International Regime Formation Research Articles

Space Resources and the Politics of International Regime Formation

Space Resources and the Politics of International Regime Formation

THE DISTINCTION BETWEEN BRICS AND G7 IN RESPONDING TO THE UKRAINE-RUSSIA CRISIS: G20 MULTILATERAL CRISIS?

Introduction/Main Objective: This research discusses the differences in BRICS and G7 responses to the Ukraine-Russia conflict, where these two groups consist of countries with different political interests. Following the results of the G7 and BRICS Summits, both responded differently to the Ukraine-Russia crisis. Background Problem: Differences in response are proposed because the G20 has the vision to achieve the resolution of policy issues on problems that hinder world economic growth, one of which is the food crisis caused by the Uraina-Russia conflict. The selection of the G7 and BRICS's different responses is the right strategy to determine how much potential the G20 has. It is difficult to achieve its goal of providing solutions for the world economy thanks to the structure of its members, who have diverse interests and responses to the Ukraine-Russia crisis. Novelty: This study uses interest-based theory to analyze the differences in the responses of the G7 and BRICS. This theory seeks to explain the formation of the G20's international regime by dismantling aspects of the fundamental interests behind the cognitive states that decided to establish the international regime of the G20. Method: The method used in this research is the discourse analysis method in a case set because this study wants to see changes in discourse related to the multilateral G20. Findings/Results: The complexity of trading, namely the BRICS and G7, with different responses and interests in responding to the Ukrainian crisis, can encourage a multilateralism crisis in the G20. The research results prove that the complexity of reporting generates different interests, so the response to the Ukrainian-Russian crisis tends to differ. Conclusion: The G20 has not been able to overcome the different interests of its members in solving the problem of the world food crisis because the discussion of the world food crisis is linked to the discussion of Ukrainian-Russian security politics.

Международные механизмы компенсации климатических потерь и ущерба: новации

Recent trends in climate international regime formation include the development and diversification of multilateral mechanisms to prevent and reduce actual and future risks and damages from impacts of global climate change, including in the most vulnerable countries and regions of the planet. At the moment, the most urgent need is not just to implement any interstate cooperation within the existing regimes (which also has its shortcomings), but also to provide real funding for projects to compensate for losses and damages. At the end of 2022, an important phase of multilateral climate dialogue over the past three decades between the countries of the global North and the global South on institutionalizing their collaboration on financial and technological assistance to reduce climate societal vulnerability resulted in the decision to create a special global fund to cover loss and damage from climate-related natural disasters and promote sustainable development. The authors have identified and analyzed the main issues to be covered during the process of creation of the new international instrument. The forthcoming development of its design, participants’ commitments, funding sources, norms and procedures that meet the top priorities will be based on the experience and best practices of existing regional funds, among other things. The combination of global and regional regulation is shown to be an effective instrument of the current international climate regime. New trends and diversification of mechanisms of international climate regulation are considered as an important element in the process of its further development, implementation and effectiveness in the long term.

The Securitization of Cyberspace: From Rulemaking to Establishing Legal Regimes

With the development of information and communication technologies (ICTs), the Internet has become increasingly important in terms of national security, economic development, and global leadership. Apparently, conflicts and contentious issues in cyberspace requires creating rules and development of regulation. The authors examine the process of making up rules in cyberspace from the perspective of M. Castells’ network society theory and B. Buzan’ securitization theory. According to M. Castells, key challenges have gradually altered in the network society and power relations and social management are based on the control of communication and information which embraces a network society. Furthermore, the authors investigate the development of the Internet in the context of securitization theory. It is stressed that cyberspace has become a full-fledged political space with the central position of digital sovereignty and information security. The article for the first time proposes a comprehensive periodization of international relations’ transformation in cyberspace. Afterwards, the authors consider the appearance of tensions between actors in cyber space, which include political and economic threats. It encourages state actors to establish a preliminary regulation and to agree on norms regulating state behavior in cyberspace. These mechanisms have become a venue for promoting different concepts of cyber law and establishing legal regimes. In conclusion the authors analyze the hierarchy of actors in global Internet governance to assess the actors’ influence on the establishment of legal regimes in cyberspace. The main assessment criteria are as follows: ability to influence global production chains of high-tech goods, ability to conduct offensive and defensive cyber operations, and influence on the formation of international legal regimes. The authors divide actors into two major groups - rule-markers capable of influencing the global information space and constructing legal regimes, and rule-takers that are an object of great powers competition in cyberspace.

