Rule-takers,rule-makers,or rule-promoters? Turkey and Mexico's role as rising middle powers in global economic governance

Rising middle powers play increasingly active international roles, yet so far we lack systematic analyses of their aspirations and impact on global economic governance. This paper addresses this gap. I argue that the role that rising middle powers assume in global economic governance depends on the degree of alignment of their regulatory preferences with those of established powers, and on the strength of their regulatory institutions. If their preferences are aligned and they develop high regulatory capacity in an issue area, they will aspire to promote existing global rules in their own region. They will engage in regional rule-promotion because of growing economic ties to their region, and also because their regulatory agencies are socialized into these rules within transgovernmental networks. I explore these arguments empirically through case studies of two rising middle powers, Turkey and Mexico, in the global governance of competition law and policy.     

From rule-taker to rule-promoting regulatory state: South Korea in the nearly-global competition regime

When rapid economic growth catapults a country within a few years from the margins of the global economy to middle power status, does global regulatory governance need to brace for a challenge to the status quo? To answer this question, we extend the power transition theory of global economic governance to middle powers: A rising middle power should be expected to challenge the international regulatory status quo only if increasing issue-specific strength of its regulatory state coincides with preferences that diverge from the preferences of the established powers, which are enshrined in the status quo. We examine this argument empirically, focusing on South Korea in the realm of competition law and policy. We find that South Korea, a non-participant in the international competition regime until the 1980s, developed in the 1990s substantial regulatory capacity and capability and thus “spoiler potential.” At the same time, however, its policy preferences converged upon the norms and practices established by the United States and the European Union, albeit with some distinct elements. Under these conditions, we expect a transition from rule-taker to rule-promoter. We find that South Korea has indeed in recent years begun to actively promote well-established competition law and policy norms and practices – supplemented by its distinct elements – through technical assistance programs, as well as various bilateral channels and multilateral institutions. The findings suggest that the power transition theory of global economic governance is usefully applicable to middle powers, too.     

Power transitions and the rise of the regulatory state: Global market governance in flux

This special issue examines the consequences of the ongoing power transition in the world economy for global regulatory regimes, especially the variation in rising powers' transition from rule-takers to rule-makers in global markets. This introductory article presents the analytical framework for better understanding those consequences, the Power Transition Theory of Global Economic Governance (PTT-GEG), which extends the scope of traditional power transition theory to conflict and cooperation in the international political economy and global regulatory governance. PTT-GEG emphasizes variation in the institutional strength of the regulatory state as the key conduit through which the growing market size of the emergent economies gives their governments leverage in global regulatory regimes. Whether or not a particular rising power, for a particular regulatory issue, invests its resources in building a strong regulatory state, however, is a political choice, requiring an analysis of the interplay of domestic and international politics that fuels or inhibits the creation of regulatory capacity and capability. PTT-GEG further emphasizes variation in the extent to which rising powers' substantive, policy-specific preferences diverge from the established powers' preferences as enshrined in the regulatory status quo. Divergence should not be assumed as given. Distinct combinations of these two variables yield, for each regulatory regime, distinct theoretical expectations about how the power transition in the world economy will affect global economic governance, helping us identify the conditions under which rule-takers will become regime-transforming rule-makers, regime-undermining rule-breakers, resentful rule-fakers, or regime-strengthening rule-promoters, as well as the conditions under which they remain weakly regime-supporting rule-takers.     

Opening-up labor mobility? Rising powers' rulemaking in trade agreements

This article analyzes China's and India's role as emerging rulemakers in one of the most contested fields of international cooperation: labor mobility. It shows how both countries have seized the trade venue to negotiate labor mobility clauses that go well beyond the original preferences of established powers. Whereas India's more vocal claims have faced resistance, China's success in concluding far-reaching bilateral deals with Western countries is explained with stronger domestic regulatory capability and capacity. Maintaining a technocratic approach in trade negotiations, supported by the centralization of relevant competences in the trade ministry and consistently synchronizing external commitments with domestic reforms, China has been able to convey its market power into regulatory influence. As a result, the global standard for negotiating mobility in trade agreements has risen – notwithstanding the enduring stalemate at the multilateral level.     

Transgovernmentalism Meets Security: Police Liaison Officers,Terrorism, and Statist Transnationalism

Studies of transgovernmental activities have enhanced our understanding of changing global politics, but their claims have not been fully investigated with respect to the security realm. Therefore, this article first acknowledges a gap between the practices and capacities of nonstate entities creating transnational threats and those of state‐based agents of response. States' ability to respond to these threats has been questioned. Is this skepticism warranted or have states begun adapting and developing new responses to address nonstate security challenges? This article looks at transgovernmental responses to transnational terrorism and identifies an unconventional group of substate pioneers, police liaison officers (PLO), making moves into the transnational realm. Data collected through interviews with international PLOs reveal these activities to be characterized by increasing informality, depoliticization, and demonopolization of global security cooperation. This cooperation nevertheless maintains its strong ties with state legitimacy and capacity, and is therefore conceptualized here as statist transnationalism.     

