Author: Michael W. Dowdle Discussions and studies of regulation and governance draw their regulatory insights from the experiences of the advanced industrial economies. It is presumed that these insights, and the regulatory practices they recommend, apply with equal force to understanding the regulatory environments of other countries, such as the ‘developing’ countries of the Global South. This is not likely to be the case. The economic geography of the Global South is such that regulatory strategies that work in the industrial north can become dysfunctional when transplanted to developing countries. Our understandings of regulation and governance need to better take this into account. This is because the effectiveness of many regulatory strategies is often tied to aspects of industrial and social organisation that are themselves the product of a larger transnational geography (particularly transnational economic geography). Transnational economic geography can affect regulatory capacity in a number of ways. For example: A region’s ability to generate wealth is strongly affected by that region’s distance from its ultimate consumer centres (aka transportation costs): the more it costs to deliver regional products to their ultimate consumers, the more innately fragile and underdeveloped the economy will be; More developed economies often enjoy absolute advantage in high-wealth industries due to their external economies (agglomeration effects), while the particular comparative advantages of peripheral economies tend to focus on cutting production costs rather than on generating wealth; The psychological dynamics of transnational finance make capital innately more expensive and innately more volatile in most Global South economies. This means is that peripheral economies will be innately more volatile, innately more fragile, and innately less amenable to conditions of sustained and persistent economic growth. But many of the regulatory strategies that we use to evaluate and promote economic and legal development in the Global South are vitally dependent on the presence of an already wealthy and stable socio-economic environment. Consider, along these lines, the regulatory practices associated with what is sometimes called the modern regulatory state:  i.e., regulation that proceeds via centralised rule-making as transparently administered by independent regulatory agencies; with a regulatory focus on the ongoing monitoring of the economy rather than on controlling entry into that economy; and working in conjunction with a professionalised judicial system that is able to resolve disputes both between private actors and between private actors and public officials in a fair and transparent manner and with effective capacity for enforcement. Centralised rule-making, centralised monitoring and transparency all require a prior standardisation and stabilisation of national society, something that in the West only came about through advanced industrialisation. Independent regulatory agencies require an extensive public education system and extensive public funds to train and retain the highly professionalised workforces of lawyers, accountants, forensic investigators, and industry analysts needed to staff them, again something that in the West only became possible when industrialisation greatly increased public wealth. In sum, what today we call rule of law was actually built on top of a prior industrial development, and the vast increase in public wealth it generated — not the other way around. None of this is an argument for developmental fatalism. But it does mean that we have to be a little more nuanced in our approach to legal development. It means, for example, that in thinking about regulatory development in the Global South, we have to be cognizant of their innately different regulatory environments — environments that are likely to be innately less stable, innately less responsive to centralisation and rationalisation, with innately less access to the public and social wealth necessary to maintain a modern regulatory state. It means that we may need to start approaching issues of regulatory reforms in the Global South from the perspective of promoting actual quality of life independent of promoting economic growth (since many of the geographic factors mentioned above suggest that in peripheral economies, capacity for growth can be limited by factors that escape the reach of human intentionality). Finally, it suggests that regulation needs to be seen as being an extension of politics — and of the particular politics in which it is being inserted — and not a replacement for that politics: the patronage-based forms of institutional discipline so characteristic of developing countries, for example, can often represent very efficient and often vital governmental responses to low-wealth and innately volatile social-economic conditions. This last point suggest a final the lesson from all this: just because a particular regulatory arrangement differs that that with which we are familiar or comfortable, does not by itself mean that it is therefore dysfunctional. We ourselves may have something to learn about regulation and governance from alternative regulatory practices found in the Global South. Asia’s regulatory reawakening Korea inter pares? – South Korea on the global stage The Great Crash of 2008 and getting financial regulation right