The Impact Of The United States Foreign Policy During The Donald Trump Government On Global Climate Governance

The problem of climate change is one of the most crucial issues today. The various impacts that have occurred due to climate change have increased the world community's awareness of the effects in the future. This was exacerbated by the existence of U.S. foreign policy when the Trump administration voted to exit the Paris Agreement. The lack of research into the impact of the U.S withdrawal from the Paris Agreement on tackling global climate issues has prompted the study. This paper will analyze the impact of what has arisen from the U.S withdrawal from the Paris Agreement during the Trump administration, using foreign policy theory in interpreting the actions or policies taken by Donald Trump in the withdrawal from the Paris Agreement, the constructivist approach used in analyzing international regime formation as a social construct, the concept of climate governance in analyzing the impacts that occur, and the Theory of International Regimes initiated by Stephen Krasner examines the world's climate change regime. The method used in this research is a qualitative research method with explanative writing techniques. This study shows that there are three significant impacts resulting from the Withdrawal of the United States from the Paris Agreement, among others, the increase in global emissions that are bad for the environment, which is indicated by increased activity that produces gas emissions in the United States region. Second is the decline of climate finance mechanisms that will affect the quality of climate change reports produced. Third, this withdrawal will also affect global climate governance, which will affect the compliance of member countries to the agreement.

Regime Internacional dos Povos Indígenas: referências teórico-descritivas

O propósito desta contribuição é fornecer referências descritivas sobre o regime internacional dos povos indígenas. A metodologia empregada nesta pesquisa é qualitativa, com referência a fontes primárias e secundárias. O artigo reúne elementos da história da formação do regime internacional dos povos indígenas e elabora reflexões sobre o conteúdo do direito internacional dos povos indígenas com referência às instituições e iniciativas políticas atuais.

Оценка Эффективности «Группы Двадцати» и Брикс На Основе Результатов Мониторинга Исполнения Решений (Evaluation of the Effectiveness of the 'Group of Twenty' and BRICS Based on the Results of Monitoring the Implementation of Decisions)

Russian Abstract: Работа посвящена сравнительной оценке эффективности «Группы двадцати» и БРИКС на основе результатов мониторинга реализации решений по приоритетным направлениям сотрудничества. Авторы приходят к выводу, что на уровне «двадцатки» более эффективно решаются глобальные вопросы, связанные с формированием международных режимов регулирования важнейших сфер глобального управления: реформы финансового сектора, инвестиционного режима, реформы системы международной торговли, реформы международных финансовых институтов. В рамках БРИКС эффективно решаются конкретные задачи социально-экономического развития (доступ к ИКТ, интеграция малых и средних предприятий в глобальные цепочки стоимости, развитие электронной торговли). Обеспечивается выработка общих позиций для их продвижения в более широких форматах (в сфере реформы международной финансовой системы, обеспечения открытой и справедливой системы международной торговли), а также решения в области региональной безопасности. English Abstract: The work is devoted to a comparative evaluation of the effectiveness of the G20 and BRICS based on the results of monitoring the implementation of decisions on priority areas of cooperation. The authors come to the conclusion that at the G-20 level global issues related to the formation of international regimes for the regulation of the most important spheres of global governance are more effectively addressed: financial sector reform, investment regime, reform of the international trade system, reform of international financial institutions. Within the BRICS, specific tasks of social and economic development (access to ICT, the integration of small and medium-sized enterprises into global value chains, the development of electronic commerce) are effectively addressed. The development of common positions for their promotion in broader formats (in the sphere of reforming the international financial system, ensuring an open and equitable system of international trade), as well as regional security solutions, is being provided.

