional change, and seeks to trace the impact of market and technological change on established political and regulatory institutions. The article demonstrates that the main impact of marketization of waste services and the introduction of ISO 14001 environmental management systems was to expand the range of choices for companies and regulators to engage in regulatory interaction concerning environmental waste management practices. The main purpose of the article is to demonstrate exactly how the emergence of regulatory choices for both companies and regulators is likely to open up new avenues for regulation in the environmental field that, once pursued, systematically reduce incentives for corporate and regulatory actors to engage in associational politics.