ple, China, the second largest economy in the world in purchasing-power terms, has a
membership quota in the IMF similar to that of Belgium (Buira 2003).
Additionally, this decision-making structure ensures that industrial countries
have the majority of the votes on the governing bodies: 24 industrial countries enjoy a
61.4% voting share, while developing countries (and non-oil producers) have scarcely
29% of the vote. And this structure is replicated in the IMF’s government system: the
same 24 industrial countries, none of them beneficiaries of IMF-supported pro-
grammes, have 10–11 executive directors, while 42 African countries, for which IMF
decisions are crucial, have just 2 executive directors. Obviously, many countries feel that
they are not well represented in the decision-making processes.
Even in institutions such as the World Trade Organization, where all countries
have equal voting capability, there are complaints about the degree of democracy and
transparency in decision-making and about the representativeness of governing bodies
(see viewpoint 1.2 on global public goods and global governance). Developed countries
reach agreements among themselves that they later try to impose on the other member
states using their greater economic weight.
It is difficult for international institutions to promote effective processes of nego-
tiation and agreement based on voluntary cooperation formulas between countries if
they are not capable of appropriately integrating and representing all countries involved.
This requires intense efforts at transparency, accountability and legitimacy.
FINANCING MECHANISMS FOR THE PROVISION OF INTERNATIONAL PUBLIC GOODS
There are four basic mechanisms for supporting public goods supply: correcting the
effect of externalities by creating a quasi-market or applying taxes or fees; turning to
voluntary private resources from individuals, businesses or foundations; claiming public
resources from national contributions or international funds and combining any of
these three mechanisms (table 1.7). The relevance of each mechanism depends on in-
centives and government structures that are internationally established for the provision
of these goods (Sagasti and Bezanson 2001).
Table 1.7. Financing mechanisms for global public goods
Financing means Mechanism
Market creation or strengthening
Internalizing externalities
Taxes, fees and levies
Corporations (for profit)
Drawing on private sources Corporations (not for profit)
Individuals
National sources
Relying on public sources
International sources
Forming partnerships Combination of various different sources
Source: Sagasti and Bezanson 2001.
PUBLIC GOODS FOR ECONOMIC DEVELOPMENT 2
7
, Viewpoint 1.2
Global public goods and global governance
Why does sound economic theory with impor- cal questions about the appropriate manner in
tant policy implications such as that advanced in which policy is made, decisions are taken and
international discussions on global public goods implemented and resources are distributed. This
so often prove difficult to implement in practice? is an issue for the theorist as much as the practi-
Frequently, such economic theory demonstrates tioner. Indeed, a problem with the much of the
little or no appreciation of the political constraints contemporary analysis of the demand for govern-
likely to work against policy implementation. While ance, beyond the confines of the state, is that it is
economic assumptions about what constitutes often posed as a technical and managerial prob-
good governance in the twenty-first century are lem. This approach removes any notion of politics
becoming increasingly sophisticated technically, or ethics from problem solving.
especially for the provision of public goods, they But actors in this process are not ethically neu-
often remain oblivious to the nature of the politics tral and dispassionate. They are players with po-
that can derail them, no matter how theoretically litical agendas. This is so whether the relevant
sound and policy relevant. international institutions are included (United Na-
In short: economics, even the emerging subdis- tions and alliances in the security domain, the
cipline of political economy, is not comfortable International Monetary Fund in the international
with politics. Political economy, as what might be financial arena; the World Trade Organization and
called a theory of choice under constraint using regional and bilateral institutional arrangements in
game theoretic models, may offer important in- the trade arena; the World Bank in the context of
sights into issues such as scarcity and the role of development) or those ever more visible non-state
institutions in the policy process. It is less com- actors (such as multinational corporations and
fortable with questions of ideological contest, non-governmental organizations) and various
power, political struggle, representation, legiti- advocacy coalitions and global public policy net-
macy and accountability, all of which can make or works such as the Davos Forum or the emerging
break the implementation and acceptance of a counter-voices at the Global and European Social
given policy. Forums or what is generically thought of as the
alternative globalization movement.
That discomfort sets the stage for discussing
global governance, an overused and underspeci- The financial crises of the late 1990s generated
fied concept. The demand for research on global precisely the sorts of distrust and animosity that
governance has followed the recognition that sov- detract from the possibilities for mutually benefi-
ereignty is more a relational and relative question cial cooperation at the international level. The
of responsibility. The result is a dramatic change rhetoric in industrialized countries about burden
in the role of international law. sharing—the implication being that developing
countries did not share the burdens of global pub-
More than a technical and managerial problem
lic goods—was more than countered by percep-
The demand for global and regional governance tions in developing countries that the burdens of
has become increasingly complex. And the role of moral hazard, social dislocation and the impact of
multilevel governance structures in key policy unfettered competition had been unloaded on
areas has grown dramatically. precisely the economies and societies that were
Yet in some key areas of the global cooperative least equipped to deal with them. In an era of
agenda, in both the economic and the security deregulated capital movement and the processes
domain, collective governance capacity appears of financial change that brought hedge funds,
to be deteriorating and resistance to its enhance- pegged exchange rates and precipitous currency
ment to be growing. For an increasing number of collapses, the notion of global burden sharing
actors global governance questions resist the adopted by the developed world was thought by
technocratic fix and pose major political and ethi-
28 THE CONCEPT OF INTERNATIONAL PUBLIC GOODS
membership quota in the IMF similar to that of Belgium (Buira 2003).
