Why give them more independence? The role of credibility, salience, epistemic communities, and the agencies’ strategies in strengthening the independence of Chilean economic regulators.

Abstract

The rise of the regulatory state has been characterized by the liberalisation of markets, the privatisation of public companies, the re-regulation of certain activities, and the creation of quasi-autonomous regulatory agencies (Majone 1994). Regarding the last, several studies have explored some of the functional and contextual explanations for elucidating why elected officials decided to delegate public authority to non-majoritarian institutions in the first place. In turn, other studies have explored the actions of these agencies and their relationship with their principals once they have been created. However, the literature has not explored what factors might lead elected officials to increase the independence of regulatory agencies long after they have been created as quasi-autonomous public bodies. This research aims to answer that question by analysing four legislative processes that involved institutional reforms of Chilean economic regulators between 2008 and 2016. We analysed the cases by applying a qualitative process tracing over different sources of data. Different elements from the literature are theorised and tested as relevant variables for explaining the phenomenon: the role of credibility towards investors, the regulatory salience, the influence of epistemic communities, and the strategies of the agency that is under reform.