Regulation for a Digital Age
Adaptive Governance: Regulation for a Digital Age
Posted By On June 3, 2018

While regulation can have a negative connotation for stifling creativity and innovation, it is responsible for many positive things that citizens enjoy daily. As a result of regulation in most countries, we can be confident that the food and drugs we consume are safe, that doctors who treat our illnesses have a minimum level of qualification, and that the oceans are sufficiently clean to enjoy a refreshing swim.

Technologies such as online platforms, artificial intelligence, and autonomous vehicles are having a dramatic impact on economic and social structures in Asia and globally. They will continue to develop whether or not we create new governance systems to shape their impact. In order to maximize the positive and inclusive aspects of technology, and minimize or eliminate the negative or harmful effects, it is important to accelerate our exploration of new, more agile models of regulation. A few examples of new thinking and creative regulation from various parts of the world are provided below.

Super-regulation: Gillian Hadfield of the University of Southern California suggests a concept called super-regulation. Specialist, private, for-profit and nonprofit organizations would design regulatory schemes, which would be overseen by public regulators. These private regulators would be able to sell their solutions and attract the same kind of investment and brainpower as people building those products. The targets of regulation, the companies that have to comply with regulatory rules, would be required to choose which of these private regulatory schemes to submit to, and pay for, that service. Under super-regulation, governments regulate the regulators: auditing their performance, surveying consumers and citizens, and tracking metrics that show whether a regulated industry is meeting targets. This approach would “harness the benefits of private regulation but without turning to self-regulation”.[1] Utilizing people who are close to the issues/problems and equipping them to come up with smart solutions can allow for rapid iteration to meet the needs of the governed, and avoid top down approaches that are out of touch.

 Regulatory Sandboxes: Regulatory sandboxes create opportunities for experimentation by providing innovators with regulatory/legal exemptions over a specific duration of time, while testing their products in a well-defined live environment, under the supervision of a regulator. This approach helps to mitigate risks by the innovator and the regulating government, enables innovators to utilize a test and learn approach, and helps regulators to create new rules that will protect the interests of consumers. Governments such as Singapore[2], Malaysia[3], Sweden, and the United Arab Emirates are currently experimenting with regulatory sandboxes for sectors such as autonomous vehicles and fintech. The United Kingdom is also actively experimenting with sandboxes. Given that technology often has cross-border implications, the United Kingdom has proposed the idea of a global sandbox. “This could potentially allow firms to conduct tests in different jurisdictions at the same time and allow regulators to work together and identify and solve common cross-border regulatory problems, through tests. Under such a model, testing could span two or more jurisdictions.”[4]

Crowdsourcing in Policymaking: Crowdsourcing is an open call for anyone to participate in an online task by sharing information, talent and knowledge. It has been used by Finland, Brazil and Iceland to search and collect knowledge for policies and to engage citizens.

Crowdsourcing has the potential to increase the quality of regulation and the speed of its development, and to ensure regulation effectively protects citizens. In “The Value of Crowdsourcing in Public Policy-Making: Epistemic, Democratic, and Economic Value”, Aitamurto and Chen explain how crowdsourcing legislation can create value for public policy and regulation. Drawing on examples from Finland, they argue that crowd-sourced policymaking creates democratic value by increasing accountability, inclusiveness, transparency and deliberation in. Epistemic value is developed when crowdsourcing serves as a knowledge search mechanism and a context for verification and learning. Economic value is created when crowdsourcing makes knowledge search in policymaking process more efficient and enables the government to produce higher quality policies that address citizens’ needs and societal issues more quickly and efficiently.[5]

Public-Private Data Collaboratives: As technologies grow in complexity more data is required to help decision-makers both inside and outside of government to create regulation and solutions to social problems. However much of the most useful data is owned by the private sector. In order to leverage the potential of data to improve people’s lives, then we need to accelerate the creation and use of data collaboratives. These involve private companies, research institutions and governments exchanging data to improve the quality of government services including regulation. A list of data collaboratives collected from around the world by GovLab is provided here.

Many of these methods have not been used for a long enough period of time to establish an evidence base. However, by experimenting with some of the above tools, leaders in the Asia-Pacific and globally may be able to increase the speed of their regulatory response time, facilitate an inclusive process that involves more citizens, while maintaining the trust of the societies they govern that regulation will foster innovation while protecting the interests of citizens.

 

[1] Hadfield, Gillian, Rules for a Flat World: Why Humans Invented Law and How to Reinvent It for a Complex Global Economy, Oxford University Press, Oct 3, 2016, p. 248

[2] http://www.mas.gov.sg/Singapore-Financial-Centre/Smart-Financial-Centre/FinTech-Regulatory-Sandbox.aspx

[3] https://www.myfteg.com/regulatory-sandbox

[4] https://www.fca.org.uk/firms/regulatory-sandbox/global-sandbox

[5] Tanja Aitamurto & Kaiping Chen (2017) The value of crowdsourcing in public policymaking: epistemic, democratic and economic value, The Theory and Practice of Legislation, 5:1, 55-72, DOI: 10.1080/20508840.2017.1282665

 



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