Regulatory Theory (1).pptx, public policy,public administration

presentation for theory of public policy

1. Concept of Regulation : Theory & Practice Navigating the Complexities of Governance

2. Anila Shaban Maleeha Sabahat Raja Sana Zulfiqar Muhammad Salman Hassebullah Abbas Saleem Abbasi Group Members

3. Evolution of theory 01

4. Introduction It is a multi-disciplinary approach. It originated in Europe and North America in the 1970s in response to the emerging crisis of the postwar economy and its mode of regulation, and it has since been applied to many other periods, regions , and contexts. (Bevir, 2007) Régulation theory has encountered two main obstacles to achieving widespread international recognition: Semantic difficulty: British and American texts, written in English, the French term régulation is confused with ‘regulation’ (réglementation in French) Baseless critique of English readers: because they had access to only a few texts, which were already outdated, on the basis of which they made their critiques, which were often apt, but which did not take into account subsequent developments in research. (Boyer, 2005)

5. Main Idea: The regulationist movement originates in a rigorous and radical critique of neoclassical theory. Its critique is based on: A postulation of the self regulating character of market economies. (Aglietta, 1976) the abandoning of an erroneous interpretation of the disequilibria and contradictions which marked the end of the Golden Age Economic actors interact on the basis of a series of institutions, rules of the game and conventions that imply so many situated rationales. Therefore, we cannot simply assume that it is based upon set of principles valid for all times and all places. It challenges both the idea of individuals as purely rational economic agents (homo economicus) and the structuralist approach that views social structures as unchanging . Instead, régulation theory posits that economic actions and relationships are deeply embedded in social contexts that vary over time and place. This theory highlights the limitations of rational calculation in unpredictable environments and emphasizes the role of social constraints, norms, and institutions in shaping economic behavior.

6. Definition Regulation Theory: In the words of Michel Aglietta , one of the founding fathers of régulation theory, it involves ‘the analysis of the way in which transformations of social relations create new economic and non-economic forms, organized in structures that reproduce a determining structure, the mode of production.’ In short, régulation theory offers an analysis of capitalism and its transformations, which is entirely the opposite of the purely microeconomic approach of regulation. Its name derives from its French originators, who describe it as la théorie de régulation (the theory of regulation) or approche en termes de régulation (the approach in terms of regulation).

7. Introduction The main proponent is the idea of Karl Marx that the Capitalism is unstable Karl Marx argued that capitalism is unstable because it leads to capital overaccumulation and class struggle. Regulation theorists examine the ways in which different varieties of capitalism attempt to manage these instabilities.

8. Evolution of Theory Aglietta's seminal work, "A Theory of Capitalist Regulation: The US Experience" (1976), laid the foundation for régulation theory. He analyzed the development of American capitalism and identified different "regimes of accumulation" (ways in which economic growth is generated and sustained) and "modes of regulation" (systems of norms, institutions, and practices that stabilize and support these regimes). Orgin and Early Development:

9. Core Concepts Regimes of Accumulation : These are periods during which a certain configuration of production and consumption practices leads to stable economic growth. For example, the post-World War II "Fordist" regime, characterized by mass production and mass consumption. Modes of Regulation : These include laws, norms, conventions, and institutions that ensure the stability and reproduction of a regime of accumulation. For example, labor laws, welfare systems, and financial regulations that supported the Fordist regime. Crises and Transitions : Aglietta emphasized that crises occur when existing modes of regulation can no longer support the regime of accumulation, leading to a period of instability and the eventual emergence of new modes of regulation.

10. Evolution and Expansion (1980s-1990s) : Régulation theory expanded beyond the analysis of American capitalism to include other national and regional contexts. Scholars began to study different types of capitalism, such as the French, Japanese, and Scandinavian models. The theory also incorporated a broader range of social sciences, including political science and sociology, to better understand how economic processes are embedded in social and institutional contexts.

11. Contemporary Developments (2000s-Present) : Régulation theory continues to evolve, addressing new challenges such as globalization, financialization, and the environmental crisis. Scholars are examining how global financial markets and multinational corporations influence national modes of regulation. Recent work has focused on the role of transnational institutions, such as the International Monetary Fund and the World Bank, in shaping modes of regulation across different countries. The theory also explores the impact of technological changes, like digitalization and automation, on labor markets and economic stability.

