Global Public Goods for Development: How Much and What For

Updated May 19, 2015

Global public goods (GPGs) provide benefits to people in both rich and poor countries. They play a crucial role in safeguarding the social, economic, and political progress of the past century. They are fundamental to managing global risks such as climate change, infectious diseases, and financial crises that can harm developing countries disproportionately; and in exploiting opportunities, such as new vaccines, that can benefit them especially. Yet very little is known about how much governments spend on GPGs that matter for developing countries. What scant publicly available information there is we have gathered here for an initial and provisional estimate. Our list is necessarily selective and conservative as none of the major institutions with a global mission – including the World Bank and WHO – report on the funds or programs they dedicate to global public goods, nor have they agreed on any standard definition of GPGs. Our compilation of spending on development-related global public goods in 2012 adds up to about $14 billion (Table 1 and Table 2), equivalent to a little over 10 percent of global spending on official development assistance that year.    

We limit our compilation to the following categories of spending that are more clearly associated with development-related benefits that transcend borders:

• Transfers and contributions to the UN and other international organizations for activities that are global in scope (such as to the FAO for management of data on changes in desertification) as opposed to “country programs” (such as FAO support to Morocco for fertilizer distribution);
• Spending by international organizations on research and on data collection and management, using the budgets of their research and economics departments to generate this data[1];
• Contributions by any country to global programs and products of a global public good nature targeted to developing countries, such as contributions by the UK to the Advanced Market Commitment[2] program to encourage private production and marketing of a pneumococcal vaccine in low-income countries[3];
• Transfers by any country to a developing country to finance activities with global benefits, for example transfers by Norway to Brazil to curb deforestation and thus climate change[4];
• All countries’ contributions towards enforcement and monitoring of international agreements with shared global benefits, such as the Montreal Protocol; and
• Spending by international organizations on activities of a GPG nature, such as UN peacekeeping operations that limit cross-border conflicts in the developing world[5].

We exclude a number of areas with potential for global impact where a significant share of the expected benefits are locally concentrated. For example, we exclude transfers for AIDS prevention and treatment because although AIDS can be spread across borders, most of the spending in the last fifteen years has been channeled to developing countries to help treat and prevent the disease within their own borders.  We do not include public spending on research and development (R&D) within countries, though arguably that spending often benefits people in other countries. Consider the US Department of Defense’s contribution to the world’s poor via the early financing of the research that led to the Internet, or the benefits of research on tropical diseases at the National Institutes of Health. There is no global standard for defining and reporting such spending nor for estimating the development impact of R&D spending by any one country on other countries’ current or future welfare.[6]     

The concept of global public goods

When selecting the spending categories for our compilation, we were guided by the definition of global public goods as institutions, mechanisms, and outcomes that provide quasi universal benefits, covering more than one group of countries, several population groups, and extending to both current and future generations (Kaul, Grunberg, and Stern, 1999). GPGs are non-rival and non-excludable: one country’s enjoyment of the good does not affect (or reduce) its enjoyment by others and once the good becomes available, no country can be excluded from sharing its benefits (Samuelson, 1954; Cornes and Sandler, 1986). For example, the IMF’s surveillance of global financial markets and members’ economies helps detect systemic risks and vulnerabilities early on in the global economy. The resulting early warning system encourages countries to take steps at home to reduce the risks of a global crisis.

Why global public goods matter

Growing interconnectedness through international trade, migration, and travel has increased the number of critical common challenges faced by the global community. Climate change, cross-border epidemics, security risks, and financial crises pose a mounting threat to stability and living standards everywhere. While they affect all of us, those living in the poorest nations - with little or no personal savings, no social safety nets or government emergency assistance programs to fall back on - are the most vulnerable. The provision of global public goods is a pre-requisite for sustained future progress both in rich and poor countries and is vital for reduction of poverty and inequality across and within countries.

Our initial, provisional, rough compilation

Total official development assistance (ODA) in 2012 was an estimated $133 billion[7]. Our initial compilation of spending on development-related global public goods in 2012 adds up to about $14 billion (Table 1 and Table 2), much of which is reported by contributing countries as ODA. Given their importance for continued positive development outcomes, our estimates suggest that GPGs are severely underfunded.

Table 1. Estimated Annual Outlays for and at select development-oriented Global Public Goods Facilities (USD millions)

Note to Table 1: This table reflects an approximate, but non-comprehensive estimate of funds believed to have financed GPGs in 2009, 2011 and 2012, based on the work of Birdsall and Leo (2011). The amounts reflect contributions received by donors in a given year or multi-year pledges when that is more reflective or the organizations financing mechanism (e.g., the GEF’s replenishment cycles) or, when such data is not available, the budgets of specific departments/ programs (detailed description of the funds listed and sources used can be found in the endnotes).

In Table 2, we also estimate spending by select UN agencies on global public goods. It is difficult (if not impossible) to distinguish between spending by UN agencies for country programs versus spending on data, research, surveillance, and new technologies with obvious global benefits. That difficulty reflects the reality that UN agencies and the global financial institutions do not (yet) provide data using the category of GPGs.