Transaction costs in the evolution of transnational polycentric governance

Polycentric systems of governance may help address two key challenges in the transnational governance of socioecological systems, the problems of fragmentation and fit, but there is limited understanding of the processes through which polycentric governance systems emerge. This paper draws on institutional economics and accounts of international regime formation to develop an ideal-type model of the evolution of transnational polycentric governance. In particular, the model highlights systematically different transaction costs across different phases of polycentric governance evolution. These costs result in important trade-offs between building a broad coalition during agenda setting and addressing complexity in implementation. The plausibility of the model is probed using the case of Reducing Emissions from Deforestation and Forest Degradation (REDD+), drawing on global-level data on REDD+ collaboration, as well as fieldwork in Central Kalimantan, Indonesia. This case suggests that low transaction costs in the agenda-setting phase led to a confused vision for what REDD+ should be, ultimately hampering implementation.

Análise das Convenções sobre Restituição de Crianças Indevidamente Transportadas ou Retidas à Luz da Teoria dos Regimes Internacionais

http://dx.doi.org/10.5007/2177-7055.2016v37n72p125Neste artigo se examina a formação de regimes que tratam da subtração internacional de crianças, a partir da teoria das relações internacionais, demonstrando ser adequada a cooperação mesmo em hipóteses alheias a questões econômicas ou de segurança. Adota-se o método qualitativo, partindo do exame da formação dos regimes tratados, em seguida faz-se a análise dos modelos teóricos das relações internacionais e, finalmente, realiza-se o estudo da constituição e manutenção dos regimes, sob a perspectiva de cada um dos modelos teóricos, revelando-se ao final que a teoria das relações internacionais fornece instrumentos de fomento à cooperação mesmo em temas marginais ao lucro ou ao poder.

The Promise of Ocean History for Environmental History

Paul Sutter closes his essay on the state of the field of environmental history by calling attention to the relatively short time during which humans have transformed the planet— a point that certainly applies to the ocean. Anthropogenically induced global climate change is affecting ocean temperature and acidity. Overfishing has not only decimated marine populations but has emptied entire levels of the marine food web. Bottom trawling has scarred virtually all the commercially reachable seafloor. Attention to marine environmental issues has lagged behind similar attention to land by a century or more; only since the 1990s has the ocean’s environmental status gripped the attention of mainstream media and ordinary people. Although the ocean seems remote, marine environmental activists and ocean boosters rightly note the many ways that all people are tightly connected to it. The seas provide food, energy, communication, and transportation of the goods and raw materials that fuel the global economy. Threats to oceans and the uses made of ocean space and ocean resources have prompted the formation of international legal regimes and agreements. The majority of the world’s population lives along coasts—and the proportion of coastal dwellers is on the increase—therefore even more people will be involved in the challenges associated with sea-level rise and the increasing frequency and intensity of storms. Such interactions between people and ocean are grist for historical scholarship. Sutter acknowledges environmental history’s terrestrial bias and notes the small but growing body of literature that recognizes the ocean’s place in history. This notice has happened at an auspicious time, because environmental history’s embrace of hybridity opens a space for the sea and other environments like it. Like land, the ocean is a natural environment that is—perhaps to a greater degree even than terra firma—knowable through cultural lenses. Technology necessarily mediates understanding of the vast depths of the ocean and even

Book review: The Myth about Global Civil Society: Domestic Politics to Ban Landmines, by Daniela Tepe

