International Public Goods

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Table of Contents

Introduction
The economic concept of public goods
Classification of public goods by benefit
Classification of public goods by sectors
How countries dealt with H1N1, financial crises and terrorism
Conclusion
Works Cited

Introduction

Public good refer to a commodity whose utilization is determined by the society and not an individual and financed by means of taxation. In contrast, an International public good can be defined as a utility that provides specifically well-defined benefits to everyone across the globe (Faust 24).

An international public good does not imply that benefits are available to every person in every country but means that they are available to the global public per se. The effectiveness of public goods depends on two core factors: individuals’ preferences or taste, and capability for consumption (Faust 25). For example, uneducated individuals cannot benefit from global knowledge because of their inability to read and comprehend knowledge material.

The economic concept of public goods

A public good can be defined on economic basis as a utility that everybody enjoys in union with others in the sense that the consumption of that good by an individual does not lessen the availability of that good to other individuals (Samuelson 387). In the study of economics, a wholesome public good involves two characteristics: it is supposed to be non-excludable and non-rival.

Non-excludable means that once a good is availed, preventing an individual from enjoying its benefits is impossible. This means that imposing a certain price on the good is not fully effective because it is impossible to prevent free- riding and therefore, its provision would not be appropriate for the private sector. If the exclusion of the good is not possible or highly expensive, then public provision warrants a certain level of contribution by the public for provision of the good in appropriate amounts.

The non-rival aspect of a public good means that the amount consumed by an individual does not diminish the amount available for consumption by other individuals in any way. According to Kanbur et al (61), excluding individuals from non-rival benefits is not sensible because increasing the number of individuals that derive benefits from the public good creates benefits whose cost has no impact on society. Practically, goods are not purely public as stated because a public good cannot exhibit any of the two characteristics wholly.

The extent of availability of a good refers to the degree to which individuals can be barred from benefiting from the provision of a good. No one can fail to benefit from a pure public good because they are non-excludable and non-rival. Since international public goods cut across borders, their provision and subsequent financing should match their international provision status.

As such, financing could be provided by certain agencies that posses international authority to deal with them. In contrast, national goods are available at the national level only and have the potential to cause spillover effects.

A practical, clear-cut distinction between public goods and theoretical externalities that present public bad is difficult to establish. A private good differs from a public good in that the total amount of a private good is the sum total of individual good consumed by each individual (Faust 32).

For public good, the amount provided is the total amount and the same quantity available to all individuals for consumption. An extremity refers to a mutual dependence between different agents that is outside the mechanism of pricing (Cullis and Jones 41). This implies that consumption or production of a good by one agent presents some effects on consumption by other agents.

For example, cigarettes are private goods whose consumption is excludable and rival and total consumption involves individual consumption summed up together. However, cigarette emissions create a disutility to other individuals that is within the public spill-over range. A probable response could be to impose higher taxes on cigarettes.

Taxing cigarettes, prices disutility and lowers the level of cigarette consumption hence reducing the bad caused by cigarette consumption. However, taxing does not totally eradicate bad effects and sufferers may seek assistance by pushing for a ban on public smoking. This provides excludability.

Reducing smoke pollution is a public good while banning smoking is not a public good in terms of its economic benefits. As such, there is a distinct difference between public goods and externalities. It is not overly important to focus on the distinction.

Classification of public goods by benefit

There are three types of non-excludable and non-rival benefits that ultimately provide public goods. They include risk reduction, capacity enhancement and provision of utility (Kaul et al 43). Though mutually related, each has special benefits that are available to the public.

First, countless public goods provide benefits in the form of risk reduction. Risk reduction involves minimizing potential negative effects of harmful materials or substances (Kaul et al 49). In this case, risk is a public bad or disutility. Risk reduction is a public good and it is only international only if benefits are available to everyone at a global level.

For instance, reduction of greenhouse emission decreases the risk of global warming that affects everyone. A risk reduction will be regional, national or international depending on the number of people that benefit from it. Improving security and hence reducing international crime is a public good that is global because it benefits everyone at a global level.

Secondly, certain public goods emerge because of enhancement of the capacity to produce either public or private goods. In this case, the enhanced capacity for production represents the benefit that is available to all. This enhanced capacity represents the public good and not necessarily products of the production process.

For example, knowledge. Theoretically, knowledge is available to everyone in equal measures even though some individuals may be limited in their ability to access it thus calling for complementary public goods (Kaul et al 51). However, knowledge is an international public good. Education fosters the capacity for national development and is therefore a national public good. In addition, it makes it possible to provide global knowledge and thus acts as a complementary to provision of international public good.

Thirdly, certain benefits provide public goods because they provide direct utility. Reducing degradation of a common public resource such as a water body leads to a direct improvement of the resource.

This provides a benefit to everyone and the knowledge of the provision of the benefit is a source of utility for individuals. An example in this case is the conservation of wildlife. A higher quality of the resource is vital in enhancement of productivity and sustainability of the resource. This enhances capacity that can benefit everyone.

