Independence: Reasons, Costs and Benefits

Abstract

This chapter focuses on the most relevant feature of all NCAs: independence. It defines independence in relation to accountability, since one cannot increase the former without shrinking the latter, and vice versa. As a consequence, the chapter goes on by showing that independence has not only benefits but also costs. Regarding the latter, it reviews the contributions in the literature pointing out the risk for parliaments and governments to lose control over policy implementation, and the solutions that politicians can adopt to avoid “agency drift”. The chapter also illustrates the supposed benefits of independence, focusing in particular on the credibility and stability of policy enforcement that should be associated with it. It concludes by reviewing the impact of other systemic factors, like veto players and VoC, on the independence of regulatory agencies.