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Regulatory governance in Brazilian infrastructure industries

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  • Correa, Paulo
  • Melo, Marcus
  • Mueller, Bernardo
  • Pereira, Carlos

Abstract

The impact of regulation on the economic performance of regulated sectors depends crucially on the appropriateness of the design of the regulatory agencies' structure and process, that is, on regulatory governance. Governance refers not to the policies that emerge from regulation, but rather to the 'inputs' that go into the regulatory process. The current interest in regulatory governance has created the need for a measure to allow comparison among agencies and sectors, as well as over time. Given that there is no obvious way of measuring governance, one solution is to build an index that captures the essence of the concept by translating observable attributes of the regulatory agency and its environment into a number ranging from 0 to 1 (low-to-high quality governance). This paper presents such an index for 21 infrastructure regulatory agencies (federal and state) in Brazil in 2005. This index was based data collected by the authors through questionnaires applied to high-ranking officials at the regulatory agencies. The main index is composed of four sub-indexes that capture issues related to autonomy, decision-making process, tools for effective decision making and accountability. The results show that regulatory governance is relatively similar among the 21 agencies, with better results at the federal than at the state level. In addition it was found that formal attributes do not always translate into effective governance. Of the four dimensions of regulatory governance, the autonomy and accountability were, on average, more developed than decision-making process and regulatory tools.

Suggested Citation

  • Correa, Paulo & Melo, Marcus & Mueller, Bernardo & Pereira, Carlos, 2008. "Regulatory governance in Brazilian infrastructure industries," The Quarterly Review of Economics and Finance, Elsevier, vol. 48(2), pages 202-216, May.
  • Handle: RePEc:eee:quaeco:v:48:y:2008:i:2:p:202-216
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    References listed on IDEAS

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    1. Baron, David P., 1989. "Design of regulatory mechanisms and institutions," Handbook of Industrial Organization,in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 24, pages 1347-1447 Elsevier.
    2. Stern, Jon & Cubbin, John, 2005. "Regulatory effectiveness : the impact of regulation and regulatory governance arrangements on electricity industry outcomes," Policy Research Working Paper Series 3536, The World Bank.
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    6. Voigt, Stefan & Salzberger, Eli M, 2002. "Choosing Not to Choose: When Politicians Choose to Delegate Powers," Kyklos, Wiley Blackwell, vol. 55(2), pages 289-310.
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    Citations

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    Cited by:

    1. World Bank, 2007. "How to Revitalize Infrastructure Investments in Brazil : Public Policies for Better Private Participation, Volume 1. Main Report," World Bank Other Operational Studies 8047, The World Bank.
    2. Alexander Moore & St├ęphane Straub & Jean-Jacques Dethier, 2014. "Regulation, renegotiation and capital structure: theory and evidence from Latin American transport concessions," Journal of Regulatory Economics, Springer, vol. 45(2), pages 209-232, April.
    3. Trillas, Francesc, 2010. "Network industries and regulatory jurisdiction," IESE Research Papers D/859, IESE Business School.
    4. repec:eee:juipol:v:49:y:2017:i:c:p:116-126 is not listed on IDEAS
    5. Cassey LEE & Yoshifumi FUKUNAGA, 2013. "Competition Policy Challenges of Single Market and Production Base," Working Papers DP-2013-17, Economic Research Institute for ASEAN and East Asia (ERIA).
    6. repec:gig:joupla:v:2:y:2010:i:1:p:3-30 is not listed on IDEAS
    7. Recuero Virto, Laura & Gasmi, Farid & Noumba Um, Paul, 2010. "Does political accountability matter for infrastructure regulation? The case of telecommunications," MPRA Paper 28496, University Library of Munich, Germany, revised 2010.
    8. Lee J. Alston & Bernardo Mueller, 2011. "Brazilian Development: This Time for Real?," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 12(1), pages 37-46, March.
    9. Andres, Luis & Guasch, Jose Luis & Azumendi, Sebastian Lopez, 2008. "Regulatory governance and sector performance : methodology and evaluation for Electricity distribution in Latin America," Policy Research Working Paper Series 4494, The World Bank.

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