Withering in the Heat? In Search of the Regulatory State in Jamaica and Trinidad and Tobago

Abstract

This article seeks to explain the development of telecommunications and electricity regulation in Jamaica and Trinidad and Tobago. Across countries and sectors, there has been a degree of privatization and regulatory reform, although the extent of these changes has varied across countries and sectors. In order to identify both the causes of these changes, and their differing degrees, we consider the applicability to the Commonwealth Caribbean of the growing body of scholarship on the rise throughout Western Europe of the 'regulatory state'. This scholarship has identified, as the main features of the regulatory state, the separation of policy-making and service provision functions of governance, the delegation of regulatory responsibilities to independent regulatory agencies and an emphasis on formal rules over implicit and discretionary standards of performance. In Europe, the growth of the institutional framework associated with the regulatory state is said to have been a response to changing policy environment. Specifically, governments are said to be increasingly compelled to prioritize efficient policies over the pursuit of redistributive goals, and (related to the pursuit of efficient polices) face policy challenges of increasing complexity and interdependence among different actors than has previously been the case. Given these newly articulated demands, traditional policy instruments - such as state owned enterprises and centralized administration by bureaucracies headed by elected officials - are perceived to lack credibility. In order to assess whether this proposed explanation can explain developments in the Commonwealth Caribbean, we document the main developments over the last twenty years or so in each of the four cases examined in this article, and then compare developments between nations, across sectors and over time. If the 'regulatory state hypothesis' is correct, we would expect empirical analysis to reveal the following: cross nationally, we would expect to witness a greater degree of regulatory state type governance in Jamaica, compared with Trinidad and Tobago, due to the greater degree of reliance on external investment (which we assume limits scope for prioritizing redistributive objectives); across sectors, we would expect to sectoral differences less prominent than the hypothesized national patterns, given the degree of similarity between telecommunications and electricity in terms of interdependence and complexity, as well as in terms of the trade-offs faced by policymakers between efficiency and redistribution. To a large extent these predictions are confirmed by empirical case study analysis; however, a number of puzzles remain. For example, why was the Jamaican telecommunications regime 'punished' (in terms of low investment and poor performance) by the failure to delegate regulatory functions and by the legal uncertainties surround license obligations? Why has Trinidad and Tobago repeatedly failed to establish credible, independent sectoral regulation of telecommunications regulation despite a professed intention to pursue efficient policies and to introduce competition? We, therefore, diagnose a partial 'withering' of the regulatory state in the Commonwealth Caribbean, and speculate, in line with the 'actor-centred institutionalism' school, that the pattern of institutions (rules), interest group organisation and dominant ideas about regulation can help explain some of these anomalies. In conclusion, we argue that the actor-centred institutionalism literature can complement the purely functionalist assumptions of regulatory development inherent in the regulatory state literature.

Keywords: Utilities regulation, Jamaica, Trinidad and Tobago, telecommunications, electricity, actor-centered institutionalism

JEL Classification: H11, K23, L94, L96, 054