Government agencies are administrative units of government that are tasked with specific responsibilities. These agencies can be established by national, regional or local governments. These agencies are entities distinct from government departments or ministries, but they often work closely with and report to one or more departments or ministries. Others operate independently, especially those with oversight or regulatory responsibilities.
Any given government is likely to have hundreds of agencies with a variety of objectives and roles. A majority of government agencies are responsible for carrying out the policies of the establishing government. The agencies sometimes carry out the policies directly, and other times they do it indirectly through a process known as proxy administration. Through such things as contracting, loan guarantees and government-sponsored enterprises, agencies can deliver public goods and services or implement specific policies.
There is an important distinction between government-sponsored enterprises and government corporations. Government-sponsored enterprises, or government-sponsored entities, are shareholder-owned companies that are chartered by a government to implement or promote policies. By contrast, government corporations, or government-owned corporations, are created directly by governments to engage in activity that is particularly commercial.
In the United States, the most well-known government corporation is the U.S. Postal Service. Government-sponsored enterprises generally are considered to be government agencies, but government corporations are not. Government corporations sometimes are referred to as “quasi-government agencies.”
Regulatory agencies are one of the most common types of agencies. They set standards for private sector activity and then enforce those standards. Many government agencies operate under the executive branch of the national government, but regulatory agencies do not. They are established by legislatures, and the regulations they devise carry the force of law. As a result, regulator agencies are legislative in nature.
One critical concern with government agencies involves a concept known as agency capture. A “captured agency” is one that adopts rules, regulations or policies that are favorable to the interest group that it is responsible for regulating or administering. Interest groups can “capture” agencies by applying political pressure on government officials who in turn apply pressure on the targeted agency.