Transitional Governance

A joint workshop between WG7 (Civil Peace) and WG4 (Governance and Peace).
Oslo, 11-13 May 2005.

Transitional institutions are the political institutions that emerge in a society when the status quo is unsustainable. Such situations can arise after a civil war (with the defeat of the government or a negotiated change in governance), defeat in an interstate war, withdrawal of an occupying force, the collapse of an authoritarian regime, or the end of colonial rule. Transitional institutions may or may not be explicitly designed to be temporary. These institutions can be imposed or negotiated or something in between. They can stem from an external power or may be completely indigenous in origin. They might reflect the old order to a high degree (as often is the case in de-colonialization) or, alternatively, constitute a revolutionary departure from the past.  They might also be more or less democratic by design, though in this project our focus will be on institutions that are intended to be at least minimally democratic.

Transitional democratic institutions exhibit some particularly interesting problems. Given that they are created immediately after the dissolution of the old order, they typically cannot initially be established by democratic means. Consequently political executives and legislators are not elected, nor have elected officials selected anyone to serve in judicial or administrative capacities. Perhaps even more than other democratic institutions, transitional institutions are faced with problems of agency loss as well as transaction costs. Agency loss in representative democracies is the difference between what a democratic majority (the principal) wants and what a political agent delivers, evident in policy drift (or policy-shirking) or rent-seeking activities.  Adverse selection and moral hazard are two generic and pervasive forms of agency loss.  Transaction costs, including search costs, bargaining and decision costs, policing and enforcement costs, come into play when it comes to institutional design issues.

The framers of transitional institutions often face several forms of agency loss and transaction costs at the same time.  Indeed, there may be an inherent trade-off between agency loss and transaction costs, or between different forms of agency loss (such as adverse selection vs. moral hazard).  Our conference will begin to explore such challenges and conflicts.  We are especially interested in papers that explore the trade-offs between agency loss (either moral hazard or adverse selection) and transaction costs in the design of different institutions that are essential to liberal democracies.

For example:

• In a post-conflict situation, peace and democracy may stand at cross purposes. A power-sharing agreement could ensure peace, but provide only limited democratic accountability.
• The design of transitional institutions may involve an explicit choice between agency and transaction costs. How do these trade-offs affect the decision-making processes? How are the choices of institutional design made?
• Post-colonial heritage highlights the problems associated with the unintended consequences of transplanted institutions. Simply adopting the institutional framework of the colonial power might reduce the transaction costs of designing and building institutions, but these institutions could be completely inappropriate in the transplanted environment, exacerbating problems of democratic agency loss.
• To what extent can transitional institutions be imposed externally, and what are the costs and benefits of doing so?
• Many transitional institutions are designed to be temporary. What political decisions govern the transformation of transitional institutions? When are transitional institutions altered and endowed with mechanisms of democratic accountability?
• Under what circumstances do transitional institutions collapse or decay? Can transaction costs alter the fate of such transitional institutions, or hinder the creation of particular ones to begin with?
• As transitional democratic institutions we want to feature political institutions. Focusing on a particular institution is fine: the electoral system, courts or other aspects of the judicial system, federalism, central banks or other economic policy making institutions, the bureaucracy and the executive in particular are all relevant. A general discussion of a particular set of institutional design issues is also encouraged.