| The Politics of Global Regulation |
| Eds Walter Mattli and Ngaire Woods, Princeton University Press, 2009, 312 pages, £44.95 (£16.95 paperback). |
| The debate around global regulation has reached something of crescendo in the last year or so. While the financial crisis again demonstrated the integrated nature of the global economic system and the nations’ dependency on global players to coordinate meaningful action, the outcome of the Copenhagen summit showed the difficulty of delivering global outcomes that are favourable to all. It is therefore timely and welcome that Mattli and Woods have undertaken to edit The Politics of Global Regulation. |
| The editors bring together a range of experts to discuss the political nature of global regulation, centred on a conceptual framework that analyses how changes in global regulation occur and what drives them. The basic thrust of this framework is that global regulation is an outcome of global supply of and demand for regulation. How these forces interact to reach equilibrium determines on whether a regulatory shift from the status quo benefits vested interests or achieves a wider public purpose. |
| The supply side is largely determined by the institutional context within which global regulation takes place. Where the institutions are more open, accessible and accountable, the system is less prone to regulatory capture. In contrast, where rules are far less open, transparent, or accountable we are likely to see more capture. However, open institutions on their own won’t deliver profound change. There must be significant and sustained demand for change, principally led by outside interest groups. The challenge is to understand how demand for regulation is generated and what is likely to lead to sustained change. Three factors are identified as critical in incentivising and enabling change: availability of information on the deficiencies and biases of the status quo (such as disasters with the potential to act as ‘demonstration effects’ that push outside players to react and seek change); the presence of a viable common interest able to reduce coordination costs especially where such costs are likely to be prohibitive; and the ability of groups to forge new ideas that would persuade other players to support regulatory change. |
| With these ideas established, the rest of the book effectively uses a wide variety of case studies to demonstrate how the framework fits with real world experience. The case studies are particularly helpful in illustrating how the framework differs from well-established approaches to global regulation, for example the ‘realist’ view that approaches regulation as principally driven by the dominant power. |
| Although the book is generally well researched, it could have benefited from additional refinements. In terms of substance, there’s an underlying presumption that externally-driven change is always positive, which means there is minimal discussion of the desirability of change or of where regulatory change can lead to worse outcomes. For example, corporate social responsibility (CSR), which has grown into a strong movement, is treated as largely positive. This contrasts with the experience of many other nations where CSR is creating perverse incentives, with many multinational firms using it as an informal bribe to locals to prevent them from demanding reasonable taxes. It is therefore not obvious that regulation of any kind pushed by outside groups would necessarily lead to superior outcomes. In many cases it might be undesirable. What is crucial is to understand what leads to positive or desirable outcomes, rather than merely any change at all. In terms of presentation, whilst the varieties of case studies presented are helpful in bringing the ideas to life, the discussion is often repetitive with little extension beyond the foundational framework. This has meant that where areas can be developed these are not fully discussed. |
| However, taken as a whole, the book represents a great contribution to understanding global regulation. Indeed, although written primarily from a global perspective, the reflections will also benefit those interested in national regulation issues. |
Chola Mukanga
Founder, Zambian Economist |
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