Daniel L. Nielson

Delegation and Agency in International Organizations

Part I. Introduction: 1. Delegation under anarchy: states, international organizations, and principal-agent theory Darren G. Hawkins, David A. Lake, Daniel L. Nielson and Michael J. Tierney Part II. Variation in Principal Preferences, Structure, Decision Rules, and Private Benefits: 2. A problem of principals: common agency and social lending at the multilateral development banks Mona Lyne, Daniel L. Nielson and Michael J. Tierney 3. US domestic politics and international monetary fund policy J. Lawrence Broz and Michael Brewster Hawes 4. Why multilateralism? Foreign aid and domestic principal-agent problems Helen V. Milner 5. Distribution, information, and delegation to international organizations: the case of IMF conditionality Lisa L. Martin 6. Delegation and discretion in the European Union Mark A. Pollack Part III. Variation in Agent Preferences, Legitimacy, Tasks, and Permeability: 7. How agents matter Darren G. Hawkins and Wade Jacoby 8. Screening power: international organizations as informative agents Alexander Thompson 9. Dutiful agents, rogue actors, or both? Staffing, voting rules, and slack in the WHO and WTO Andrew P. Cortell and Susan Peterson 10. Delegating IMF conditionality: understanding variations in control and conformity Erica R. Gould 11. Delegation to international courts and the limits of recontracting political power Karen J. Alter Part IV. Directions for Future Research: 12. The logic of delegation to international organizations David A. Lake and Mathew McCubbins.

Delegation and Agency in International Organizations: Delegation under anarchy: states, international organizations, and principal-agent theory

In December 1999, police fired tear gas and rubber bullets into a mob protesting the World Trade Organization meeting in Seattle. A central theme of this and similar anti-globalization protests is that the WTO, IMF, World Bank, and other global institutions are “runaway” international bureaucracies implementing a “Washington consensus” formulated by professional economists and other neo-liberals who have made their careers within these agencies (Stiglitz 2002; Rich 1994). Other critics charge that these international organizations (IOs) are imperialist tools of the powerful, exploiting poor and disadvantaged countries for the benefit of the West. Although they have not yet taken to the streets, American conservatives, at the other end of the spectrum, argue that these IOs fail to promote the interests of the United States (Meltzer Commission Report 1999; Krauthammer 2001). Meanwhile, Europeans complain about the “democratic deficit” within the European Union (see Pollack 2003a: 407–14). As the EU expands its competencies and grows to twenty-five members, critics charge that the simultaneous deepening and broadening of the union is driven by unaccountable bureaucrats in the European Commission and the highly insulated judges of the European Court of Justice. Divorced from electoral pressures, these increasingly powerful EU institutions have allegedly escaped popular control. French and Dutch voters retaliated against the Brussels-led integration project by rejecting the proposed EU Constitution in June 2005.

Supplying Trade Reform: Political Institutions and Liberalization in Middle-Income Presidential Democracies

Correcting the relative lack of attention to the supply side of trade policy, this article addresses how political institutions channel societal demands for protection. I hypothesize that strong presidents with significant legislative powers and strong party leaders—empowered through electoral rules that rein in the personal vote—can help overcome protectionist biases. These arguments compare with two institutional alternatives: first, that protectionism should decrease as electoral district size grows because elections become more proportional; and second, that the collective‐action problems in fragmented party systems thwart trade reform. I evaluate these hypotheses empirically using pooled time‐series–cross‐sectional data involving 18 developing countries from 1971 to 1997. I find that delegation to presidents and party leaders is significantly related to trade liberalization, and some evidence suggests that the effective number of parties and the size of electoral districts may also influence levels of protectionism.

Foreign Aid Shocks as a Cause of Violent Armed Conflict

In this study we resolve part of the confusion over how foreign aid affects armed conflict. We argue that aid shocks – severe decreases in aid revenues – inadvertently shift the domestic balance of power and potentially induce violence. During aid shocks, potential rebels gain bargaining strength vis-à-vis the government. To appease the rebels, the government must promise future resource transfers, but the government has no incentive to continue its promised transfers if the aid shock proves to be temporary. With the government unable to credibly commit to future resource transfers, violence breaks out. Using AidData’s comprehensive dataset of bilateral and multilateral aid from 1981-2005, we evaluate the effects of foreign aid on violent armed conflict. In addition to rare-event logit analysis, we employ matching methods to account for the possibility that aid donors anticipate conflict. The results show that negative aid shocks significantly increase the probability of armed conflict onset.

Constitutional Change in Colombia Policy Adjustment Through Institutional Reform

By the late 1980s the Colombian constitution had come under severe pressure for reform as the population shifted markedly from a rural to an urban majority. The president had repeatedly tried to provide policy to court the median Colombian voter, who was urban. The congress was strongly tied to rural interests. Congress consistently thwarted presidential efforts at policy reform. Different presidents again and again proposed constitutional reform as a way of achieving eventual policy aims, only to have the proposed reforms soundly rejected in the legislature. The Colombian congress solely possessed the authority to make constitutional revisions. This article tells the story of how this institutional impasse was overcome. In the wake of severe social strife and conflict a national referendum on constitutional reform was passed by popular vote and upheld by judicial action. This article argues that such constitutional conflict might only be overcome through extraconstitutional—although still democratic—means.

