SASE's 22nd Annual MeetingTemple University, Philadelphia

June 24-26, 2010Governance Across Borders:

Coordination, Regulation, and Contestation in the Global Economy

Analyzing the institutional innovation process: EU regulation through an

evolutionary lens

Evita Paraskevopoulou,Universidad Carlos III de Madrid

Motivation/Research QuestionsInnovation is a function of many factors among

which we can study the implications public policyPublic policy is a function of many factors among

which we can study the implications of innovation

What are the attributes of the policy process?What are the attributes of the regulatory process?How do new regulations emerge?What are the factors that determine the outcome of

the regulatory process?

2

Conceptual Approach

• Regulations are policies• Policies are institutions• Institutions are commonly accepted sets of rules

that evolve• The regulatory process is an institutional process• The regulatory process is an evolutionary process• The regulatory process resembles the innovation

process

3

(Evolutionary?) Attributes of the policy process“Public policy needs to be generated or at least processed within the

framework of governmental procedures, influences and organizations” (Hogwood and Gunn, 1984: 24).

The policy process is a process of agents´ mobilization, persuasion and negotiation (Slembeck, 1997) i.e. public policy is the result of a timely process that is shaped by existing

institutions and is facilitated by interactions between public and private actors

Current changes in the political sphere can be seen as part of a sequence of earlier changes and as setting the scene for future evolutionary developments (….) historical circumstances are essential knowledge that the policy maker needs to possess and continuously update in order to increase the possibilities for the successful planning and implementation of future policies. (Nelson and Winter, 1982)

There is policy feedback i.e. “policies produce politics” (Pierson, 1993) i.e. the policy process is cumulative and path dependent in its nature

4

(Evolutionary?) Attributes of the policy process

• Politics are a subtype of social evolutionary process that relies on knowledge accumulation for its evolution (Modelski, 1996) i.e. policy evolution is about learning processes and

ideological struggles

5

In politics...• Agents rarely achieve important changes

through individual action• Asymmetry of information (agenda-setting

effects)• Changes are largely dependent on authority

and power• Change requires longer time• Incentives for learning stem from the will to

change existing institutions and political accountability

6

So it is suggested that • The regulatory process is an evolutionary

process fueled by knowledge accumulation and transition and is facilitated by purposeful actors whose perceptions and choices vary and evolve

• The regulatory process resembles the innovation process

7

Methods and Empirical context

• Exploratory study, case studies, semi structured interviews

• Detergents Industry• EU political system, co-decision regulatory process• EU Regulations

REACH (Registration, Evaluation, Authorisation and Restriction of Chemical substances)

2004 Detergents RegulationGHS (Globally Harmonized System of Classification

and Labelling of Chemicals)

8

Attributes of the EU political system and the co-decision process

Demand for policy coordination and redistribution of power and advantages to actors at the interfaces of policy levels (Grande, 2001)

Understaffing of public apparatus and increasing demand for expert knowledge (Bowen, 2001)

High number of access channels, variety of representation and increasing density and frequency of interactions (Crombez, 1997)

Inbuilt incentive and sanction mechanisms regarding the transmission of valuable information (Broscheid and Coen, 2003)

Degree of access is dependent on the quality of information provided (Bouwen, 2001)

Changing patterns of interest representation, firms evolving into sophisticated policy actors (Coen, 2007)

9

Evidence:

• path dependency and cumulativeness– Changing legal paradigms

• actors and interactions– Multi-actor, multi-level

10

Foaming Events in European Rivers

Development of Detergents Directives for Biodegradibility

Revision of Detergents Directives and Voluntary

Agreements for classif ication and labelling

Review of Detergents Directives,

Communication w ith Industry

Implementation of Detergents Regulation

1973: Framew ork Directive establishing min 90% biodegradibillity

1982: Directives for assessment methods and 80% pass level

1995: DG III announces intention to review existing legislation

2000: Decision to change from Directives to European Regulation

2001: Draft proposal and publication of consultation

2002: Final Proposal

2004: Regulation is publiced

2005: Regulation comes into force and consultation for derogations is published

2007: Deadline for derogations

Ongoing negotiations for expansion of regulaoryprovisions

1960 1970 1980 1990 2000 2010

2004 Detergents Regulation

11

1960 1970 1980 1990 2000 2010

Concerns about chemicals

Continuous amendments of DSD (due to new

knowledge)

Rising concerns about existing and new

substances

Existing substances and preparations in focus and action towards changing

the legislation

Negotiations and Formulation of REACH

1976: Restrictions on Marketing and Use Directive

1981: Amendment of DSD establishes notification system for new substances

1993: Existing Substances Regulation, prioritization of 141 substances

2001: White Paper on future EU policy on chemicals

2003: Proposals by DGs (Enterprise and Environment) and consultations

2006: REACH Regulation is adopted

2007: Regulation comes into force and the Agency is established

Ongoing efforts for successful

implementation

1967: Dangerous Substances Directive (DSD)

1999: Dangerous Preparations Directive (DPD)

1998:Initiation of process to change the legislation

REACH

12

Evidence: changing legal paradigms

• Path dependence, changing legal paradigms and learning– process of rule formulation

• co-decision process• from Directives to Regulations

– problem- solving heuristics• Re-allocation of responsibility between private and

public actors (REACH)

– Scope of implementation of new rules• Globalization and harmonization

13

European Formulator

Industry Association

European Supplier Industry

Association

National Supplier Industry

Association

National Formulator

Industry Association

Formulator Multinational

Firm

Supplier Multinational

Firm

European Authorities / Institutions

National Authorities / Institutions

EU NGO

National NGO

National Formulator

Firm

National Supplier

Firm

Evidence: Main actors and interactions

14

Variety-selection-retention mechanisms at work

Variety Diversity of ideas, preferences and interests of policy agents that

compete to bring their concerns onto policy agendas (John, 1998; Slembeck, 1997; Modelski, 1996)>>> variety of policy problems >>>variety of policy strategies, programs and instruments

Selection Selection processes at all stages of the policy process but largely

dependent and controlled by purposeful individuals (Pierson, 1993, 2000) or following Loasby (1999), are channeled by human institutions >>> “endogeneity” of selection criteria (Dosi and Nelson, 1994) and potential political capture

Retention Maintenance and replication of new rule (Dopfer et al., 1994), new

divisions of labor>>> guaranteed in politics by compulsory compliance

15

The regulatory process through an evolutionary lens

16

Regulation: an evolutionary process

17

Factors influencing the outcome

• Source and type of policy issue• Policy level of issue emergence• The distribution of information among the

participant

18

Concluding remarks/issues to discuss

• Redefine the view on public policy– Policy formation– Policy evolution– Determining factors

• Regulations as endogenously generated criteria (fear of capture?)

• Link between knowledge accumulation and bargaining power

19