Additionally, this decision-making structure ensures that industrial countries
have the majority of the votes on the governing bodies: 24 industrial countries enjoy a
61.4% voting share, while developing countries (and non-oil producers) have scarcely
29% of the vote. And this structure is replicated in the IMF’s government system: the
same 24 industrial countries, none of them beneficiaries of IMF-supported pro-
grammes, have 10–11 executive directors, while 42 African countries, for which IMF
decisions are crucial, have just 2 executive directors. Obviously, many countries feel that
they are not well represented in the decision-making processes.
Even in institutions such as the World Trade Organization, where all countries
have equal voting capability, there are complaints about the degree of democracy and
transparency in decision-making and about the representativeness of governing bodies
(see viewpoint 1.2 on global public goods and global governance). Developed countries
reach agreements among themselves that they later try to impose on the other member
states using their greater economic weight.
It is difficult for international institutions to promote effective processes of nego-
tiation and agreement based on voluntary cooperation formulas between countries if
they are not capable of appropriately integrating and representing all countries involved.
This requires intense efforts at transparency, accountability and legitimacy.
FINANCING MECHANISMS FOR THE PROVISION OF INTERNATIONAL PUBLIC GOODS
There are four basic mechanisms for supporting public goods supply: correcting the
effect of externalities by creating a quasi-market or applying taxes or fees; turning to
voluntary private resources from individuals, businesses or foundations; claiming public
resources from national contributions or international funds and combining any of
these three mechanisms (table 1.7). The relevance of each mechanism depends on in-
centives and government structures that are internationally established for the provision
of these goods (Sagasti and Bezanson 2001).
Table 1.7. Financing mechanisms for global public goods
Financing means Mechanism
Market creation or strengthening
Internalizing externalities
Taxes, fees and levies
Corporations (for profit)
Drawing on private sources Corporations (not for profit)
Individuals
National sources
Relying on public sources
International sources
Forming partnerships Combination of various different sources
Source: Sagasti and Bezanson 2001.
PUBLIC GOODS FOR ECONOMIC DEVELOPMENT 2
7
, Viewpoint 1.2
Global public goods and global governance
Why does sound economic theory with impor- cal questions about the appropriate manner in
tant policy implications such as that advanced in which policy is made, decisions are taken and
international discussions on global public goods implemented and resources are distributed. This
so often prove difficult to implement in practice? is an issue for the theorist as much as the practi-
Frequently, such economic theory demonstrates tioner. Indeed, a problem with the much of the
little or no appreciation of the political constraints contemporary analysis of the demand for govern-
likely to work against policy implementation. While ance, beyond the confines of the state, is that it is
economic assumptions about what constitutes often posed as a technical and managerial prob-
good governance in the twenty-first century are lem. This approach removes any notion of politics
becoming increasingly sophisticated technically, or ethics from problem solving.
especially for the provision of public goods, they But actors in this process are not ethically neu-
often remain oblivious to the nature of the politics tral and dispassionate. They are players with po-
that can derail them, no matter how theoretically litical agendas. This is so whether the relevant
sound and policy relevant. international institutions are included (United Na-
In short: economics, even the emerging subdis- tions and alliances in the security domain, the
cipline of political economy, is not comfortable International Monetary Fund in the international
with politics. Political economy, as what might be financial arena; the World Trade Organization and
called a theory of choice under constraint using regional and bilateral institutional arrangements in
game theoretic models, may offer important in- the trade arena; the World Bank in the context of
sights into issues such as scarcity and the role of development) or those ever more visible non-state
institutions in the policy process. It is less com- actors (such as multinational corporations and
fortable with questions of ideological contest, non-governmental organizations) and various
power, political struggle, representation, legiti- advocacy coalitions and global public policy net-
macy and accountability, all of which can make or works such as the Davos Forum or the emerging
break the implementation and acceptance of a counter-voices at the Global and European Social
given policy. Forums or what is generically thought of as the
alternative globalization movement.
That discomfort sets the stage for discussing
global governance, an overused and underspeci- The financial crises of the late 1990s generated
fied concept. The demand for research on global precisely the sorts of distrust and animosity that
governance has followed the recognition that sov- detract from the possibilities for mutually benefi-
ereignty is more a relational and relative question cial cooperation at the international level. The
of responsibility. The result is a dramatic change rhetoric in industrialized countries about burden
in the role of international law. sharing—the implication being that developing
countries did not share the burdens of global pub-
More than a technical and managerial problem
lic goods—was more than countered by percep-
The demand for global and regional governance tions in developing countries that the burdens of
has become increasingly complex. And the role of moral hazard, social dislocation and the impact of
multilevel governance structures in key policy unfettered competition had been unloaded on
areas has grown dramatically. precisely the economies and societies that were
Yet in some key areas of the global cooperative least equipped to deal with them. In an era of
agenda, in both the economic and the security deregulated capital movement and the processes
domain, collective governance capacity appears of financial change that brought hedge funds,
to be deteriorating and resistance to its enhance- pegged exchange rates and precipitous currency
ment to be growing. For an increasing number of collapses, the notion of global burden sharing
actors global governance questions resist the adopted by the developed world was thought by
technocratic fix and pose major political and ethi-
28 THE CONCEPT OF INTERNATIONAL PUBLIC GOODS
