Click on the cover image above to read some pages of this book! The world's agenda of international cooperation has changed.
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The conventional concerns of foreign affairs, international trade, and development assistance, are increasingly sharing the political center stage with a new set of issues. These include trans-border concerns such as global financial stability and market efficiency, risk of global climate change, bio-diversity conservation, control of resurgent and new communicable diseases, food safety, cyber crime and e-commerce, control of drug trafficking, and international terrorism and weapons of mass destruction.
Globalization and increasing porosity of national borders have been key driving forces that have led to growing interdependence and interlocking of the public domains--and therefore, public policy concerns--of countries, governments, private businesses, civil society, and people at large. Thus, new and different issues are now occupying top places on national policy agendas, and consequently, on the agendas of international negotiating forums.
The policy approaches to global challenges are also changing. A proliferation and diversification of international cooperation efforts include focus on financing arrangements. Financing of international cooperation in most instances is a haphazard and non-transparent process and often seems to run parallel to international negotiations.
There are many unfunded mandates and many-non-mandatory funds. To agree on and to achieve international economic goals, we need to understand how financing of international cooperation efforts actually works. Our understanding is hampered by two gaps: 1 lack of an integrated and cohesive theoretical framework; 2 lack of consolidated empirical and operational knowledge in the form of a comprehensive inventory of past, current and possible future i.
This book reduces these two gaps and provides a guide to improve our ability to finance international cooperation. It serves as a worthwhile guide to how policy areas e. Help Centre. Track My Order. My Wishlist Sign In Join. Be the first to write a review. Add to Wishlist. Ships in 10 to 15 business days. But with global public goods, we must collectively plan and budget. Otherwise, why would you put a lot of money up? For example, costs related to a new vaccine for malaria, or new drugs for tuberculosis since they cease to be effective every few years.
What sort of burden sharing arrangements, in your view, should apply in the case of multilateral mechanisms such as the Green Climate Fund? How should countries like China, India and Brazil participate? If those countries wish to contribute to the Green Climate Fund, then of course they can do so, and some are making small contributions. But the developed countries have undertaken to set the climate straight and to make an appropriate contribution to the achievement of that end.
In order to be credible, one simply has to live up to such undertakings. And now that China is advancing towards the position of biggest polluter, I think the Chinese will step up their contributions. They are politically savvy. You have said that if we want a developing country to do something that it would not otherwise do, we are buying an environmental service for which a payment is due.
But, even allowing that there is no formula that can mechanically determine the size of such payments, there remains a fundamental question about prices. How do we get prices broadly right? There, I think we need to be pragmatic. I would expect Brazil or India or South Africa—or any other relevant country—would think through for themselves what would be a fair and mutually beneficial arrangement, and we would do the same. The deal is done when the parties agree. This is a case of getting it vaguely right, so that everybody goes home and feels the bargain is a good one for them.
Of course, on the developing country side, the payments received should do more than simply cover the additional expenditures incurred, or the incentive is not there. There has to be some profit margin. The negotiating process you describe has certainly been followed in actual cases. However, if as a government we proceed from the premise that we are going to negotiate a deal with country X, there must be a risk that we will not get good value for money.
Reflections on Policy Entrepreneurship: The Cases of Human Development and Global Public Goods
But here, governments on both sides of the deal are accountable to taxpayers. Does this perhaps argue for some sort of reverse auction process? Certainly in the area of climate change the best thing would be a global carbon market. Then one would have the permits produced where they can be produced for the least cost, and consumed where they are most needed. But even there, climate change negotiators argue against arrangements that would see reductions achieved mainly in developing countries, and therefore against developing countries receiving too large a share of carbon market flows.
Environmental services would have been purchased in those developing countries able to supply them most cost-effectively, including countries that might have made substantial contributions to the fund. Is this broadly the kind of multilateral financing arrangement that you would prefer? I was quite disappointed when I read successive governing board documents from the Green Climate Fund.
At first, they talked about giving money to the best-suited providers. But now they are no longer thinking as an investor would. They have shifted towards a distributional attitude, which is to slip back into aid mode. We want to achieve climate change mitigation. Whoever can most cost-effectively bring about a rapid reduction in emissions should be supported to do so.
Something like 90 per cent of mitigation finance is going to the major polluters among the developing countries, especially China and India. To the extent that ODA money is involved—which at present is a very large extent—there is, of course, a substantial question mark.