Domestic drivers of transgovernmental regulatory cooperation

Transgovernmental cooperation among domestic regulators has generated considerable interest among scholars and policymakers. While previous research has focused on describing such regulatory networks, we know very little about what drives individual jurisdictions to join them. The question of membership is important because it determines the reach of rules and standards promulgated by a given network, and because it is logically prior to understanding the rulemaking dynamic within a network. We develop a set of hypotheses that highlight the role of domestic political factors in shaping network membership. Our empirical analysis, using an original data set for transgovernmental cooperation in securities and insurance regulation, finds that the institutional form of domestic market regulation, as well as the relative domestic weight of the industry, are closely correlated with membership. All else equal, jurisdictions with independent regulatory agencies and those where the industry in question represents a large share of gross domestic product are much more likely to join the respective network than jurisdictions without these characteristics. The paper underscores the important interactions between domestic and international factors for informal cooperation, an issue that has become increasingly central to global governance.     

Escaping the International Governance Dilemma? Incorporated Transgovernmental Networks in the European Union

This article investigates the role of transgovernmental networks of national regulators in addressing collective action problems endemic to international cooperation. In contrast to recent work on transgovernmental actors, which emphasizes such networks as alternatives to more traditional international institutions, we examine the synergistic interaction between the two. Building on the broader premise that patterns of “dual delegation” above and below the nation‐state enhance the coordinating role of networks of national agencies in two‐level international governance, the article examines the formal incorporation of transgovernmental networks into European Union (EU) policymaking. The focus on authoritative rule‐making adds a crucial dimension to the landscape of EU governance innovations while connecting to the broader study of transgovernmental networks in international governance. The article develops an analytical framework that maps these incorporated networks across different sectors in terms of function, emergence, and effectiveness. Two case studies of data privacy and energy market regulation are presented to apply and illustrate the insights of this mapping.     

The rewards of cooperation: The effects of membership in European regulatory networks

Networks famously epitomize the shift from ‘government’ to ‘governance’ as governing structures for exercising control and coordination besides hierarchies and markets. Their distinctive features are their horizontality, the interdependence among member actors and an interactive decision‐making style. Networks are expected to increase the problem‐solving capacity of political systems in a context of growing social complexity, where political authority is increasingly fragmented across territorial and functional levels. However, very little attention has been given so far to another crucial implication of network governance – that is, the effects of networks on their members. To explore this important question, this article examines the effects of membership in European regulatory networks on two crucial attributes of member agencies, which are in charge of regulating finance, energy, telecommunications and competition: organisational growth and their regulatory powers. Panel analysis applied to data on 118 agencies during a ten‐year period and semi‐structured interviews provide mixed support regarding the expectation of organisational growth while strongly confirming the positive effect of networks on the increase of the regulatory powers attributed to member agencies.     

The Limits of Policy Diffusion: Introducing International Norms of Anti‐Money Laundering into China's Legal System

This article examines the contribution of policy diffusion to create a regulatory system against money laundering in China. A two‐level analysis of transnational interactions and domestic law making shows how Communist Party prerogatives shape the insertion of multilateral norms into the legal system. In a contentious process of local accommodation, transnationally engaged technocratic bodies, turf‐conscious bureaucracies, and powerful party organs struggle to reconcile the goals of promoting global economic expansion, gaining international recognition, and absorbing innovative regulatory tools while preserving tight domestic control. In effect, Chinese policymakers try to utilize policy diffusion as a mechanism for negotiating and promoting the nation's global rise. Yet, when it comes to implementation, global regulatory standards are weakened or even neutralized through discretionary enforcement. The depth and robustness of normative assimilation therefore remain uncertain.     

Globalization and the future of the nation state

This article addresses the issue of whether the nation state has a future as a major locus of governance in an increasingly ‘globalized’ economic and social system. It begins by considering the development of the sovereign state and argues that international agreements between states were important in establishing the power of the state over society. It goes on to consider the changing capacities of the state in the modern world. Extreme versions of the 'globalization' thesis are then challenged, and it is argued that national-level economic processes remain central and that the international economy is far from ungovernable. Major nation states have a pivotal role to play in creating and sustaining such governance. However, their role is less than as autonomous national macro-economic managers, than as agencies that are representative of their populations and sources of legitimacy for new forms of governance. The central function of the nation state is that of distributing and rendering accountable powers of governance, upwards towards international agencies and trade blocs like the European Union, and downwards towards regional and other sub-national agencies of economic co-ordination and regulation.     