12. Critique and Further Research : Critics argue that régulation theory can be too focused on macro-level structures and may overlook the agency of individual actors and small-scale social processes. Ongoing research seeks to address these critiques by integrating more detailed analyses of micro-level interactions and considering the role of culture and identity in economic behavior.

13. What is Regulation? Regulation is an intentional restriction or instigation on/for a choice of activity by an entity not directly involved in the activity/Process. This could include government bodies, regulatory agencies, international organizations, industry associations, professional bodies, or other stakeholders with authority or influence over the relevant domains. These entities establish rules, standards, policies, and enforcement mechanisms to shape behavior and outcomes in line with societal objectives or values.

14. Why is Regulation Needed? 02

15. Why is Regulation Needed? The government may leave the production to the private sector but they have to regulate them to ensure that the firm does not take advantage of its monopoly position Governments regulate to make a level-playing field and to prevent monopolies. Government set standards to regulate quality and safety control To Prevent Market Failures

16. Why is Regulation Needed? Recognition of Trade Unions and their Right to Collective Bargaining. Governments also Index Wages to Productivity. Governments set Minimum Wages, Working Conditions, and Hours. Governments imply progressive taxation policies to redistribute wealth to the people on the lower strata of the society

17. Regulatory Instruments 03

18. Regulatory Instruments Regulatory instruments are the tools and mechanisms used by governments, regulatory agencies, and other institutions to achieve regulatory objectives. Licenses: Licensing is a regulatory instrument that requires individuals or entities to obtain permission from a regulatory authority before engaging in certain activities or operations. For example, professional licenses are required for occupations such as doctors, lawyers, engineers, and pilots to ensure competency and protect public safety.

19. Regulatory Instruments Taxes: Taxation is a regulatory instrument used by governments to influence behavior, raise revenue, and address market failures. For example, carbon taxes to reduce greenhouse gas emissions. Controls & Regulations: Regulations encompass a broad range of rules, standards, and requirements imposed by governments or regulatory agencies to achieve specific policy objectives. It may include environmental regulations, health and safety standards, product quality standards, labor regulations, financial regulations, and trade restrictions.

20. Regulatory Instruments Penalties: Penalties are enforcement mechanisms used to deter non-compliance with regulatory requirements. Quotas: Quotas are quantitative restrictions imposed by governments on the quantity of goods, services, or resources that can be produced, imported, exported, or consumed within a specified period. Subsidies: Subsidies are financial incentives provided by governments to support or encourage certain activities, industries, or behaviors.

21. Regulatory Agencies in Pakistan 04

22. Regulatory Agencies in Pakistan Agency Function Constitutional Link State Bank of Pakistan Regulates monetary and credit policy, issues currency, supervises banks. Article 37(2) OGRA (Oil and Gas Regulatory Authority) Regulates oil and gas industry, ensures fair pricing and competition. Falls under federal government's power to regulate EPA (Environmental Protection Agency) Protects environment, implements environmental laws, sets pollution standards. Article 24A (protection of environment) Securities & Exchange Commission Regulates stock market, protects investors, ensures fair trading practices. Falls under federal government's power to regulate economic and financial matters Intellectual Property Organization of Pakistan Grants and protects patents, trademarks, copyrights. Implied by right to property (Article 17)

23. Regulatory Agencies in Pakistan Agency Function Constitutional Link Pakistan Medical Commission Regulates medical education and practice, ensures quality of medical services. Falls under concurrent legislative list (health) (Article 142) Food and Drug Authority (DRAP) Regulates drugs, medical devices, cosmetics, ensures safety and efficacy. Falls under concurrent legislative list (health) (Article 142) Civil Aviation Authority Regulates civil aviation industry, ensures safety of air travel. Falls under federal government's power to regulate airspace PTA (Pakistan Telecommunication Authority) Regulates telecommunication sector, promotes competition, protects consumer interests. Falls under federal government's power to regulate communication PEMRA (Pakistan Electronic Media Regulatory Authority) Regulates electronic media, ensures freedom of expression, prohibits hate speech. Falls under freedom of speech (Article 19)

