Global public good

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In traditional usage, a global public good (or global good) is a public good available on a more-or-less worldwide basis. [1] There are many challenges to the traditional definition, which have far-reaching implications in the age of globalization.

Contents

Definition

In traditional usage, a pure global public good is a good that has the three following properties: [2]

This concept is an extension of American economist Paul Samuelson's classic notion of public goods [3] to the economics of globalization.

The traditional theoretical concept of public goods does not distinguish with regard to the geographical region in which a good may be produced or consumed. However, the term "global public good" has been used to mean a public good which is non-rivalrous and non-excludable throughout the whole world, as opposed to a public good which exists in just one national area. Knowledge has been used as a classic example of a global public good. [4] In some academic literature, it has become associated with the concept of a common heritage of mankind. [5]

Challenges to the traditional definition

Significant challenges exist to the classical definition of "public goods", in general, that are also relevant to the definition of "global public goods". Kaul et al. (2003), suggest that there are actually three types of public goods. [6] First, there are public goods that cannot be made excludable, either because they are inherently indivisible or because the cost of division would be prohibitive. A simple example would be sunlight. Second, there are goods that are inherently public by design. Examples include a nation's judiciary system or basic education system. A third type, they argue, are goods that are public by default, either due to lack of foresight or knowledge in the design. An example of this type would be the ozone layer and damage done to the environment by chlorofluorocarbon (CFC) emissions before anyone understood the potential for damage.

Many of the challenges to traditional definitions have to do with how to handle externalities, which pose fundamental economic policy problems when individuals, households, governments or firms do not include, in their total cost accounting, the indirect costs of or the benefits from their economic transactions. [7] Private goods producers, for example, can lower their total costs, and therefore their prices, by externalizing (not including) certain costs, such as the costs of preventing air or water pollution that is a by-product of their production methods. Such a company, then, becomes a corporate free rider, driving up the cost of the "public goods" of clean air and water, which are often transnational resources.

The transnational nature of such resources points to another problem with a traditional definition of global public goods. Remedies to problems such as air and water pollution are typically legal remedies, and such laws often exist only in the context of geographically-bounded governmental systems. [8] In the case of global public goods—such as climate change mitigation, financial stability, security, knowledge production, and global public health—either international or supranational legal entities (both public and private) must be created to manage these goods. [9] As different types of global public goods often require different types of legal structures to manage them, [9] this can contribute to a proliferation of non-governmental organizations (NGOs) and intergovernmental organizations (IGOs), such as has been the case in the recent past.

Thus, society can modify the non-rivalry and non-excludability of a good's benefits such that goods often become private or public as a result of deliberate policy choices. New consideration in the face of these challenges can expand the definition to recognize that, in many cases, goods exist not in their original forms but as social constructs, largely determined by policies and other collective human actions. [6]

Implications

At a time when processes of globalization are encompassing increasingly more cultural and natural resources, the ways in which global public goods are created, designed, and managed have far-reaching implications. Issues of globalization, today, are precisely those that are beyond the policy endeavors of states, reflecting a mismatch between the scope of the problem and the authority of decision-making bodies attempting to address such issues. [10] Many goods that might be public by default would be best designated at the policy level as common goods (global-level common-pool resources or global commons), with appropriate regulation, until such time as levels of knowledge, foresight and governing structures might become available to designate such resources as either private or public goods.

Although not the only example, no better example can be found than the issue of potable water. Water has always been an important and life-sustaining drink to humans and is essential to the survival of all known organisms. Over large parts of the world, humans have inadequate access to potable water and use sources contaminated with disease vectors, pathogens or unacceptable levels of toxins or suspended solids. Drinking or using such water in food preparation leads to widespread waterborne diseases, causing acute and chronic illnesses or death and misery in many countries. [11] While the global water cycle is the subject of advanced scientific study and observation, it is still an incompletely understood process. If availability of water for human consumption is left solely to market forces, those who are most in need of water for subsistence-level survival are also those least likely to be able to purchase it at a market price. Since the water cycle and the natural flows of fresh water resources do not obey the limits of political boundaries, neither can these water resources be managed solely by local- or national-level public authorities. Privatization of such resources can be used as a method of avoiding contentious public policy-making processes, but is likely to produce inequities. [12] [13] [14] The history of the development of water supply and sanitation in Ecuador and resulting water conflicts there are an example. [15] [16] Thoughtful design of transnational or international water management authorities over such global common-pool resources will play a large part in possible solutions to peak water problems.