Coast guards and maritime piracy: sailing past the impediments to cooperation in Asia

Abstract

Despite the efforts of the past decade, maritime piracy remains of international concern today. Countries need to cooperate actively at both the regional and international levels to eradicate the problem effectively. In particular, the nature of the threat in the Asia-Pacific region suggests that coastal states – countries that possess sovereignty over the pirate-infested waters but lack the law-enforcement resources – have to turn to resource-rich extra-regional powers for assistance. Unfortunately, cooperation between such disparate countries has traditionally been impeded by sovereignty sensitivities, as best exemplified by Malaysia's and Indonesia's hostile responses to the United States' Regional Maritime Security Initiative in 2003. Faced with this apparent dilemma, a new phenomenon has emerged. National coast guard agencies, instead of their military naval counterparts, have become attractive alternatives for promoting international cooperation against non-traditional security threats, such as maritime piracy. Spearheaded by the Japanese Coast Guard (JCG), coast guards from various countries have imparted training expertise, conducted joint exercises, hosted low-publicity multilateral meetings, and even transferred security equipment across international borders. Together they have succeeded in promoting cooperation without arousing the sovereignty sensitivities often associated with such cooperation. This article analyzes the evolution of coast guard cooperation in Asia, highlighting in particular the Japanese Coast Guard's success in this endeavor. With the general alignment of regional and global power interests in Southeast Asia, coast guard agencies hold promise for extra-regional powers wishing to help eradicate maritime piracy in the region.     

Top‐Down Self‐Organization: State Logics,Substitutional Delegation,and Private Governance in Russia

This study investigates the counterintuitive emergence of self‐regulation in the Russian construction sector. Despite its proclivity for centralizing political authority, the government acted as the catalyst for the delegation of regulatory powers to private industry groups. The article argues that a factor little considered in extant literature—namely, a weak and corrupt bureaucracy—is key to explaining why the normally control‐oriented executive branch began to promote private governance despite industry's preference for continued state regulation. The article's signal contribution is to theoretically explain and empirically demonstrate how a government's prior inability to establish intrastate control over an ineffective and bribable public bureaucracy creates incentives for political authorities to search for alternative means for policy implementation outside of existing state agencies. These findings are important for understanding the impetus and logic behind particular regulatory shifts in countries where the state apparatus is both deficient and corrupt.     

India,Brazil, and public health: Rule-making through south–south diffusion in the intellectual property rights regime?

This article analyzes the domestic drivers of regulatory state formation in India and Brazil and its consequences for the global rules governing pharmaceutical patents. We first analyze Indian and Brazilian politics of regulatory state formation; then, in light of the extent to which the two countries have built regulatory capacity and capability in the field of patent regulation, we explore whether and how they have been able to influence the existing intellectual property regime in health. We look into India's Section 3(d) and Brazil's prior consent requirement. Whereas India's Section 3(d) regulation has gained international regulatory influence by diffusing to other developing countries, the same cannot be said for Brazil's prior consent regulation, which has been caught by policy-reversals. The transition toward regulatory states in emerging countries is a bulky road and does not progress in linear ways. However, once regulatory capacity and capability have been solidified, domestic policy innovations can become internationally influential.     

State-owned enterprises,state capitalism and social distribution in Singapore

State-owned enterprises and sovereign wealth funds have ‘insured’ Singapore's domestic economy against financial crisis and restructuring interventions from multilateral institutions, engendered elite cohesion and political stability, binding middle class employees to the political system. This essay analyses paths by which the Singapore government established state-owned enterprises and transformed them into global enterprises. It also examines how sovereign wealth funds contribute to government social expenditure without increasing taxes. Such redistribution through state capitalism resonates with the People's Action Partys social democratic origins, inviting comparisons with contemporary developments in Chinese state-capitalism.     

Diffusion,transmutation, and regulatory regime in socialist market economies: telecoms reform in China and Vietnam

Abstract

Marketization and state restructuring are proceeding apace in China and Vietnam. China and Vietnam are not, however, converging upon the global regulatory model, even allowing for customary national variations. Rather, they are building up distinctive forms of regulatory regimes aiming to maintain the party-state's control over key state sectors, while at the same time integrating with the global economy and conforming to international norms and standards. This study argues that the regulatory model being adopted in Vietnam and China is the product of a specific kind of transition from a command to a market economy within an authoritarian political regime. While diffusion theories are of use in identifying external driving forces for the reform effort, these theories are of limited value for unveiling the dynamics of local contexts. Indigenous incentives, opportunity structures, and the experimental nature of public policy explain why, despite their exposure to global reform movements and commitment to multilateral institutions, China and Vietnam are likely to end up not with just a variety of the same regulatory regime, but a different one. The case of telecommunications regulation is used to illustrate this.     

