Credibility and the design of regulatory agencies in Brazil

Abstract

In this paper we model the process of regulatory agency design, focusing on the role of credibility. The government is constrained in the sense that it must create regulatory institutions that allow it to commit to not administratively expropriate investors. The model explains both the preference of the agency head chosen by the government as well as the optimal level of statutory control. We argue that in Brazil this trade-off between credibility and control of the agencies is key to understanding the specific regulatory institutions that have been chosen. Comparative static results are derived to examine how changes in some key variables affect the design of the agencies, providing us with a set of hypotheses for comparing the design of five different agencies created to regulate industries with very different characteristics. Although these agencies were initially created under very similar designs, they are expected to evolve in ways that accord with our theory.

A participação popular nas agências reguladoras da Bahia

“…As agências brasileiras foram estruturadas com a finalidade precípua de criar um ambiente jurídico estável e confiável para os agentes econômicos interessados em investir no país, sendo uma exigência dos órgãos internacionais e do mercado financeiro (Binenbojm, 2005;Farias, 2002;Mueller & Pereira, 2002). Essa condicionante se deu por força da sucessão de acontecimentos econômicos e sociais ocorridos no Brasil nas décadas de 1980 e início da 1990, verbi gratia pela criação de diversos planos econômicos, hiperinflação, impeachment de um presidente, forte intervenção estatal nas atividades econômicas, sendo que tais circunstâncias não contribuíram para um ambiente estável e confiável para os investimentos de grande porte.…”

“…As agências reguladoras de infraestrutura foram criadas com o escopo de criar um ambiente de credibilidade e diminuir o risco regulatório para o capital privado investidor, Research, Society and Development, v. 9, n. 8, e466985165, 2020 (CC BY 4.0) | ISSN 2525-3409 | DOI: http://dx.doi.org/10.33448/rsd-v9i8.5165 6 mediante a instituição de uma governança regulatória, restringindo a atuação arbitrária dos governantes (Melo, 2002;Mueller & Pereira, 2002).…”

The Organizational Consequences of Politics: A Research Agenda for the Study of Bureaucratic Politics in Latin America

“…Some scholarship in this area takes a political science approach (e.g., Amengual 2011b; Batista da Silva 2011; Baird and Fernandes 2014), but most work on this subject tends to come from the fields of economics or public administration. Topics include the design of regulation (Mueller and Pereira 2002), the diffusion of regulatory agencies (Jordana and Levi-Faur 2005;Post 2005;Levi-Faur and Jordana 2006;Jordana et al 2011), and de facto regulatory independence in the region Trillas 2006, 2009;Durand 2010;Trillas and Montoya 2013). Far from simply reproducing existing analytical approaches or applying existing theories, much of this research moves theory development regarding the regulatory state away from a North American context to a broader sectoral one (e.g., central bank independence in a range of countries) or explicitly uses variation in the role of the state and its development in Latin America to produce generalizable insights.…”

Delegation, Presidential Regimes, and Latin American Regulatory Agencies

“…This mechanism was presented as the "correct" institutional design for new regulatory agencies (see, for example, OECD 2000OECD , 2006World Bank 1997), or as a required modernization for existing ones, and was diffused extensively in Latin America and worldwide (Jordana and Levi-Faur 2005;Jordana, Levi-Faur, and Fernandez 2009). Thus, regulatory institutions created or reformed during the 1990s tended to be relatively similar to each other, although there remain some variations in their institutional characteristics, which reflect historical legacies and many other factors differentiating nations and sectors (see Jordana and Sancho 2004;Gilardi 2008;and, in regards to Brazil, see also Mueller and Pereira 2002;Correa et al 2006). In general, it was expected that agency heads appointed under specific professional conditions and protected by delegation rules from their political principals, could make regulatory decisions oriented to the long-term development of markets, regardless of political volatility.…”