Worldwide Adoption of Regulatory Sandboxes: Drivers, Constraints and Policies

Regulatory sandboxes are becoming a valuable tool for promoting innovation in sectors such as finance, energy, telecommunications, and health. We analyse 199 cases across 92 countries to understand the dynamics of worldwide adoption. Results show significant geographical concentration, with three countries (USA, Singapore, UK) accounting for a quarter of all sandboxes. We find that economic development and legal traditions are both strongly associated with sandbox adoption. Although regulated industries and innovation are critical for poverty reduction and growth, regulatory sandboxes are unfortunately exceedingly rare in developing countries. We use Laffont’s theory of regulation to draw recommendations on how developing countries could be supported in order to bridge this innovation gap.