Regulatory Competition and the World Bank's Doing Business Reports: Taiwan's Liberalization of the Minimum Capital Requirement for Incorporation as an Example

In 2009 Taiwan repealed the minimum capital requirement for incorporation (MCR), owing to the World Bank (WB)'s Doing Business (DB) reports. This article presents regulatory/jurisdictional competition as an analytical framework for convergence towards the liberalization of the MCR, especially in the case of Taiwan. To analyze the dynamics producing the regulatory change as a type of legal transplants promoted by intergovernmental organizations (IGOs) like the WB, this article compares the United States, the European Union (EU) and Taiwan and explores how regulatory competition creating a "law market" led to convergence towards the reduction or abolishment of the MCR. In the case of Taiwan, this article illustrates how the WB, via its DB reports, has promoted international regulatory competition leading to the domestic lobbying by anti-regulatory and exit-affected interest groups and how the law market forces may have driven the Taiwanese government to enact the legal transplants, thus converging towards the liberalization of the MCR. The findings have significant implications. Specifically, similar law market dynamics behind inter-jurisdictional regulatory competition has been at work in a federal nation like the United States, a supranational federal system like the EU, and internationally. Moreover, the Taiwanese case study demonstrates that such an IGO as the WB would take initiatives in acting as a public actor to diffuse its preferred legal model such as liberalization of red tape like the MCR across national borders, by promoting jurisdictional competition sparked by its DB indicators and rankings.