But, sources aside, the allocation pattern is broadly appropriate. I do not see the same cost-effectiveness principle at work in the Green Climate Fund. What is your broad appraisal of the strengths and weaknesses of the likely SDG framework, on the assumption that in September its goals and targets will be adopted approximately as proposed by the Open Working Group in mid? I think we will get the framework that has been proposed, and that there is really nothing new in it. Most of the goals that are there we already have, either at the global level or in national policies.
The framework can nevertheless serve as a reminder.
When it comes to implementation, I think what will be important is that developing countries, those who still hope to get aid, formulate their own, strong country programmes. In particular, it will be important that developing countries formulate their own global public goods agendas—in which areas do they hope that the world will move, how, and in order to achieve what? Another important point is that it is past time to introduce a structural reform within both national governments and the multilateral system.
We need an organisational layer that is currently missing, or almost so, in order to deal more effectively with global challenges. At present we are organised, nationally and internationally, along the lines of geography and economic sectors.
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This is why we need issue management. We have the beginnings of this type of arrangement in the health sector, following the Ebola outbreak in West Africa, but as a result of compulsion rather than foresight. Reality is forcing issue management upon us. The difference is that the CEO knows where to get the wheels and engines and body constructed, and how to assemble the plane. They just get the job done; they produce a complex good. They are at bottom secretariats for international negotiations, or standard-setting bodies, or technical assistance providers. So one needs really operational agencies, and they should be light-footed, equipped to play a facilitating and convening role, and ably led by very clever people.
One can set up a tsar within the UN system, but that system controls relatively few resources. One possibility is that it becomes like our budget for global public goods. However, it is probably better to provide money to a global health fund in order to deal with global health problems. Perhaps the Bank could offer economies of scale, if it were restructured as a sort of umbrella for all the major issue-specific global funds. But that might prove cumbersome. We need to go to issue managers within countries. Countries were in charge.
Now countries have to take charge again of their own programming. The idea that countries—even quite poor countries—would set their own global public goods agendas is not often mooted. How might they articulate those agendas for the purpose of financing? In my view, all the money that went into, say, the Global Fund for AIDS, Tuberculosis, and Malaria should first have gone to the country level, for the developing countries.
Then the developing countries should themselves have created, for reasons to do with economies of scale and scope, a global health fund. The developing countries would then have been given to understand that basically the global health fund was theirs. They would have had it in their own budgets. But they would still have saved money by pooling resources and working together, allowing bulk purchasing and so on.
The New Public Finance: Responding to Global Challenges
So the developing countries would receive a quantity of resources on the understanding that they would create a global fund, but the nature of this fund would be their business? I can understand that an actual transfer of funds to developing countries might create difficulties when it comes to ensuring that the funds end up in the global pool in full and on time.
However, at least in order to have it all clear in our heads, it would have been good to undertake such a transaction. A fundamental feature of the MDGs was their focus on concrete, quantitative targets in connection with each goal. There are also SDG targets, notoriously numerous, but for the most part these are not defined at the global level and therefore will not motivate international cooperation. What is your view of these targets?
Targets are all very well. They give one a sense of direction. But it is quite remarkable to discuss goals and indicators of success, yet keep mum about the means of implementation. I raised this point in discussions in New York and felt that it was perhaps partially recognised. Initially, means of implementation figured only very briefly at the end of the draft SDG framework, but in the final proposal we see that they fiddled some words on means of implementation into the other goals also, as additional targets. I always compare public goods and related activities to private goods.
I have never seen a production line where a car is followed by a refrigerator on one and the same conveyor belt. But somehow the World Bank is doing this. Given the complexity of some of the problems that the world is facing, I really think we need dedicated mechanisms to deal with each of them. That is broadly the type of architecture that I would prefer to see. The idea is to get some specific jobs done, or problems solved, and this idea is not well served by the lumpy organisations of the past.
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Of course you do need those too, for certain purposes. For example, the IMF is certainly needed, or regional equivalents. Governments have their particular interests so they will never really take care of the global commons. In this way, if it were so minded, it could offer a financing package attractive enough to achieve a deviation from business-as-usual in a given area, such that a public investment would make a significant contribution towards the provision of a global public good.
If that is accepted, then the Bank would first of all need to change its governance arrangements dramatically. It would in fact have to be a totally different bank. It could, I suppose, be something like a budget envelope. But then it would be an additional layer: one would send a pool of finance to the bank, and the bank would act as a fiduciary agent just as it does for the Global Fund, the Green Climate Fund and many other mechanisms. So yes, it might have some function of that kind, but it would be quite a different institution from what it is now.
