«EUI Working Papers RSCAS 2012/23 ROBERT SCHUMAN CENTRE FOR ADVANCED STUDIES Global Governance Programme-18 MULTILEVEL GOVERNANCE OF INTERDEPENDENT ...»
Although standard public economics keeps mainly the national policy context in mind when discussing public goods, collective-action problems like free-riding may also contribute to the underprovision of GPGs. But do they explain the full extent of the challenges we are currently facing?
Or, do other factors also come into play?
The present chapter begins to explore these questions, developing conjectures destined for further study in the subsequent chapters of this volume.
Section I introduces the concept of GPGs and examines in which respects the properties of these goods and the provision challenges they pose resemble or differ from those of national public goods.
Drawing on this discussion and on various social and political-science literatures, Section II identifies factors that could, under certain circumstances, impede the provision of GPGs. Section III briefly looks at the current policymaking realities in order to ascertain whether contemporary policy debates and reform initiatives contain echoes of the identified impediments. They indeed do.
The findings indicate that GPGs, like public goods in general, are liable to suffer from collectiveaction problems such as free-riding. In fact, they may face a higher risk of encountering such problems than national public goods. The reason is that international negotiations resemble political markets in which states are individual actors pursuing particularistic, national interests, and not, necessarily, global concerns. Consequently, GPGs may suffer from dual – economic and political – market failure.
However, more than free-riding appears to matter. Global public goods tend to involve policy interdependence among countries, because in most instances no nation, however powerful, can selfprovide these goods. They require international cooperation based on a blend of fairness and power politics, and hence, negotiating strategies that some countries, especially the conventional major powers, may yet have to work out and adjust to. Therefore, GPG provision is likely to be affected by the current shifts in global power relations towards increased multi-polarity.
Moreover, several GPGs, including climate change mitigation, pertain to another basic transformation that the international community must accomplish: a rethinking of the growth and development paradigms it has pursued to date so that it can move towards a low-carbon economy.
* Hertie School of Governance, Berlin.
Thus, it must be expected that policy reform efforts aimed at correcting the underprovision of GPGs will be surrounded by considerable technical, economic, and political uncertainty. They will disturb conventional governance systems, and hence, will encounter resistance and become bogged down in policy stalemates. In this vision, crises will persist and remain unresolved for quite some time – despite entailing high costs for many people, individual nations, and the world as a whole.
But, as the concluding section of this chapter – again, with further study and debate in mind – suggests, if some change processes were to be accelerated, notably those that aim at more open, participatory, and decentralized globalization, including regionalization, many other policy stalemates could perhaps also be resolved more speedily – to everyone’s benefit.
Conceptualizing Global Public Goods 1 Standard economic theory distinguishes between two main categories of goods: private goods and public goods.
Goods that can be parcelled out and made excludable, so that clear property rights can be attached to them, are categorized as private goods.
Public goods, by contrast, are goods that are non-excludable, meaning that the goods’ effects (benefits or costs) are there for all. If a good is non-excludable and non-rival in consumption so that one person’s use of the good or one person’s being affected by it does not diminish its availability for others, the good is said to be pure public. An example is the light of a candle, the service provided by a street sign, or also peace and security. If a good possesses only one of these properties it is impure public. The atmosphere, for example, is non-excludable but rival in consumption, because unrestricted pollution can change its gas composition and contribute to global warming. Patented pharmaceutical knowledge illustrates a non-rival good, whose use has, at least for a limited period of time, been made excludable. So, it, too, falls into the category of an impure public good.
The public effects of a good can be of different geographic – local, national, regional or worldwide – reach; and they can span across one or several generations. If a good’s benefits or costs are of nearly universal reach, spreading across all countries, or if it could potentially affect anyone anywhere, it is a global public good, a GPG. Together with regional public goods, GPGs constitute the category of transnational public goods. 2 For an understanding of the policy challenges that GPGs pose and the provision constraints they may encounter, it is especially useful to consider the following aspects in more detail.
Publicness (and Privateness) as a Policy Choice The standard economics definition of public goods fails to distinguish between a good’s potential publicness and its de facto publicness. Yet this distinction is increasingly important. Due to a number of change processes, including technological advances, strengthened policy design skills, increased porosity between markets and states, as well as greater political and social freedoms, it has become more and more evident that publicness and privateness are in most cases not innate properties of a good but social constructs, a policy choice. Therefore, it is important to distinguish between the This section draws on Kaul et al. (2003). More detailed discussions on public goods and transnational – regional and global – public goods can be found, among others, in Barrett (2007); Kaul et al. (1999); Sandler (2004).
To be clear, the term ‘global,’ when used in reference to the consumption properties, the benefits or costs of a public good, means trans-boundary, border-transgressing or worldwide. When the term is used later in this chapter in reference to the provision path of a GPG, it indicates that action has to be taken by actors worldwide, and, as the case may be, nationally and internationally.
Global Public Goods: Explaining their Underprovision
potential and de facto publicness of a good. For example, land can be freely accessible to all; or it can be fenced in and made excludable. Similarly, certain facts can be kept secret or be publicized.
