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«EUI Working Papers RSCAS 2012/23 ROBERT SCHUMAN CENTRE FOR ADVANCED STUDIES Global Governance Programme-18 MULTILEVEL GOVERNANCE OF INTERDEPENDENT ...»

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GPG provision calls for the introduction of a new, additional organizational principle, namely, an issue-orientation. The need for such issue-orientation is particularly warranted at the international level. This is because international cooperation is in many instances aimed at correcting specific problems, notably at discouraging, in a targeted way, negative cross-border spillovers like pollution or encouraging positive spillovers like those that result from the national-level policy harmonization that countries might undertake in order to join international regimes such as the multilateral trade regime or the international civil aviation regime.

Yet, organizations and their underlying institutions, once established, can be difficult to change (Furubotn and Richter, 2000; North, 1990). 13 Problems of lock-in and path-dependency may arise and cause the provision path of GPGs to break down or associated reform attempts to be held up.

Following North’s (1990, pp.4, 5) terminology, institutions are “the framework within which human interaction takes place …the rule of the game …formal written rules as well as typically unwritten codes of conduct” (p.4). Organizations

–  –  –

Policy Stand-Offs In today’s multi-actor world, which is characterized by the progression of democracy at the national level and the involvement of more and more non-state actors at the global policy domain level, more than multilateral relations between nations impact the functioning of international cooperation. It is therefore important to look beyond the political market, that is, the intergovernmental negotiations discussed in the last section, and examine the broader policy context.

As studies on policy change have found, policy stand-offs and stalemates are the norm; and major policy reforms are the ‘infrequent exception’ (Repetto, 2006). A possible reason for the stalling of policy change efforts could be a standoff between the proponents and opponents of change that prevents issues from moving in any direction. Such a situation could especially arise in cases where changing the provision of a GPG is likely to have major distributional implications, as the intended global move towards a low-carbon economy certainly would (Eisenack, Klaus et al., 2010). As proponents and opponents promote more and more research and analyses to bolster their arguments, existing political rifts can widen rather than narrow, a problem that can be seen in both the climate change area and other fields. For example, assessments of the benefits developing countries could derive from the Doha Round differ quite widely (see for example Bhagwati, 2011; Jean-Pierre Lehmann, 2011; Scott and Wilkinson, 2011); and so do the policy proposals on how to tackle the 2008 financial crisis and the ensuing sovereign debt crisis in Europe. 14 At the same time, while crises stir up willingness to change, this willingness often wanes quickly once the worst is over, explaining, as (Reinhart and Rogoff, 2009) show, the recurrent nature of financial crises.

Fundamental policy transformations have indeed been rare during the past six to seven decades – breakthroughs like those we witnessed after World War II with the creation of the United Nations system and the establishment of the Bretton Woods institutions; or the change towards economic openness and market fundamentalism that accompanied the vanishing of the East/West divide in the 1980s. Yet, even the continuing relevance of these major policy reforms is now being questioned. Just consider the current debates on global governance in which the United Nations often figures only as one player among others, or the debate on a new – “green” – growth paradigm. 15 Several of the ‘sticky,’ or severely underprovided, GPGs are closely linked to the current major reform debates: the need to change the growth and development paradigm pursued to date in order to promote enhanced environmental sustainability; the rebalancing of markets and states; and how to tackle the new security threats like communicable diseases or transnational crime and violence while, at the same time, maintaining economic openness. Moreover, although already fundamental and farreaching in and by themselves, these and other issues must be tackled under unstable conditions – the aforementioned and ongoing major power shifts.

(Contd.) include political bodies …, economic bodies.., social bodies …, and educational bodies..” (p.5). They are seen as guided by but also influencing institutional change.

The 2008 financial crises spawned a flurry of studies and commentaries on how to manage various aspects of the present crisis and strengthen financial regulation in the longer run. The disagreements between these contributions stem, in part, from the fact that some authors start from a more neo-liberal position and others from a more Keynesian approach. In part, as Helleiner et al. (2010) point out, authors arrive at different conclusions because of a differing analytical focus.

Whereas some analyses focus on inter-state power, others focus on domestic politics or transnationalism in explaining the origins of and possible ways out of the crisis. Similar differences between the analytical frameworks could perhaps also be found in other issue areas, including multilateral trade, climate change, or global governance more broadly.

For proposals on how to redesign the resent system of global governance, see for a broad, overarching view, among others Samans et al. (2010); and for an outline of green growth strategies the OECD (2011). Yet again, as we are in the midst, or perhaps, only at the beginning of, a wave of worldwide rethinking on these and related issues, it must be stressed that the foregoing references offer but a glimpse of the blitz of reform ideas currently being generated.





Global Public Goods: Explaining their Underprovision

Could it be that global crises are also escalating today because the world is going through a major period of transformation and uncertainty that often causes reform proposals to get trapped in policy stalemates? How far into this transformation are we? Are tipping points in sight that could unleash a new willingness to engage in international cooperation and resolve some of the pending issues?

Inconsistency among GPGs Symptomatic of an era of transformation is also that the old order and the institutions that were built to support it will overlap with emerging new institutions and organizations, among them many that qualify as GPGs. Thus, inconsistencies could arise in the global public domain, notably as a result of clashing global norms and principles.

