## What Are Global Public Goods? ## Source details **Canonical URL:** [What Are Global Public Goods?](https://www.imf.org/en/publications/fandd/issues/2021/12/global-public-goods-chin-basics) ## Other formats - [Markdown version](/en/publications/fandd/issues/2021/12/global-public-goods-chin-basics/index.md) - [Structured JSON version](/en/publications/fandd/issues/2021/12/global-public-goods-chin-basics/index.json) - [Bundle manifest](/en/publications/fandd/issues/2021/12/global-public-goods-chin-basics/bundle-manifest.json) ## Bibliographic details - Authors: MOYA CHIN - Published: December 3, 2021 --- ### Definition and scope - Public goods are nonexcludable and nonrival: available to all and can be enjoyed repeatedly without diminishing benefits to others. - Scope can be local, national, or global: - Local example: public fireworks. - National example: national defense. - Global examples: natural environment, histories and cultures, technological progress, and everyday standards such as the metric system. - Illustration: “No one can be prevented from using the metric system, and whenever someone uses it its usefulness to others is not diminished.” ### Why public goods are undersupplied - Core problem: insufficient incentives for private provision. - Mechanisms that drive undersupply: - Free rider problem: suppliers cannot charge users; everyone can use a public good whether or not they contributed. - Small individual benefit vs. large spillovers (externalities): individual benefit may be too small to motivate provision even when societal benefit is large (example: vaccination yields individual health and large positive spillovers by preventing transmission). - Temporal mismatch: benefits often realized in the future while costs are borne today; people overvalue the present relative to the future (examples: education and the natural environment). - Conclusion: left to the private sector, public goods will tend to be undersupplied. ### Role of governments and formal institutions - Coordination is the historical solution: ensures contributions and proper weighing of costs and benefits. - Governments can enforce regulation and taxation to mobilize resources and eliminate the free rider problem. - Effective provision depends on strong institutions and inclusivity: inclusive governments value welfare across current citizens and future generations and can internalize spillovers to realize full societal benefits. ### Are global public goods different? - Theoretical characteristics: global public goods are nonexcludable and nonrival and exhibit free rider problems, spillovers, and short time horizons—same as local/national public goods. - Practical differences and amplified failures: - Global institutions often lack legal authority to enforce regulation and taxation or institutional capacity to coordinate needs of all citizens and generations. - Coordination is harder because global institutions interact with national governments, which have distinct economic and political incentives and may struggle to provide public goods domestically. - Case study: Paris Agreement - Successes: accommodates countries’ different needs and responsibilities; commitment by developed economies to provide $100 billion in climate financing each year to mobilize resources for emerging market and developing economies. - Limitations: the withdrawal of the United States in 2020 and chronic underprovision of climate financing highlight limited enforcement ability and persistent free rider problems. ### Supply, demand, and prospects for global provision - Historical pattern: institutions that supply public goods often formed in response to rising demand (examples cited: public education in the United States; IMF established after the Great Depression and World War II to promote global financial stability). - Drivers increasing demand for global public goods: - Greater interconnectedness through trade, capital flows, and migration relative to 1945 when many global institutions were founded. - Recent crises heighten salience: COVID-19 increases demand for global public health; refugee crises increase demand for global peace; climate change increases demand for sustaining the global environment. - Requirements for improved provision: - A global framework that recognizes shared obligations, delineates country responsibilities, and enforces commitments. - Comprehensive governance structures in global institutions to ensure legitimate decisions representing all present and future citizens. - Outlook: if current momentum for global coordination can be harnessed and mobilized to build governance-capable institutions, the provision of global public goods may become a reality. *Source: "What Are Global Public Goods?" by MOYA CHIN, F&D Magazine, December 2021.* --- ## Content in this bundle - **عودة إلى الأسس - ما هي السلع العامة العالمية؟** - [عودة إلى الأسس - ما هي السلع العامة العالمية؟ (Markdown version)](/-/media/files/publications/fandd/article/2021/december/ar/basics.pdf.md){rel="alternate" type="text/markdown"} - [عودة إلى الأسس - ما هي السلع العامة العالمية؟ (PDF)](/-/media/files/publications/fandd/article/2021/december/ar/basics.pdf){rel="external" type="application/pdf"} - **What Are Global Public Goods?** - [What Are Global Public Goods? 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