Moreover, there are a number of global public goods—or global-level common-pool resources—that are necessary conditions for continuing global trade and transactions. [17] Even if one takes a position that globalization has more negative impacts than positive, the economic interdependence of national-level economies has reached a kind of point of no return in terms of continued global economic stability. Thus, continuing global trade and transactions require global public goods such as widespread peace, international economic stability, functioning supranational trade authorities, stable financial and monetary systems, effective law enforcement, relatively healthy populations of consumers and laborers, etc. [17]

See also

Related Research Articles

<span class="mw-page-title-main">Environmental economics</span> Sub-field of economics

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In the social sciences, the free-rider problem is a type of market failure that occurs when those who benefit from resources, public goods and common pool resources do not pay for them or under-pay. Examples of such goods are public roads or public libraries or services or other goods of a communal nature. Free riders are a problem for common pool resources because they may overuse it by not paying for the good. Consequently, the common pool resource may be under-produced, overused, or degraded. Additionally, it has been shown that despite evidence that people tend to be cooperative by nature, the presence of free-riders causes cooperation to deteriorate, perpetuating the free-rider problem.

<span class="mw-page-title-main">Market failure</span> Concept in public goods economics

In neoclassical economics, market failure is a situation in which the allocation of goods and services by a free market is not Pareto efficient, often leading to a net loss of economic value. Market failures can be viewed as scenarios where individuals' pursuit of pure self-interest leads to results that are not efficient – that can be improved upon from the societal point of view. The first known use of the term by economists was in 1958, but the concept has been traced back to the Victorian philosopher Henry Sidgwick. Market failures are often associated with public goods, time-inconsistent preferences, information asymmetries, non-competitive markets, principal–agent problems, or externalities.

<span class="mw-page-title-main">Public good (economics)</span> Good that is non-excludable and non-rival

In economics, a public good is a good that is both non-excludable and non-rivalrous. For such goods, users cannot be barred from accessing or using them for failing to pay for them. Also, use by one person neither prevents access of other people nor does it reduce availability to others. Therefore, the good can be used simultaneously by more than one person. This is in contrast to a common good, such as wild fish stocks in the ocean, which is non-excludable but rivalrous to a certain degree. If too many fish were harvested, the stocks would deplete, limiting the access of fish for others. A public good must be valuable to more than one user, otherwise, the fact that it can be used simultaneously by more than one person would be economically irrelevant.

<span class="mw-page-title-main">Infrastructure</span> Facilities and systems serving society

Infrastructure is the set of facilities and systems that serve a country, city, or other area, and encompasses the services and facilities necessary for its economy, households and firms to function. Infrastructure is composed of public and private physical structures such as roads, railways, bridges, tunnels, water supply, sewers, electrical grids, and telecommunications. In general, infrastructure has been defined as "the physical components of interrelated systems providing commodities and services essential to enable, sustain, or enhance societal living conditions" and maintain the surrounding environment.

In economics, capital goods or capital are "those durable produced goods that are in turn used as productive inputs for further production" of goods and services. At the macroeconomic level, "the nation's capital stock includes buildings, equipment, software, and inventories during a given year."

<span class="mw-page-title-main">Goods</span> Tangible or intangible things that satisfy human wants and can be transferred

In economics, goods are items that satisfy human wants and provide utility, for example, to a consumer making a purchase of a satisfying product. A common distinction is made between goods which are transferable, and services, which are not transferable.

<span class="mw-page-title-main">Rivalry (economics)</span> Property of economic goods

In economics, a good is said to be rivalrous or a rival if its consumption by one consumer prevents simultaneous consumption by other consumers, or if consumption by one party reduces the ability of another party to consume it. A good is considered non-rivalrous or non-rival if, for any level of production, the cost of providing it to a marginal (additional) individual is zero. A good is "anti-rivalrous" and "inclusive" if each person benefits more when other people consume it.

<span class="mw-page-title-main">Economic system</span> System of ownership, production, and exchange

An economic system, or economic order, is a system of production, resource allocation and distribution of goods and services within a society. It includes the combination of the various institutions, agencies, entities, decision-making processes, and patterns of consumption that comprise the economic structure of a given community.

<span class="mw-page-title-main">Private good</span> Good which is excludable and rivalrous

A private good is defined in economics as "an item that yields positive benefits to people" that is excludable, i.e. its owners can exercise private property rights, preventing those who have not paid for it from using the good or consuming its benefits; and rivalrous, i.e. consumption by one necessarily prevents that of another. A private good, as an economic resource is scarce, which can cause competition for it. The market demand curve for a private good is a horizontal summation of individual demand curves.