Political Cycles and Organizational Life Cycles: Delegation to Anticorruption Agencies in Central Europe

A large number of “independent” anticorruption agencies (ACAs) sprung up around the world in past decades. Yet little comparative work has been done to explain the diversity of their organizational forms or development trajectories. Using insights from regulatory theory and the regulation of government literature, this article argues that the formal powers and independence ACAs are granted crucially depend on whether external and/or domestic impetuses for setting them up can counterbalance governments' incentives for no action, or only symbolic action. The ACAs' initial mandate influences but does not determine how they fare in later life: Support or obstruction from ruling governments, their own ability to use strategic resources, and leadership shape the extent to which the agencies are able to carry out their tasks in practice. These arguments are examined through comparison of three ACAs in the European Union's “new” member states—Latvia, Poland, and Slovenia.     

Jurisdictional integration: A framework for measuring and predicting the depth of international regulatory cooperation in competition policy

This article takes a new approach to international regulatory cooperation by developing a concept of the depth of cooperation, jurisdictional integration. A dataset of international competition policy agreements is compiled and ranked against an ordinal index of the depth of de jure cooperation in enforcing competition policies. There has been both a deepening and broadening of de jure cooperation over time. Statistical analysis finds that common membership of the Organisation for Economic Co‐operation and Development is a strong predictor of the depth of agreements to cooperate in enforcing competition policies; that we can be confident that the depth of agreements is low when signatories' substantive competition laws are dissimilar; and that the depth of de jure cooperation is a strong predictor of whether an agreement is “intergovernmental” or “transgovernmental.” The article puts forward a new way to map and measure international regulatory cooperation, and a new variable for use in research on its causes and consequences.     

Sino‐American relations post‐Tiananmen

This essay analyses some of the political, economic and social challenges of East Timor's transition to independence. It scrutinizes the ethical dimensions of building peace in a territory devastated by the combined effect of Indonesia's colonial occupation and the violent militia attacks of September 1999. The most difficult task ahead does not lie in the physical rebuilding of the territory - gargantuan as it may be - but in the more intricate and long-term rehabilitation of a traumatized society. The latter involves competing Timorese factions as well as a range of international actors, including the United Nations Transitional Authority, foreign governments, business institutions and various multilateral and bilateral donors, each having their own organizational leitmotifs and policy priorities. If not managed carefully, the reconstruction process could further exacerbate existing societal tensions and complicate the search for peace and reconciliation. The essay identifies a number of crucial components necessary to counter such risks, including the need to promote popular participation in the rebuilding process. Without the legitimacy created by strong community involvement and grassroots participation in decision making, the task of national reconstruction may well become overwhelmed by conflict.     

Does formal independence of regulators change? Evidence from Portuguese agencies

The rise of the regulatory state has led to the global diffusion of independent regulatory agencies (IRAs). IRAs are the result of the tension between the functional demands of regulatory capitalism and the need of politicians to control policies. Their life cycles have not been linear. Their legal statuses have changed over time, affecting their degrees of independence. This article revisits Gilardi's formal independence index, makes an in‐depth diachronic and cross‐sectorial analysis of 11 regulatory bodies in Portugal, and searches for explanations for the observed variations. It concludes that the formal independence of IRAs tends to increase due to external pressure and the need of governments to project credible commitment, but principals only grant as much independence as they see fit to satisfy those (external) demands (for change).     

Public Information and Regulatory Processes: What the Public Knows and Regulators Decide

Because bureaucratic agencies may be less transparent in their decision processes than legislatures, most states have developed processes to incorporate input from regulated communities and other parties potentially affected by regulations. Administrative agencies may encourage democratic practices to increase legitimacy and accountability of the bureaucracy and improve decision‐making processes. However, rules governing the regulatory process vary by state, with some incorporating more open practices than others. Understanding these dynamics is increasingly important, as the rulemaking process has become central to policymaking over the past several decades, with a large portion of policymaking authority delegated to administrative agencies. Drawing from regulatory documents, rulemaking comments, media coverage, and interviews with regulators in 14 regulatory decision processes across five states, this study finds that while states vary in their approach to providing access to information, there are overriding patterns that reduce the role of citizens and the overall transparency of regulatory processes.