¶ … Principal-Agent Model in Economics and Political Science Taking this view of the world makes it difficult to study fundamental transformations, especially when the nature of institutions and the relationship between economics and politics may be changing. But it also tends to limit problem-solving theories to explaining the functioning of existing systems and makes them less useful in raising questions about how they came into existence and is maintained or changing. These differences are of central importance to the conceptualization of the relationship between politics and economy. While mainstream political economy takes the separation of the economic and political spheres for granted, critical political economy asks how this separation came about, how it has been (re-)produced and by whom, what role it plays in modern capitalist democracies, and why it has become so widely accepted in the social sciences. Critical political economy is, for example, helpful in the analysis of the 'new regionalism' in Europe, where efforts to redefine the relationship between politics and the economy and to 'insulate substantially the new economic institutions from popular scrutiny or democratic accountability' have been important aspects of the move towards economic and monetary union.
The international political perspectives of free trade
A Global Analysis
International Trade Impact on Tunisia
The Export of agricultural products
International trade and development of Tunisia
Balance in the Trade Regime
Imports and exports of Tunisia
Coping With External and Internal Pressures
The Common External Tariff (CET)
Anti-Dumping Duties (ADDs) and Countervailing Duties (CVDs)
Rules of origin
The New Commercial Policy Instrument
Sector Based Aspects
GATT/WTO's Main Principles
Multilateral negotiation and free trade
The Trading Policies of European Union
Critical Political Economy
The Gross Domestic Product of Tunisia
The Real Data Analysis of Import Export Companies in Tunisia
The Smith Co Company
The Softkim and Lovers Limited
The Impact of Free Trade on Tunisia Trading 43
Africa, the Caribbean, and the Pacific
Alternative Mediterranean Conference
Asia-Pacific Economic Cooperation Conference
Association of South-East Asian Nations
Central and Eastern European countries
Common Foreign and Security Policy
Conference for Security and Co-operation in Europe
European Environmental Bureau
European Economic Community
European Investment Bank
Euro-Mediterranean Human Rights Network
European Political Cooperation
Euro-Mediterranean Study Commission
Front Islamique du salut
Friends of the Earth
Former Yuglosav Republic of Macedonia
International Court of Justice
International Monetary Fund
Multicultural Agreement on Investment
Mediterranean free trade area
Middle East Peace Process
Mediterranean Information Office
Mediterranean Non-member Countries
Mediterranean Partner Countries
North Atlantic Council
North Atlantic Free Trade Agreement
North Atlantic Treaty Organization
Organization for Economic Co-operation and Development
Organization for Security and Co-operation in Europe
Poland and Hungary Aid for the Reconstruction of the Economy
Arab Network for the Environment and Development
Regional Economic Development Working Group
Renovated Mediterranean Policy
Structural adjustment programmers'
Turkish Republic of Northern Cyprus
Union of the Arab Maghreb
United Nations Educational, Scientific, and Cultural Organization
Western European Union
World Trade Organization
World Wildlife Fund (Worldwide Fund for Nature)
Political economy is concerned with the nature and interaction of the political and economic aspects of social reality. Different approaches to political economy can be distinguished and categorized along several dimensions or criteria. The most important of these is the conceptualization of the relationship between politics and economy, more specifically 'whether or not they claim to depict a systematic relationship between' the two. While one of the central tenets of mainstream approaches to political economy is an ontological (and largely unquestioned) assumption that the 'state' and the 'market' are essentially separate spheres of social reality, critical approaches argue that they are systematically related and that the apparent separation posited and observed by mainstream political economy is itself the product of historical development. This critical perspective on the relationship between 'state' and 'market' does not necessarily imply an economic reductionist understanding, where politics is simply reduced to the effects of economic forces, although that position was dominant within Marxist political economy for many years. But it does suggest that major political developments cannot be explained without reference to economic forces.
A closely related issue is the stance adopted with regard to 'social reality' and its analysis and conceptualization in the social sciences. The distinction made by Robert Cox between problem-solving and critical theories is useful here and it is worth quoting him at length: 'Problem-solving theory, takes the world as it finds it, with the prevailing social and power relationships and the institutions into which they are organized, as the given ...
Free trade has long been associated with the phenomenon of lassies faire and lassies passe. This implies to the liberal trading polices across the borders. The principal-agent model and the theory of delegation, which originated in the new economics of organization, have been increasingly applied in the study of the European Union (EU). This chapter critically examines these applications. It argues that the principal-agent model holds significant promise for understanding the complex relationships and interactions that characterize the Union, not least on account of its greater institutional sensitivity over traditional theories of integration. However, its potential has as yet not been fully realized. This is due partly to the prior theoretical commitments of the EU scholars, who have used these models, partly to misunderstandings of the complexity and implications of the approach.
The discussion below is divided into three parts. The first offers a brief overview of, and background to, the principal-agent model. The second discusses the promise that the model offers for understanding European integration and governance, then examines in detail its deployment by authors writing from four theoretical perspectives - liberal inter-governmentalism (LI), institutional inter- governmentalism (II), historical institutionalism supra-nationalism (HIS), and rational choice supra-nationalism (RCS). The final section discusses general weaknesses in how the principal-agent model has been applied to the EU and suggests future research possibilities (Posner, 1999, p. iii).