24. Critical Analysis 05

25. Overall Critical Analysis of the Theory

26. Overemphasis on Structural Analysis Regulation theory tends to emphasize structural factors and institutions to such an extent that it may overlook the role of individual agency and the complexity of human behavior in shaping economic outcomes. Critics argue that this focus can lead to a deterministic view where economic agents are seen as overly constrained by structures, underestimating their capacity for innovation and change. Static Analysis of Institutional Forms Regulation theory has been criticized for its static analysis of institutional forms and regimes of accumulation. It sometimes fails to capture the fluidity and evolution of institutions over time.Critics point out that institutions are not static but are constantly evolving, influenced by political, economic, and social changes. Historical Specificity and Generalizability The theory often relies heavily on specific historical contexts, particularly the post-World War II period in Western Europe and North America.

27. Neglect of Micro-Level Analysis The focus on macro-level institutions and structures can lead to a neglect of micro-level processes ,this results in a less comprehensive understanding of how individual and firm level decisions impact broader economic patterns. Incorporating micro-level analysis, such as firm behavior, local labor markets, and household dynamics, would provide a more comprehensive understanding of economic regulation. Complexity and Accessibility The interdisciplinary nature and the complex integration of diverse theoretical perspectives can make régulation theory challenging to understand and apply. This complexity can limit its accessibility and practical utility for policymakers and scholars from other disciplines. Policy Implications The theory sometimes struggles to translate its insights into concrete policy recommendations. The complexity and abstraction of its concepts can make it challenging to derive clear policy directions. Policymakers may require more straightforward and practical guidance, which necessitates simplifying and operationalizing the theory's concepts for practical use.

28. Critical Analysis in Respect to Pakistan

29. Critical Analysis 1) Regulators often become the hands of powerful lobbies. The Environmental Protection Agency (EPA) is tasked with protecting Pakistan's environment and enforcing environmental regulations. However, its effectiveness has been questioned due to concerns about its independence and influence from powerful lobbies such as industrial lobbying and Political interference. 2) Too much independence to regulatory authorities also threatens to isolate them from direct democratic control

30. Critical Analysis The sub-optimal performance of regulators in Pakistan is caused by various institutional and capacity constraints. Under 18 th Amendment, the subject of regulation is under the Council of Common Interests, The Council of Common Interest lacks technical capacity and resources to evaluate performance of regulators. The Drug Regulatory Authority of Pakistan (DRAP) is responsible for regulating the pharmaceutical industry, ensuring the safety, efficacy, and quality of drugs. Under the 18th Amendment, the CCI has a say in how DRAP functions. The CCI is composed of political representatives from the federal government and provinces. These representatives may not have the scientific and technical knowledge necessary to effectively evaluate DRAP's performance in regulating complex issues like drug safety and quality control.

31. Critical Analysis The appointments of members of regulatory authorities are frequently challenged in courts which affects their routine functions. In 2015, the appointment of Absar Alam as the chairman of PEMRA was challenged in the Lahore High Court (LHC) In 2018, the appointment of Muhammad Saleem Baig as a member of PEMRA was challenged in the Islamabad High Court (IHC). In 2018, the appointment of Farrukh H. Sabzwari as a commissioner of the SECP was challenged in the Sindh High Court (SHC). The appointment of Zafar Abdullah as the chairman of the SECP was challenged in the Islamabad High Court (IHC) in 2017. In 2016, the appointment of Tariq Saddozai as a member of NEPRA was challenged in the Islamabad High Court (IHC). In 2020, the appointment of Aamir Khan as a member of NEPRA was challenged in the Islamabad High Court (IHC).

32. Critical Analysis Judicial Reviews of the decisions of regulators remain pending in courts for a long time. In 2018, the PTA imposed fines on several telecom operators for various regulatory violations, such as poor service quality and non-compliance with licensing conditions. The affected operators challenged these fines in the courts, arguing that they were arbitrary and disproportionate. However, due to procedural delays and backlogs in the judicial system, the cases remained pending for years without resolution.

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