This special issue examines the consequences of the ongoing power transition in the world economy for global regulatory regimes, especially the variation in rising powers' transition from rule-takers to rule-makers in global markets. This introductory article presents the analytical framework for better understanding those consequences, the Power Transition Theory of Global Economic Governance (PTT-GEG), which extends the scope of traditional power transition theory to conflict and cooperation in the international political economy and global regulatory governance. PTT-GEG emphasizes variation in the institutional strength of the regulatory state as the key conduit through which the growing market size of the emergent economies gives their governments leverage in global regulatory regimes. Whether or not a particular rising power, for a particular regulatory issue, invests its resources in building a strong regulatory state, however, is a political choice, requiring an analysis of the interplay of domestic and international politics that fuels or inhibits the creation of regulatory capacity and capability. PTT-GEG further emphasizes variation in the extent to which rising powers' substantive, policy-specific preferences diverge from the established powers' preferences as enshrined in the regulatory status quo. Divergence should not be assumed as given. Distinct combinations of these two variables yield, for each regulatory regime, distinct theoretical expectations about how the power transition in the world economy will affect global economic governance, helping us identify the conditions under which rule-takers will become regime-transforming rule-makers, regime-undermining rule-breakers, resentful rule-fakers, or regime-strengthening rule-promoters, as well as the conditions under which they remain weakly regime-supporting rule-takers.

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This paper looks at the insertion of China and India in the contested and highly legalised regime of intellectual property rights (IP). In doing so it pays particular attention at two dimensions, the internal adoption of this regime and external endorsement/contestation of international IP norms. Much has been written about whether emerging countries will challenge or support the maintenance of an open rules-based multilateral trade system. In this context, the differentiated integration of these two countries in the IP regime is notable. Domestically, China despite much criticism for widespread IP infringement has followed a maximalist interpretation of TRIPS. India, on the contrary has followed other emerging countries in pursuing a more critical, minimalist understanding. These positions have also been visible at the multilateral arena. This empirical finding runs contrary to the assumption that defiance results from market power. The divergence is the more surprising given a recent explosion of patent filings in both countries. From a political economy perspective, this should translate into support for stricter rules under TRIPS. In explanaining the two countries’ divertent insertion this paper looks beyond economic (market) power and domestic interests and underlines the role of ideational legacies, domestic interests and regulatory capacity. The paper thus stresses the need to look deep into domestic politics and ideational cleavages, as well as at their evolution over time, in order to better understand the international behaviour of emerging countries