Daniela Tepe The Myth about Global Civil Society: Domestic Politics to Ban Landmines, Palgrave: Basingstoke, 2012, 208 pp: 9780230279148, 55 [pounds sterling] (hbk) This book could have been an important contribution to Marxian research. It is not. Its unfulfilled promise is to draw on Marxian state theory in order to explain the manner in which non-governmental organisations (NGOs) shape foreign policy and international regime formation. In December 1997, the legally binding Ottawa Convention to ban anti-personnel landmines was signed. An extensive International Relations (IR) literature has demonstrated that national NGO campaigns loosely linked to each other via the International Campaign to Ban Landmines played a key role in bringing about this result by reframing landmines, transforming them from a national security to a human security issue. Yet little is known about how national contexts affected the role of NGOs as change-makers. Tepe links this gap to the preoccupation of much NGO research with global civil society. Hence, she sets out to explain the cross-national variation of the successful anti-landmine campaigns in the UK and Germany--variations in membership, strategies and goals. Her wager is that such an account cannot succeed unless it pays attention to the nationally specific nature of the capitalist state and society in the two countries. To this end, she employs 'a materialist state-theory framework' (p. 2). Tepe seeks to highlight the added value of her approach by contrasting it with existing NGO research, notably liberal-constructivist IR. Surprisingly, she does not discuss mainstream social movement theory with its focus on political opportunity structures, framing and resource mobilisation. Tepe acknowledges that liberal-constructivists have analysed how state-society relations shape the capacity of NGOs to influence public policy. Yet they fail to take into account 'the historically specific implementation of states' (p. 18). Tepe neither elaborates on what she means by this notion, nor does she zero in on other shortcomings of liberal-constructivism. One prominent model, which she discusses, draws attention to the degree of state centralisation and the nature of policy networks linking state and civil society, but fails to consider how the balance of class forces materialises as strategic selectivity in state institutions. Also, liberal-constructivism has little to say about how policy content shapes NGO effectivity--say, about how NGOs are affected by the nature of variable hegemonic projects which influence where boundaries are drawn and what gateways are opened between the state and civil society. More problematic still, Tepe's strategy in reviewing liberal-constructivist research is to build up straw-man arguments that she then attacks. This strategy dissimulates the fact that that she actually agrees with most of what liberal-constructivists say. 'While constructivist authors understand the importance of domestic actors in norm socialisation, I disagree with their argument that liberal states have fully internalised human rights standards' (p. 19). Virtually no liberal-constructivist doing social science makes such a claim, which flies so blatantly in the face of empirical reality. Also, Tepe wrongly asserts that liberal-constructivists 'neglect diverging values and opinions among members of the same network because the concept of shared norms and values forbids the very existence of such tendencies' (p. 20). The idea of norm contestation is central to liberal-constructivism. Sometimes Tepe's straw-man strategy conspicuously backfires. After criticising Andrew Moravcsik's liberal IR theory, she argues that in contrast to him, she 'understands state interests as functionally differentiated and the product of societal processes of preference building, where certain interests are represented more fully than others' (p. 24). This is a perfect summary of Moravcsik's theory! …

The Dynamics of International Legal Regime Formation: The Sino-British Joint Declaration on the Question of Hong Kong Revisited: A Reply to Roda Mushkat

Professor Roda Mushkat�s article, arguing for the application of international regime theory to understanding the Sino-British Joint Declaration, is a curate�s egg. As I read it, I often found myself nodding in agreement with her, especially her analysis and critiques of various international relations theories and methodologies. But she fails to make the case for regime theory analysis in general and for its application to the Sino-British Declaration in particular. International regime theory has been with us since John Ruggie introduced this concept to international relations through his seminal article �International Reponses to Technology: Concepts and Trends�1 in 1975. Underlying this theory is the notion that imperatives of behaviour coordination compel the formation of international regimes. Thus, �regimes� include international organizations such as the International Monetary Fund (IMF) or international agreements, such as the Kyoto Protocol. They evolve � become structured �regimes� � because they serve as a forum to standardize and facilitate discussion, communications and agreements across various countries. Scholars like Stephan Krasner (whom Mushkat cites) argue that the presence of a hegemon � such as a superpower like the United States � gives momentum to the creation of the regime. This has been called the �hegemonic stability theory�2 because hegemons use their power to create regimes. Correspondingly, when the power of these hegemons wane, the effectiveness of the same regimes come under threat. Regimes can be subjects of international law in that they shape the behaviour of states, sometimes to the extent that state practice may constitute a source of customary international law. Mushkat starts out by arguing that students of international behaviour have something to say about the formation of international legal regimes and proceeds to spend �

