The financing of global public goods
is, in the first place, a matter of facilitating a more efficient allocation
of resources to a certain good. It is not necessarily an issue of raising
additional resources.
Financing global public goods often
does not require any new money, public or private. A lot can be accomplished
simply by changing existing incentive structures. Such a re-alignment of
incentives can be brought about, for example, through regulation (e.g.
limiting carbon emissions). Or, it can be brought about by providing
additional information so that countries and other important actors, such as
business and civil society, are able to clearly see the advantages of
meeting the challenges associated with providing global public goods. In the
case of trade, for instance, providing the multilateral trade regime, a
global public good in itself, requires, first and foremost, a balanced
rule-based framework, which ensures that the regime is beneficial to all
countries.
But often there is also a need for
financial incentives. It may take the form of withdrawing money from a
certain activity, such as the use of cars and related air pollution. Or, it
may involve increasing the flow of resource towards a particular good, such
as providing a positive financial incentive (subsidy) to pharmaceutical
companies that undertake R&D on diseases that predominantly affect the
poor. Such actions could add to overall economic growth, political stability
and development, which makes all better off.
Providing Global Public Goods
also recommends that if an enhanced provision of global public goods has
public finance implications, the requisite resources should be included in
the budget of the technical (line) ministry holding the overall
responsibility for the good. (See also the answer to question
17.)
[For more on these points, see the chapter on
financing global public goods by Kaul and Le Goulven.]
