Principal Agent Theory

Question 1

What is the principal-agent theory ?

Answer 1

Sovereign States Delegate part of their authority to Supranational Organisations to manage complex issues

Question 2

Which is the principal ?

Answer 2

The country delegating power

Question 3

Which is the agent ?

Answer 3

The Supranational Organisation to whom the power is delegated

Question 4

Types of Agents (Supranational Organisations)

6

Answer 4

1. UN
2. EU
3. World Bank
4. Commonwealth
5. IMF
6. WTO

Question 5

Benefits of delegating power to Agent

4

Answer 5

• Efficiency
• Expertise
• Collective Action
• Shifting blame for unpopular decisions

Question 6

Disadvantages of delegating power

(3)

Answer 6

1. Loss of sovereignty
2. Agent Drift (Different Agendas)
3. Legitimacy Issues (Brexit)

Question 7

Types of legitimacies for Supranational Organisations

Answer 7

• Democratic Legitimacy - Elections
• Results Based Legitimacy
• Order-Based Legitimacy - (Rule of law)
• Systematic Legitimacy
• Deliberative Legitimacy - (Political Dialogue)
• Procedural Legitimacy - (Structured rule-making processes and good governance)

Question 8

An example of the Principal Agent Theory

Answer 8

National Governments delegate some of their authority to the European Commission resulting in limited direct control

Question 9

How can the legitimacy of Supranational Institutions be enhanced ?

Answer 9

Esty (2006) states that Administrative law, traditionally applied within domestic contexts, can enhance legitimacy of supranational institutions.