Global public goods are, as noted, goods that exist in the global public domain. However, different GPGs will have entered the global public domain at different points in time. Although, as just discussed, major policy change is rather the exception than the norm, it nevertheless happens.

Therefore, GPGs belonging to different policy eras can exist side by side in the global public domain – and be, for many actors, difficult to reconcile. For example, many countries appear to be struggling with how to combine policymaking sovereignty and economic openness.

With more and more state and non-state actors getting involved in the global public domain, inconsistency among GPGs may also arise from the differences that various actor groups have for a particular good. Studies have shown that the national policy performance of governments is being monitored by some 170 indices designed and employed by different civil society organizations, private-sector actors, academics, individual governments, and multilateral organizations (Bandura, forthcoming). Thus, state and non-state actors face a puzzling array of not uncommonly contradictory and conflicting policy expectations and demands.

Relative Recentness of Issues Not too long ago issues like health, education, law and order, or taxation were perceived as essentially domestic policy concerns. By now they have been globalized and are recognized as such. Also, not too long ago, the conventional major powers could have suggested a particular policy response to a global challenge and banked on other nations falling in line, but now they cannot. Other issues like cyberbased crime did not even exist a few years ago. So, many policy challenges today are new, as yet poorly understood, require study not only to understand their technical aspects but also their economics, and importantly, necessitate the development of new policy approaches and instruments.

As long as uncertainty about the existence of a particular problem, or uncertainty about the desirability and feasibility of possible technical and political response options exists, aversion to ambiguity is likely to impede action (Brock, 2006). This can be for valid reasons, because embarking prematurely on a new policy path, be it a choice for a particular technology (e.g. nuclear energy) or a particular policy approach (e.g. addressing carbon leakage from the producer rather than the consumer side) can trigger long-lasting and costly lock-in effects. Thus, it could sometimes be preferable to allow more time for learning and testing. But the longer policy innovation takes, the higher the risk that it gets interrupted by policy swings: election cycles and changes in governments that frequently contribute to the often only short-lived emergence of new policy ideas and reform attempts. As a consequence, incremental change may occur but not suffice to punctuate the present policy equilibrium.

Inge Kaul

In Sum: More than Free-Riding Matters As argued above and summarized in Table 1 below, a number of factors might be causing the underprovision of GPGs we are experiencing. Their combination and the strength of each might differ from case to case. Underprovision is likely to be more severe, for example, where several factors coincide because their effects may add up or reinforce each other. It seems that GPG concerns which have emerged relatively recently and are seen as entailing significant distributional implications are especially liable to underprovision, notably when the adjustment or cost-burden falls on the conventional major powers.

Yet, we must not overlook that even today, despite the major transformations that are occurring, GPG provision functions quite adequately in a number of cases. This holds true especially for GPGs like the global transportation and communication systems, which are GPGs that not only enjoy strong support from private sector actors but also tend to spread their net-benefits quasi-automatically and relatively evenly across nations without much need for corrective policy intervention. Indeed, they offer benefits that state and non-state actors can easily access, provided they have the means (that is, the money) to post a letter or parcel, buy an air travel ticket, or make a long-distance call (Kaul et al., 2003).

That the provision of these GPGs functions quite well underlines, once again, the importance of fair and clear net-benefits to effective international cooperation. This condition usually goes unmet where policy initiatives for the global common good are controversial and contested: where meeting a global challenge would have benefits for all but not necessarily clear net-benefits, because some would need to shoulder relatively bigger burdens than others. Or, put differently, because publicness in consumption would not be matched by publicness in utility, a situation that can arise especially where publicness in decision-making, that is, process fairness, is lacking. Where such mismatch occurs, one might also find, as depicted in Figure 3, a low willingness on the part of concerned actors to engage in collective action – to generate the necessary collectiveness or publicness of provision – and thereby respond to the challenge of policy interdependence that GPGs tend to pose.16 While there exists some evidence that lends support to arguments about the links between the fairness and the effectiveness of international cooperation, a fuller understanding of when, why and how fairness matters would, as also Kapstein (2008) suggests, require much more research. One might certainly want to add a study on the relationships depicted in the rhombus of publicness to the research agenda that Kapstein presents.

–  –  –

Source: Author Recent Policy Responses to GPG Underprovision A comparison between the above-identified list of GPG provision impediments and the issues that either figure prominently in current policy debates or appear as stated aims of policy innovations reveals considerable overlap. This indicates that the list of provision impediments suggested in Section II points to relevant factors.

However, in line with the foregoing discussion, it also appears that change happens, at best, in fits and starts. Policy standoffs still exist in many issue areas.

Take the issue of fairness of process. Some analysts - like, for example, Nye - advocate the pursuit of ‘smart power,’ that is, power not wielded over someone but with others so that resources can be pooled and common purposes achieved more effectively (Nye, 2011, pp.207–234). The creation of the Group of Twenty (G-20) can be seen as an institutional innovation that reflects a shift towards ‘smart power.’ For more information on the G-20, see the (‘Official Website of the G20’, 2012); and for assessments of the work of the G-20, for example, (‘University of Toronto on the G20’, 2012)

Global Public Goods: Explaining their Underprovision



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