Yes, but the World Bank would need to begin the adjustment now, and say that it was doing so and set out the implications of the change. In particular, it would be good for the Bank to have a consolidated budget for global public goods.
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Then it could begin to play the role that Jeffrey Sachs has in mind for it. My ideas in this area have to be approached as a package. You have the dual strands of public finance—ODA and finance for global public goods. You want systematically to deal with global public goods, so you need an issue focus on the operations side, since where it exists it tends to be more on the negotiations side. Looking now at the operations side, of course you see that the goods to be produced are very complex, and that inputs might come from all sides. For example, hand washing is good for infectious disease control.
So we need inputs from households, private firms, national governments and many other sources, which must come together. Therefore you need a CEO or tsar figure, supported by various sub-managers. So, by having a production path in mind you can create better linkages. You are more likely to see where you might be misallocating resources. For example, investment in education helps reduce maternal mortality and achieves various other outcomes that might also be good for the climate.
And if you remember that the goods in question all end up in the global public domain, you also see how some are colliding with others, like TRIPS and global health. So there are synergies to be promoted, gaps to be filled and inconsistencies to be addressed. And all of this should result in cost savings. Then—and this is by no means the least important step—we have to break out of the status quo orientation we have in our global governance structures. We have to give voice to the global commons, and also in some way to future generations, because many of the issues we face involve stock externalities and will persist over a long period of time.
This would be the role of the Global Stewardship Council. And such a body, while having no decision-making authority, would need to have a high level of political credibility and influence. Yet there is little indication that such arrangements are in prospect. Why do governments not require their multilateral institutions to work more effectively towards delivering major global public goods? In my view, the biggest obstacles to reducing global risks are states.
But governments prefer to maintain their flexibility, whether in financial market or environmental regulation, hoping thereby to achieve a national advantage. Among other things, she emphasises the need for ODA funding to be kept separate from financing for GPGs, explains why this is important and recommends some ways to ensure the separation. Such countries need a lot of assistance for conventional development purposes Shoring up disease surveillance capacity in a developing country is a reasonable GPG investment e.
While in principle this seems reasonable, in practice it can be very challenging. In the case of climate change, the scientific uncertainty at regional and sub-regional scales makes it difficult to quantify these incremental costs and it can be challenging to prove that the climate-proofed project would not be commercially viable without the subsidy. This is the sort of thing that is like a red rag to a bull for opposition parties scrutinizing public expenditures in developed countries.
Implicit in her thinking is the notion that financing GPGs can be sold as a benefit to wealthy country electorates e. But it seems to me that Kaul has got things the wrong way around. The key challenge is to convince Governments and the public: first of the urgency of the need to respond to the GPG issue; second that an effective response requires public funds to be spent in other countries, and third that this expenditure should not come at the expense of ODA. Succeeding with this third challenge will in practice depend much more on Government and public attitudes about the relative value of ODA, than it will on establishing mechanisms to keep financing for GPGs separate from ODA.
On the one hand, she feels that single-sector multilateral institutions, such as the WHO, are ill equipped operationally to address the complex, multi-sector nature of GPGs. On the other hand, she is dismissive of the Bank, which does have significant capacity, experience and potential to design and manage integrated, multi-sectoral operations on a global scale. It seems to me that it would be politically more feasible to establish a response to GPGs that involves a role for the Bank integrated with the other MDBs, than it would be to establish new organisations at the global level, each assigned a separate GPG.
In the case of climate change, I am convinced that this sense of urgency, including for global leadership, will build rapidly in the years ahead in response to increasingly extreme weather.
In the meantime, however, the trend is in the opposite direction: following the December UN climate change conference in Paris the focus of attention is more likely to shift away from the multilateral level towards national-level action and planning. Many of them had hoped the text would be finalised prior to them making the trip to the Ethiopian capital.
But there was certainly a shared sense of relief over the fact that there was broad agreement on what matters most in sustainable development financing for the period covered by the newly entitled Agenda for Sustainable Development. It shows that there is a determination to embark on multilateral action in such key areas as eliminating extreme poverty, combatting climate change or fostering gender equality.
The negotiation process and the outcome document are also reflections of the increased complexity of the challenges the world faces and the global response that is required to master them. Just throwing development money at the issue is no longer an option. Rather, the Addis Ababa Action Agenda calls for a paradigm shift in the way all sources of finance—public and private, domestic and international—are used.
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