States and markets in global environmental governance: The role of tipping points in international regime formation

This article develops a model for analysing international regime formation in the environmental domain. It is argued that current approaches to understanding how regimes emerge and develop are too narrow, and fail to account for the dynamic interplay between states and markets which induce the emergence of ‘tipping points’ leading to more extensive and stringent international institutions. The article demonstrates the central role of tipping points in regime formation using the example of international climate change.

International regime formation revisited: Explaining ratification behaviour with respect to long-range transboundary air pollution agreements in Europe

We draw on the policy diffusion literature to shed more light on the determinants of treaty ratification, a crucial step in the formation of international regimes. Our hypotheses stipulate that a country’s ratification behaviour is influenced by the ratification choices of other countries in general, or of specific types of other countries. The underlying argument is that the ratification behaviour of (specific) other countries sends particular signals — for instance signals about implementation costs, competitiveness effects or reputation costs — to the country in question. The empirical testing is done on data for ratification of the UN Economic Commission for Europe’s agreements on long-range transboundary air pollution. The results show that international factors are as important in influencing ratification choices as domestic factors. This result raises interesting questions about the relative importance of international and domestic determinants in different policy areas and at different stages of international regime formation.

Generations Analysis and International Relations: Cultural Zones, Intergenerational Value Change, and Cross-National Comparison

Using findings from the World Values Survey, I argue for a consideration of generational difference as an overlooked component of social value systems, change, and cultural conflict in the international system. To the extent that such value systems underlie oft-unspoken shared understandings, and even formalized agreements replete with value-based assumptions, understanding this unstated dynamic is important in reconciling what otherwise appear to be insurmountable ‘civilizational divides’. To this end, I discuss generation, alongside civilization, as productive levels of analysis (or analytic variables) in international relations.The growing data from the World Values Survey indicates that intergenerational value change is quite real and measurable, and works in conjunction with socio-cultural, or civilizational, differences in to shape group attitudes. This provides cross-national, time-series, data-driven leverage for several research agendas within a constructivist IR approach. Among these are implications for understanding the value-laden side of democratization and democratic consolidation, the normative element of the democratic peace dynamic, formation and evolution of international regimes, civilizational divisions related to conflict, and intra-national value changes in leadership cohorts. People are shaped by their formative experiences; the World Values Survey provides a more nuanced means of measuring these processes and their outcomes. Accordingly, applying a generational distinction to IR theorizing allows us to understand the shift in international politics away from a survival-oriented state-power political environment toward a more socially-constituted understanding of international relations.

