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- Title
The Diffusion of the Sandbox Approach to Disruptive Innovation and Its Limitations.
- Authors
Chang-Hsien Tsai; Ching-Fu Lin; Han-Wei Liu
- Abstract
Faced with the challenges posed by disruptive technologies and innovations, many countries have adopted different regulatory approaches, institutional structures, and norms to maximize benefits and mitigate risks. Among such regulatory endeavors, the regulatory sandbox, first adopted by the United Kingdom in its financial sector, stands out as a prominent mechanism to strike a balance between promoting technological innovations and ensuring market order. Given the promises of the regulatory sandbox, there has been a gradual embrace of this approach by governments across continents, arguably indicating a global norm diffusion. There is also a trans-governmental endeavor to facilitate cooperation among regulators and regulatory convergence through bilateral arrangements and the multilateral 'global sandbox" club. Beyond the financial sector, due to the cross-border nature and implications of many disruptive technologies and innovations, some countries have applied similar approaches to nonfinancial areas. This Article discusses examples of different approaches in Canada, Japan, Singapore, and Taiwan in areas such as energy, the environment, health care, and transportation. These developments evidence the rise of the sandbox approach to regulate disruptive technologies and innovations in different sectors at the national, trans-governmental, and global levels, which has crucial theoretical and practical implications. By way of an in-depth analysis on Taiwan's aggressive use of the regulatory sandbox in the areas of financial services, unmanned vehicles, and more recently, artificial intelligence, this Article argues that although the sandbox approach has emerged as a handy tool for governments to manage ramifications across different sectors, there are limitations that may affect how countries implement this approach on the ground. Indeed, the legal system, regulatory culture, and domestic political economy since the Global Financial Crisis all play crucial roles in shaping path dependence and institutional inertia nested within regulatory agencies. One must not take the sandbox approach at face value because, in the long run, the ultimate contour of the global sandbox approach will be defined by complicated local contexts, seen or embedded.
- Subjects
DISRUPTIVE innovations; MARKET orders; REGULATORY approval; DIFFUSION of innovations; ARTIFICIAL intelligence
- Publication
Cornell International Law Journal, 2020, Vol 53, Issue 2, p261
- ISSN
0010-8812
- Publication type
Article