Global Risks and Collective Action Failures: What Can the International Community Do?

IMF Working Papers, October 24, 2014

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Climate change, global financial crises, pandemics, and fragility and conflict are examples of global risks that can cross geographical and generational boundaries and whose mismanagement can reverse gains in development and jeopardize the well-being of generations.
Managing such risks becomes a global public good, providing a rationale for collective action facilitated by the international community.
Provision of global public goods suffers from collective action failures that undermine international coordination.
Remaining gaps in information, resources, and capacity hamper accumulation and use of knowledge to trigger appropriate action.
Diverging national interests are identified as the key impediment to cooperation and effectiveness of global efforts, even when knowledge on the risks and their consequences are well understood.
The paper argues that managing global risks requires a cohesive international community that enables stakeholders to work collectively around common goals by facilitating sharing of knowledge, devoting resources to capacity building, and protecting the vulnerable.
When some countries fail to cooperate, the international community can still forge cooperation by realigning incentives and demonstrating benefit from incremental steps toward full cooperation.

Global risks are transboundary and intergenerational; mismanagement can reverse development gains and harm future generations.
Global public goods character of risk management implies benefits cross national boundaries and justifies collective international action.
Collective action failures arise from:
- Gaps in information that prevent accumulation and effective use of knowledge to trigger timely action.
- Shortages of resources that limit the ability to prevent, mitigate, or respond to risks.
- Insufficient capacity in affected countries to implement risk-management measures.
- Diverging national interests that remain the primary barrier to cooperation, even when risks and consequences are well understood.
Effectiveness of global efforts is undermined when coordination falters despite available knowledge.

Build a cohesive international community that enables stakeholders to work collectively around common goals.
Facilitate sharing of knowledge to close information gaps and support evidence-based action.
Devote resources to capacity building in countries lacking implementation ability.
Protect the vulnerable as part of coordinated global risk management.
Forge cooperation even when full participation is lacking by:
- Realigning incentives to encourage participation.
- Demonstrating benefits from incremental steps toward full cooperation to attract broader buy-in.

IMF Working Paper: "Global Risks and Collective Action Failures: What Can the International Community Do?" by Inci Ötker, October 24, 2014.

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