Constant Tension: Regulating International Shipping

line, but ease that tension to prevent the very dangerous possibility of the line parting and to enable the controlled movement of the ship. Elizabeth DeSombre's Ragging Standards looks at similar situation. It analyzes contemporary efforts to establish and maintain rigorous standards for the international shipping industry (tension on the line) without creating so much regulation, with its negative economic impact, that the system cannot operate (and the line parts from the stress). The book is strong and insightful study of the world's second oldest profession, and in it DeSombre makes relatively rare and quite valuable contribution both to the specialized literature on international shipping safety and to the broader literature on the formation and effectiveness of international regimes in an era of globalization. Both the most optimistic neoliberal institutionalists and those critics of international regimes who are least sanguine about the prospects for international cooperation will be equally disappointed in DeSombre's conclusion. In essence, she argues that--with respect to environmental, safety, and labor regulations in the shipping industry--the race is not to the top, or to the bottom, but to the middle. After exploring the roles of states, international organizations, industry groups, and international civil society actors, DeSombre unfolds what is, in her words, a regulatory middle ground, where profit is still possible and moderate level of protection achievable (p. 229). As contribution to the theoretical literatures on both international regimes and globalization, Flagging Standards usefully explores the efficacy of host of interrelated efforts that are designed to improve the governance of international shipping. Given that international shipping is critical global business in terms of the volume of goods involved, greater understanding of efforts to make it cleaner and safer industry is quite valuable. Her pursuit of that understanding leads DeSombre to the consideration of the roles played by states and numerous nonstate actors. Although states remain the dominant actors in the international shipping regime, efforts to raise environmental, safety, and labor standards have emerged from the interrelated efforts of several important Each of these clubs, because of the exclusivity of their membership requirements, can compel actors who perform poorly to either come up to club standards, leave the market, or operate, often illegally, at the lowest end of the industry. In shipping terms, the last option involves moving the least profitable cargoes between ports that have the lowest standards because one's ship is effectively locked out of other opportunities. DeSombre very effectively develops the concept of exclusion as an incentive in an early chapter. Thereafter, she devotes individual chapters to the formation and performance of the state and nonstate clubs. Readers

Are the Roads to Trust Mutually Exclusive?

Building Trust: Overcoming Suspicion in International Conflict. By Aaron Hoffman. Albany: State University of New York Press, 2006. 218 pp., $55.00 cloth (ISBN: 0-7914-6635-3), $19.95 paper (ISBN: 0-7914-6636-1). How conflicting parties can overcome their deep suspicions and replace them with trusting relations is a question that has occupied scholars from various disciplines for a long time. The intricacies of trust have been explored by scholars in social psychology, organizational studies, economics, conflict resolution, and political science. One literature in which trust figures very prominently, especially in the context of negotiations, is the literature on game and decision theory. However, even within this literature, it is not common to see studies that focus on the building of trust as a process or that treat the formation of trusting relations as a dependent variable (for an exception to this generalization, see Deutsch and Krauss 1962). Process-oriented studies on how to build interpersonal trust are more common in social psychology and the negotiation literature (see, for example, Lewicki and Wiethoff 2000). Process-oriented approaches to trust have also been uncommon in the international relations literature. A number of prominent international relations theories do deal with how cooperation develops among states (see, for example, Axelrod 1984; Keohane 1984). However, these theories do not necessarily scrutinize trust as a separate variable or distinguish between “cooperation with trust” and “cooperation without trust.” Moreover, even when trust has been treated as a distinct variable in international relations, it has usually been treated as an independent variable, influencing such things as collective identity formation (for example, Wendt 1999), peaceful relations and change (for example, Adler and Barnett 1998), or international regime formation (for example, Keohane 1983). In this context, Aaron Hoffman's Building Trust: Overcoming Suspicion in International Conflict is an important addition to the international relations literature because it (1) treats trust as a dependent variable, (2) focuses on the process of building trust, and (3) clearly distinguishes between “cooperation with trust” and “cooperation without …