Theory, Data, and Hypothesis Testing: World Bank Environmental Reform Redux

We thank Tamar Gutner for her thoughtful comments on our article, “Delegation to International Organizations: Agency Theory and World Bank Environmental Reform†(International Organization, Spring 2003). While championing principal-agent (P-A) theory as the most promising approach to the study of international organizations (IOs) in general, she questions the novelty of our P-A model and criticizes both our methods and data. We are grateful for the opportunity to clarify our contributions and offer concrete solutions to the research questions that she raises.We thank Brad Parks and Sue Peterson for comments on an early version of this article. For research assistance, we are grateful to Daniel Magleby, Dan Maliniak, and Jess Sloan.

Using Field Experiments in International Relations: A Randomized Study of Anonymous Incorporation1

Efforts to fight international money laundering, corruption, and terrorist financing depend crucially on the prohibition barring the formation of anonymous shell companies. To study the effectiveness of this prohibition, we perform the first international relations (IR) field experiment on a global scale. With university institutional review board (IRB) clearance, we posed as consultants requesting confidential incorporation from 1,264 firms in 182 countries. Testing arguments drawn from IR theory, we probe the treatment effects of specifying (1) the international standards (managerialism), (2) penalties for noncompliance with these standards (rationalism), (3) the desire to follow norms through complying with international standards (constructivism), and (4) status as a U.S. customer. We find that firms prompted about possible legal penalties for violating standards (rationalism) were significantly less likely to respond to inquiries and less likely to comply with international law compared to the placebo condition. Some evidence also suggests that the constructivist condition caused significantly greater rates of noncompliance. The U.S. origin condition and the managerial condition had no significant effects on compliance rates. These results present anomalies for leading theories and underscore the importance of determining causal effects in IR research.

Which Devil in Development? A Randomized Study of Citizen Actions Supporting Foreign Aid in Uganda

Debate over the effectiveness of foreign aid has raged on despite a paucity of information about recipients’ actual views of development assistance, especially as citizens compare aid to domestic government programs. We argue that citizens may see foreign aid as an escape from clientelism because aid is less politicized than government programs, citizens trust donors more, and they support aid conditionality. They may also favor multilateral donors over bilateral donors for similar reasons. We test the argument with a randomized experiment on a subject pool of roughly 3,600 Ugandan citizens – to our knowledge the first nationally representative, large-n study of aid recipients. We randomly assigned the project funders – multilateral banks, bilateral donors, and a control implying the domestic government – for actual co-financed “pipeline” projects and invited citizens to sign a petition and send a text message in support. We find that citizens are significantly more willing to sign a petition or send a text message in favor of foreign aid projects compared to government programs. A companion survey to the experiment reveals evidence that citizens perceive aid as less prone to politicization. Some evidence suggests that Ugandans also see multilateral donors as superior to bilaterals. The findings suggest that recipients view foreign aid as relatively effective compared to domestic government programs.

The PRI's Choice: Balancing Democratic Reform and its Own Salvation

This article explores the puzzle of why Mexico’s long-ruling Institutional Revolutionary Party (PRI) implemented a series of electoral reforms in 1996 that precipitated its own downfall. Previous work explaining the process of Mexican democratization focuses on foreign pressures, interparty bargaining and a unified PRI. Alternatively, we argue that internal divisions in the PRI–conjoined with the threat of a presidential deal with the opposition–determined the particular shape of the reform. The article uses a bargaining model to illustrate the conjunction of interests between the President and PRI hard-liners while taking into account the shadow role played by the opposition. We argue, finally, that the model can be extended to aid explanations of other democratic transitions, as well as general cases of majority-party decision-making and coalition bargaining.

IOs as Norms Platforms: The World Bank’s Influence on Environmental Lending at the Islamic Development Bank

In this paper we explore the proposition that changes in international organization (IO) behavior might derive from the IO’s interactions with other IOs. Norm diffusion across IOs may take place via socialization by the norm entrepreneur—which, in early stages, may rely on material incentives or may occur as the norm adopter emulates the norm initiator. We also address non-IO sources of norms: member states and non-governmental organizations (NGOs). We extend theories of norm diffusion by applying them to interactions between international organizations. We test the hypotheses that derive from this approach using a statistical analysis of Islamic Development Bank (IDB) environmental lending. The IDB provides an ideal setting to evaluate our hypotheses: the originators of most global norms, the advanced industrial democracies, do not have voting shares on the Islamic bank’s executive board. This allows us to focus on the effects of global norms diffused by IOs where the industrial democracies are the most powerful members from the effects of the preferences of IO’s member states, who jointly form the collective principal of the IDB. We find evidence for socialization to IOs through non-material and non-delegated mechanisms. Specifically, international organizations can be socialized through common institutional memberships as well through example of normatively powerful organizations.