In a pioneering article and subsequent book, Brian Levy and Pablo Spiller thought through the implications of the new institutional economics for the theory and practice of regulatory reform. A key insight was that in order to attract investment and promote efficiency, reforms must be aimed at generating credible commitment to non-expropriative policies. Furthermore, the design of regulatory institutions necessary to achieve this goal was understood to be contingent on a country's 'institutional endowment', its background pattern of legistlative, judicial and executive institutions and informal norms. In the foundational case study, Jamaica, with its unified government and weak bureaucracy, credibility necessitated an emphasis on licenses, and the minimisation of executive discretion. Since Levy and Spiller undertook this work, Jamaica has undergone substantial further regulatory reform. While the use of licenses to confer legal protection has remained, the discretionary powers enjoyed both by ministers and the independent Office of Utilities Regulation have increased, as a result of the Jamaican Telecommunications Act 2000. This paper reconsiders the 'institutional endowment' hypothesis in the light of these reforms and offers three alternative interpretations of developments. First, it may be argued that subsequent facts are in revolt against the theory, and that therefore the institutional endowment hypothesis, at least in Levy and Spiller's formulation, can be rejected. Alternatively, it may be argued that, if Levy and Spiller were right after all, then the reforms under the Telecommunications Act 2000 represent a retrogressive intervention, likely to undermine investor confidence. In opposition to these two interpretations, a third possibility is that Jamaica's institutional endowment has itself developed, and that the optimal regulatory arrangements have themselves altered. On this interpretation, capacity building measures have moved Jamaica from a country characterised by 'weak' to 'strong' bureaucracy, and hence greater executive discretion is consistent with private sector investment and greater efficiency. While no conclusive evidence can be offered in favour of any one scenario, there are good reasons to favour the third interpretation. If this is true, then the Jamaican case offers important lessons about how the seqencing and timing of regulatory reforms can allow a country to move towards more sophisticated and powerful regulatory arrangements