Global Legal Pluralism and Electronic Democracy

Transnational regimes are becoming an important factor in the organization of life around the globe. International institutions such as the World Trade Organization, the International Criminal Court and the Internet Corporation for Assigned Names have taken a leading role in the governance of various fields such as global trade, humanitarian law, and the Internet. There is a wide gap however, between the increasing power of these transnational players and their democratic commitment. Indeed, this democratic deficit is putting at risk the legitimacy of these regimes. This democratic gap calls for the creation of institutional mechanisms that will allow the global public to participate in a meaningful way in the creation and implementation of global norms. Achieving this goal requires the development of inclusive and non-hierarchical decision-making structures, which could break the confines of the current nationalistic order, and offer the public direct access to processes of global norm-production. This paper focuses on the possible contribution that the Internet can make, and is making, to the development of such novel decision-making structures. In particular, it examines whether the Internet can offer ways to incorporate the public more meaningfully into the infrastructure of global legal regimes. The capacity of the Internet to short-cut barriers of space and time, makes it, at least prima facie, the ideal medium for transnational deliberation. Indeed, this has been shown, somewhat ironically, by the fact that the Internet has played a major role in facilitating the protests against various global regimes. Protestors have used the Internet extensively, both to publicize their critique and, more instrumentally, to coordinate their actions. Websites such as Protest.Net, www.indymedia.org, www.WebActive.com and www.corpwatch.org have turned into hubs of political communication. All of these websites include details of upcoming protests, action alerts, and links to other protest websites. The extensive political usage of the Net has even led some commentators to assert that the Internet could revolutionize the face of global politics. However, despite the impressive growth of civic protest over the Internet, the use of the Web to include the public in transnational governance processes appears to be very limited. The question remains, therefore, whether the Internet has indeed the capacity to foster more inclusive structures of global law-making. The paper addresses this question in three stages. First, the traditional conception of transnational governance is reviewed and its weaknesses for understanding and addressing the issues raised by the emerging system of global law are identified. A more contemporary interpretation of international regime formation is then presented that requires a democratic and truly global decision-making forum. Second, the role of the Internet as a means of realizing such ambitions is explored, using the idea of politics as a problem of collective action. The discussion presents a simple game-theoretic model to illustrate the capacity of the Internet to facilitate the emergence of viable transnational communities. In the third and final section, three case studies are presented showing how some international regimes are currently attempting to utilize the Internet to facilitate a more democratic mode of operation. The focus here is on the World Trade Organization, the International Organization for Standardization and the Internet Corporation for Assigned Names and Numbers.

Regulatory competition among accounting standards within and across international boundaries

Most financial reporting jurisdictions across the world allow a local monopoly in financial reporting standards for publicly held corporations. In the United States, for example, the statutory authority over these standards is vested in the Securities and Exchange Commission, who delegates the task of writing standards to the Financial Accounting Standards Board, retaining an oversight function for itself. In some countries these standards are specified through statutes in varying levels of detail. Few countries permit their corporations to choose among two or more sets of competing standards; monopoly is the reigning norm. This paper examines regulatory competition as a model for writing and implementing corporate financial standards. Under this model, two or more approved standard-setting bodies are allowed to compete for the allegiance of the reporting entities. Each corporation can choose which of the two or more sets of competing standards it wishes to use in preparing its financial reports. Corporations must choose an entire set of standards in toto, clearly mark the reports with the set of standards used to prepare them, and pay a fee to the body who wrote the standards. We examine the consequences of such regulatory competition for the quality and efficiency of standards, quality of information provided to shareholders and other interested parties, and the efficiency of corporate governance and managerial actions. A debate on the merits of monopoly versus competitive standards may help direct the formation of national and international regimes for setting accounting standards.

Standards for Corporate Financial Reporting: Regulatory Competition Within and Across International Boundaries

Most financial reporting jurisdictions across the world allow a local monopoly in financial reporting standards for publicly held corporations. In the U.S., for example, the statutory authority over these standards is vested in the Securities and Exchange Commission (SEC), who delegates the task of writing standards to the Financial Accounting Standards Board, retaining an oversight function for itself. In some countries these standards are specified through statutes in varying levels of detail. Few countries permit their corporations to choose among two or more sets of competing standards; monopoly is the reigning norm. This paper examines regulatory competition as a model for writing and implementing corporate financial standards. Under this model, two or more approved standard setting bodies are allowed to compete for the allegiance of the reporting entities. Each corporation can choose which of the two or more sets of competing standards it wishes to use in preparing its financial reports. Corporations must choose an entire set of standards in toto, and clearly mark the reports with the set of standards used to prepare them. We examine the consequences of such regulatory competition for the quality and efficiency of standards, quality of information provided to shareholders and other interested parties, and the efficiency of corporate governance and managerial actions. A debate on the merits of monopoly versus competitive standards may help direct the formation of national and international regimes for setting accounting standards.