Governing Finance: East Asia's Adoption of International Standards

More than a decade has passed since the East Asian economies were marred by the massive financial crisis, which some assessed as the best thing that could have happened to the region (Kristopf and WuDunn, 2000). This ‘blessing in disguise’ allegedly comes from the fact that the governments of the crisis-hit countries ‘responded by launching one of the most ambitious governance reform projects in living memory’ (p. 1). Such reform is implemented by the East Asian governments' active compliance to international standards of transparency, finance, and corporate governance. The influence of this so-called ‘regulatory neoliberalism’ has been credited as the source of convergence of East Asian economies to international norms. In Governing Finance, however, Walter casts doubt on this conventional and scholarly wisdom by introducing the notion of mock compliance, where countries covertly resist compliance to some international standards by diverging their policies and actions from the formal rules. This mock compliance is induced by the high political and social costs of compliance domestically, which challenges the fundamental governance of those countries. Developing and emerging market countries thus strategically choose to rely on mock compliance when (a) the costs of outright noncompliance with those standards are high, (b) private sector compliance costs are high, and (c) the third and external party monitoring costs are also high. Walter argues, therefore, that the wide-spread compliance problem reveals how the politics of state transformation have been misconstrued by agents of international standards projects, leading to underestimation of reform failure.