<span class="mw-page-title-main">Public service</span> Service(s) provided to all members of a community

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<span class="mw-page-title-main">Excludability</span> Degree to which consumption of a good can be restricted

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<span class="mw-page-title-main">Common good (economics)</span>

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References

  1. ↑ Buchholz, Wolfgang; Sandler, Todd (2021). "Global Public Goods: A Survey". Journal of Economic Literature. 59 (2): 488–545. doi:10.1257/jel.20191546. ISSN   0022-0515. S2CID   236374846.
  2. ↑ Kaul, Inge, Isabelle Grunberg and Marc A. Stern (eds.) (1999). Global public goods: international cooperation in the 21st century. NY: Oxford University Press, Inc. ISBN   019-5130529 (PDF available.) Archived 2013-11-07 at the Wayback Machine
  3. ↑ Samuelson, Paul A. (1954). "The Pure Theory of Public Expenditure". Review of Economics and Statistics . 36 (4): 387–389. doi:10.2307/1925895. JSTOR   1925895.
    See also Samuelson, Paul A. (1955). "Diagrammatic Exposition of a Theory of Public Expenditure". Review of Economics and Statistics. 37 (4): 350–356. doi:10.2307/1925849. JSTOR   1925849.
  4. ↑ Joseph E. Stiglitz, "Knowledge as a Global Public Good." In Kaul, Inge, Isabelle Grunberg and Marc A. Stern (eds.) (1999). Global public goods: international cooperation in the 21st century. NY: Oxford University Press, Inc. ISBN   019-5130529
  5. ↑ Baslar, Kemal (1998). The Concept of the Common Heritage of Mankind in International Law. Martinus Nijhoff Pubs. ISBN   978-90-411-0505-9
  6. 1 2 Kaul, Inge et al., (eds.) (2003). Providing Global Public Goods: Managing Globalization. New York: Published for the United Nations Development Programme (UNDP) by Oxford University Press. ISBN   978-0195157413
  7. ↑ Helbling, Thomas (2010). "What Are Externalities?" Finance & Development, 47(4). Archived 2013-06-24 at archive.today
  8. ↑ Bodansky, Daniel (2012). "What's in a Concept? Global Public Goods, International Law, and Legitimacy". European Journal of International Law. 23 (3): 651–668. doi: 10.1093/ejil/chs035 .
  9. 1 2 Shaffer, Gregory (2012). "International Law and Global Public Goods in a Legal Pluralist World". European Journal of International Law. 23 (3): 669–693. doi: 10.1093/ejil/chs036 .
  10. ↑ Kaul, Inge (2012). "Rethinking public goods and global public goods." Pp. 37-54 in Éric Brousseau, Tom Dedeurwaerdere, and Bernd Siebenhüner (eds.), Reflexive Governance for Global Public Goods. Cambridge, MS: The MIT Press. ISBN   978-0262516983
  11. ↑ WHO and UNICEF Progress on Drinking-water and Sanitation: 2012 Update Archived 2012-03-28 at the Wayback Machine , WHO, Geneva and UNICEF, New York.
  12. ↑ Harrisa, Leila M (2009). "Gender and emergent water governance: comparative overview of neoliberalized natures and gender dimensions of privatization, devolution and marketization". Gender, Place & Culture: A Journal of Feminist Geography. 16 (4): 387–408. doi:10.1080/09663690903003918. hdl: 2429/64208 . S2CID   145440602.
  13. ↑ Castro, José Esteban (January 2008). "Neoliberal water and sanitation policies as a failed development strategy: lessons from developing countries". Progress in Development Studies. 8 (1): 63–83. doi:10.1177/146499340700800107. S2CID   154896073.
  14. ↑ Prasad, Naren (November 2006). "Privatisation Results: Private Sector Participation in Water Services After 15 Years". Development Policy Review. 24 (6): 669–692. doi:10.1111/j.1467-7679.2006.00353.x. S2CID   155045698.
  15. ↑ Terry, Matt (2007)."Ecuador's Water Crisis: Damming the Water Capital of the World." International Rivers.
  16. ↑ Hitz, Julia Apland (2010). "The Water Conflict in Ecuador." State of the planet: blogs from the Earth Institute, Columbia University.
  17. 1 2 Brock, Gillian (2009). Global Justice: a Cosmopolitan Account. NY: Oxford University Press. ISBN   978-0199230938

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