Chapter 7: Global Public Goods and Global Finance: Does Global Governance Ensure that the Global Public Interest is Served?
7. Global public goods and global ﬁnance: does global governance ensure that the global public interest is served? Joseph E. Stiglitz INTRODUCTION This chapter focuses on some aspects of global public goods and global ﬁnance relating to global governance. The central question it addresses is whether global governance, that is, the way decisions are made in the global arena, ensures that the global public interest is served. Global public goods and their externalities constitute powerful tools for the analysis of global governance, its institutions and their ﬂaws, the fundamental problems of market failure in the provision of global public goods, and potential solutions. I shall explore these issues through an analysis of the global economy, the global ﬁnancial system and its principal international economic institutions. I examine two speciﬁc policies of the International Monetary Fund (IMF), and highlight problems relating to the global reserve system. In conclusion, I shall argue the case for special drawing rights (SDRs) and make some remarks on mechanisms for ﬁnancing the provision of global public goods. BASIC CONCEPTS The concept of global public goods lies at the core of the issues that I shall discuss.1 Public goods have two critical properties: non-rivalrous consumption and non-excludability. They may be pure or impure, and the scope of their application may vary. Some discussion of these terms will be valuable for the development of my argument. 149 150 Advancing public goods Pure Public Goods Paul Samuelson is credited with the idea of pure public goods.2 In his...
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