How the United States Can Lead on Global Goods and Bads

“Where we make the most impact and where, by the way, we strengthen our relationships and influence the most is when we are helping to organize the world around a particular problem.”

That was President Obama speaking about climate change at his press conference as he departed the 2015 Paris Climate Conference last week.

Climate change is one of many global problems that pose risks to well-being for everybody in the world – and bigger, scarier, and harder to manage risks for poor people in poor countries.  As with non-state terrorism, pandemic diseases, cybercrime, war refugees and microbial resistance to antibiotics, no one country, rich or poor, wants to act alone in dealing with these “global public goods” (in this case bads) since other countries will free-ride on its efforts. Countries have to cooperate; often leadership has to come from one or a few countries or the problem festers.

Some of these goods and bads we refer to as development-relevant global public goods  (DR-GPGs). They include the “bads” that arise and persist in poor countries because their people are poor and their institutions are weak: Ebola in West Africa; deforestation in Indonesia. They also include “goods” such as clean energy breakthroughs, new vaccines and AIDS drugs, and new agricultural technologies for use in developing countries that America and other rich countries are well-placed to produce and help finance — but do so less than otherwise because of their public good nature.

Dealing with these development challenges requires America’s leadership. What does that mean in concrete terms?  We propose two areas in this paper for the CGD White House and the World series:

1. Invest more at home. Increase public investment in the research, development, and deployment of development-relevant health, energy and agriculture from our rough estimate of $14.6 billion per year to $20 billion by 2020, especially in agriculture and renewable energy in light of a climate-challenged world.

A dollar spent on R&D at home can do as much and often more for the world’s poor as a foreign aid dollar spent abroad. The US is home to world-class research institutions and businesses who lead on innovative applications of new technologies. Scientists at the publicly funded National Institutes of Health (NIH) are at the forefront of developing new vaccines for diseases that claim millions of lives in the developing world like malaria, Ebola, and HIV. US public investment in renewable energy has yielded high returns but it lags behind investments in China and Europe. New technologies developed in the US can be deployed and scaled by a broad range of actors at home and around the world, including developing country governments and private businesses. 

2. Increase the share of total US foreign assistance that finances DR-GPGs (e.g. to 20 percent from our current estimate of 10 percent). USAID and MCC could be committing financing to reducing deforestation in Indonesia and Colombia, including in the form of simply paying for verified reduced rates of deforestation. The US could be increasing support for such multilateral programs as the Clean Technology Fund that subsidize the incremental cost of clean energy (See Table 1).

3. Corral other countries in forging a clear mandate for the World Bank and the other multilateral banks to deal with DR-GPGs; the MDBs now work on an ad hoc basis with limited and fragmented grant financing through donor-funded trust funds. The World Bank is particularly well-positioned through its broad-based staff expertise and experience managing global funds and programs (such as the Global Environmental Facility) to coordinate a multi-stakeholder initiative on global public goods. However, only with US leadership and support can such a new mandate become reality.  

Finally, the US could lead in calling for all countries to agree on how to define, measure and report annually on their domestic investments in DR-GPGs, and their contributions through their bilateral assistance programs and contributions to multilateral programs to such goods.

Table 1. Examples of potential US DR-GPG investments abroad