The Principal-Agent Model in Economics and Political Science
From its origins in the new economics of organization as a theoretical construct devised to examine relations within the firm the principal-agent model became the dominant framework for examining the difficulties that arise from contracting in any setting. Agency relationships are created when one party, the principal, enters into a contractual agreement with a second party, the agent, and delegates to the latter responsibility for carrying out a function or set of tasks on the principal's behalf. In the classic representation, the principal is the shareholder of a company that contracts an executive to manage the business on a day-to-day basis. However, the principal can be any individual or organization that delegates responsibility to another in order to economize on transactions costs, pursue goals that would otherwise be too costly, or secure expertise.
Difficulties arise on account of the asymmetric distribution of information that favors the agent, including adverse selection and moral hazard. The asymmetry of information can allow the agent to engage in opportunistic behavior - shirking - that is costly to the principal, but difficult to detect. The likelihood of shirking is increased by slippage, when the very structure of delegation 'provides incentives for the agent to behave in ways inimical to the preferences of the principal'. Assuring control and limiting shirking is the 'principal's problem'. The challenge is to find ways of ensuring perfect compliance, so that agents cannot exploit the costs of measuring their characteristics and performance to act contrary to the preferences of the principal. Economists have focused on incentive structures that discourage opportunistic behavior on the part of the agent. Contractual restrictions on the agent's operational purview or monitoring the agent are alternative possibilities, but can be costly. Their effectiveness is limited by the extent to which the agent's actions can be observed (Russell, 1967, p. 147).
The new economics of organization has been very influential in political science. Rational choice institutionalism, in particular, has drawn from its toolkit in its explanations of how institutions emerge and interact. Scholars of U.S. politics have used the principal-agent model to investigate the relationship between Congress and executive agencies, and the tasks performed by congressional committees. In international relations, delegation has been used to explain why sovereignty-conscious states create international organizations. The basic model has been used to assess the efficacy of mechanisms devised to ensure agent compliance, and extended, elaborated upon, and adapted to take account of cases where there are multiple principals.
The objective of the research is to investigate various aspects of free trading policies in the global political economy, in particular the economic and industrial situation of Tunisia after the implementation of free…
Taking this view of the world makes it difficult to study fundamental transformations, especially when the nature of institutions and the relationship between economics and politics may be changing. But it also tends to limit problem-solving theories to explaining the functioning of existing systems and makes them less useful in raising questions about how they came into existence and is maintained or changing. These differences are of central importance to the conceptualization of the relationship between politics and economy. While mainstream political economy takes the separation of the economic and political spheres for granted, critical political economy asks how this separation came about, how it has been (re-)produced and by whom, what role it plays in modern capitalist democracies, and why it has become so widely accepted in the social sciences. Critical political economy is, for example, helpful in the analysis of the 'new regionalism' in Europe, where efforts to redefine the relationship between politics and the economy and to 'insulate substantially the new economic institutions from popular scrutiny or democratic accountability' have been important aspects of the move towards economic and monetary union.
76). As automation increasingly assumes the more mundane and routine aspects of work of all types, Drucker was visionary in his assessment of how decisions would be made in the years to come. "In the future," said Drucker, "it was possible that all employment would be managerial in nature, and we would then have progressed from a society of labor to a society of management" (Witzel, p. 76). The
Corruption The relationship between corruption and democracy as a political institution has been at the core of studies and researches for political science since its beginnings. The development made in the filed of Political Science along the years has influenced the way scientists perceived and analyzed the corruption phenomenon. Charles H. Blake nad Stephen D. Morris have gathered under the all embracing title Corruption and Democracy in Latin America, the works
Criminal Justice System Ever since gaining independence status, both Mozambique and Zimbabwe have come under the scanner for violation of human rights incidences and extrajudicial excesses. The under trials, often arrested without formal sanctions have been continually processed through undemocratic norms and subjected to undue treatment when in confinement and under the control of policing authorities in spite of the fact that statutory provisions in the constitution provide assured guarantee
In contrast, within the firm, the entrepreneur directs production and coordinates without intervention of a price mechanism; but, if production is regulated by price movements, production could be carried on without any organization at all, well might we ask, why is there any organization?" (Coase, 1937, p. 387) In simpler words if markets are so efficient why do firms exist? Coase explains, "the operation of a market costs something
POSITIVE AND NORMATIVE ECONOMICS RELATES TO THE U.S. GOVERNMENT The objective to the success of a specific science is the capability to identify and delineate opinions on 'what is' from 'what ought to happen'. This includes providing a demarcation between positive statements and normative statements. Positive statements deal with 'what is, was or what will be' but the normative statements deals with 'what ought to be' and are based on
They goal for globalization is to increase material wealth and the distribution of goods and services through a more international division of labor and then, in turn, a process in which regional cultures integrate through communication, transportation and trade. The overall theory is that if countries are tied together cooperatively economically, they will not have needed to become political enemies (Smith 2007). Notice the continuum here -- globalization, like