Goods that are de facto public, which is to say, actually in the public domain, may be there for three main reasons. First, making them excludable may be technically impossible or too expensive.
Second, they may have been deliberately placed into the public domain and made non-excludable and non-rival, as street signs have been. Third, goods may be public by default, due to policy neglect (which often allows air pollution to continue) or lack of information (which has, for example, led to harmful substances being consumed before their ill-effects were recognized).
Globalness as a Special Form of Publicness Globalness, or the fact that the benefits and costs of some goods have nearly universal coverage, can be viewed as a special form of publicness and also as a policy choice. Certainly, some GPGs such as the moonlight have always had the property of global publicness. They are by nature global and public. Other public goods, however, have changed their properties from, for example, being national (including local) public goods to being GPGs. The reason is that globalization and GPGs are intrinsically linked. In fact, GPGs are both drive and result from globalization.3 An example of a GPG that facilitates the globalization process is the universal postal system. It has emerged through a harmonization of national postal systems and thus illustrates a case of the intended globalization of a formerly national public good. Another case in point is the multilateral trade regime that requires cross-border policy harmonization in a large number of policy domains. Today, more and more national public goods have been subjected to such behind-the-border harmonization. They range from trade and investment regimes to human rights norms. In all these cases, public goods that were formerly provided in more country-specific ways have undergone a globalization process, been turned from national public goods into GPGs, sometimes only after years of protracted multilateral negotiations.
Yet alongside intended globalization processes, like the creation of more integrated markets, has come unintended globalization, and with it, a further globalization of formerly national public goods.
For example, more intense and frequent shipping and travel activity has facilitated the spread of communicable diseases. Financial market integration has allowed the contagion effects of financial crises to spread more speedily and more widely.
Increased openness of national borders has led to an ever-closer intertwining of national public domains and deepening interdependence among countries. As a result, the availability of more and more public goods, specifically GPGs, in any country today depends on policy actions taken or not taken in other countries.
Publicness in Utility as Distinct from Publicness in Consumption Just as preferences for private goods (e.g. houses, books, or clothing) vary, so do preferences for public goods, especially those for GPGs. This is because many socio-economic and political differences are wider between countries, i.e. on the global level, than within countries. 4 Much of what is being discussed here about the globalization of formerly national public goods would also apply to processes of regionalization. In fact, some formerly national public goods may simultaneously undergo both regionalization and globalization.
In the present context, the term ‘good’ refers to things (products, services or conditions) that exist in the public domain and are public in consumption. It has no value connotation in the sense of ‘good’ as opposed to ‘bad.’
Thus, publicness in consumption differs from publicness in utility. An African woman who faces a high risk of maternal mortality is more likely to prefer enhanced publicness of relevant medical and pharmaceutical knowledge than, say, international financial stability or even investment in mitigating climate change – even her children might not live long enough to face the full consequences of this latter change process.
In which way and to what extent a public good, notably a GPG, affects the welfare and well-being of different population groups depends not only on the overall provision level of the good but also on how it is shaped. For example, all countries face the same multilateral trade regime. But different groups of countries and even different groups of people within countries may in distinct ways gain or lose from this regime as a result of how particular norms have been shaped. Similarly, while many agree on the desirability of international peace and security, the views on how to generate this GPG vary widely, as debates in the United Nations Security Council have repeatedly shown.
The Complexity of the GPG Provision Path The provision path of GPGs is comprised of two main strands: a political process and an operational process. Both strands tend toward highly complex, large-number processes involving public and private actors and the assembly of inputs from different sectors at national and international levels.
During the political process, concerned parties enter into negotiations and agreements about which goods to provide, how much to produce, how to shape the goods, and who is to contribute which of the goods’ building blocks. Such negotiations will also determine how the costs and benefits of the intended policy interventions are likely to be distributed.
The operational process of GPG provision is concerned with the actual generation of the good, either based on voluntary, unilateral action, or as is most often the case, translating an international agreement into practical-political action.
Figures 1 and 2 illustrate, respectively, the provision path of a national public good and that of a GPG. As can be seen from these figures, both provision paths are highly complex, with the GPG provision path being not only multi-actor and multi-sector but multilevel as well.
As Figure 2 shows, GPGs can constitute final goods, that is, the goods that people actually want to enjoy. Examples are international peace and security or the control of communicable diseases. In other cases, a GPG could be an intermediate good intended to feed into the provision of another, final GPG.
Knowledge and technology elements may, for example, serve as intermediate goods for health-related final GPGs. The same holds for global principles and norms. Thus, multilateral trade agreements are an ingredient of the GPG “integrating markets”, and internal financial codes and standards, such as Basel III, are intended to foster the final GPG of enhanced financial stability. 5 It should perhaps be noted that the institution of the market has public good properties. However, while market creation and embedding requires collective action, nationally and internationally, markets, as public goods, are designed to foster competitiveness. Therefore, the properties of markets have to be distinguished from the nature of the economic activity they are intended to facilitate.