Classification of public goods by sectors

Sectors for public goods can be identified based on benefits that give rise to public gods. These sectors include the environment, health, knowledge, security and governance. The environment, health and security sectors are linked to benefits that reduce risk while knowledge and governance are associated with capacity enhancement.

Environment

The main public good in the environment sector is provision of environmental quality. Most aspects related to the environment posses an international dimension and therefore, this is a major international public good. Benefits enjoyed pint towards reducing risks or provision of utility, in which case one of the two factors will have a spill-over range.

For instance, reduction of pollution from car emissions will improve the quality of air and minimize instances of illnesses in an area. However, these efforts contribute greatly to reduction of global pollution and that provides a utility benefit to everyone on an international scale. Such an activity is major at a local level but complementary at an international level through facilitation of the consumption of public goods.

Health

The major public good is to improve the quality of health both at national and international levels. In terms of international public good, elimination of diseases is the major action (Smith 63).

Disease eradication research is a complementary in the production of public good at either a national or an international level. A contagious disease necessitates the participation of all countries in controlling and reducing the impact of the disease. This means establishment of a health service, a national public good that complements the provision of international public good (Smith 64).

Knowledge

Knowledge is an international public good whose provision benefits everyone depending on how effectively it is applied. Core activities for provision of knowledge include research and studies. For example, the International Agricultural Research Centers (IRACs) play a grandiose role in the provision of knowledge on how to provide environmental public goods. Complementary activities include actions that aid in dissemination of knowledge such as provision of instructors and institutions of education.

Security

Global peace emanating from high-level security is an international public good. Conflict resolution, prevention and peacekeeping are major activities that contribute to peace. However, peacekeeping is considered a complementary activity that is vital in prevention and resolution of conflicts. Other examples of complementary activities include institutions such as the UN Security Council and the Police Force. The former is vital at an international level while the former, at a national level.

Governance

Good governance is a public good that is important in providing utility and capacity enhancement (Brousseau et al 42). In addition, it is vital in risk reduction through provision of security. The core activity of governance is the establishment of public institutions and agencies to oversee the use of power and law in provision of international public goods. For example, the UN system and the Global Environment Facility are a source of core activities for provision of good governance that provides international public good.

How countries dealt with H1N1, financial crises and terrorism

H1N1 pandemic afflicted the world in 2009 and began in Mexico, in a state known as Veracruz. The Mexican government attempted to counter the spread of the virus by ordering the closure of all public and private facilities. Despite the efforts, the virus continued to spread internationally and later declared a pandemic.

The virus spread from person to person through respiratory droplets from the respiratory system. In addition, the United States was also inflicted on a large scale relative to other countries. The virus was contained by imposing quarantines, travel precautions and use of facemasks. Though not fully eradicated, spread and effects are minimal currently.

The financial crisis of 2007 was one of the worst and its impact is still felt today. The U.S. is the greatest economy and a downturn affects all other economies. The financial crises resulted from a slump in the housing sector and bad debts that were never paid. This led to an economic downturn that affected other economies in the world.

It led to financial constraints that led to collapse of several financial institutions and businesses, while several other institutions filed for bankruptcy. There was also widespread unemployment. The problem was solved through execution of several policies and regulations. In addition, the U.S raised its debt ceiling and borrowing levels. Though not fully solved, many countries continue to draft policies that prevent a possible recurrence of the crisis.

Terrorism was not as widely discussed and a threat to international security until the September 11 incident. The main objectives of terrorist activities include demonstration of limitations of states to protect its people, attract attention as a way of solving conflicts, and a way of seeking sympathy.

Terrorist attacks have had negative impacts on economies and livelihoods of people because people live in fear of attacks. Countries have heightened security and strengthened national security policies that govern immigration and other activities linked to national security.

Conclusion

An International public good can be defined as a utility that provides specifically well-defined benefits to everyone across the globe. Global public goods have two main characteristics: they are non-excludable and non-rival. Non-excludability breeds over-ride and hence the emergence of financial problems and ordination.

Since everyone benefits from international public goods, all nations should play a role in the provision of the goods. Non-rivalry is the major source of insufficiency in public goods owing to lack of rival goods. Global public goods can be classified into different categories based on their benefits and the sectors they influence. Whichever the definition approach, they are important aspects and serve to either reduce risk or enhance capacity.

Works Cited

Brousseau, Eric, Dedeurwaerdere Tom and Siebenhuner Bernd. Reflexive Governance for Global Public Goods. London: MIT Press, 2012. Print.

Cullis, John and Paul Jones. Public Finance and Public Choice: Analytical Perspectives, London: McGraw-Hill Book Company, 1992. Print.

Faust, Michael. Global Public Goods. New York: United National Development Programme, Office of Development Studies, 2001. Print.

Kanbur, Ronnie, Tom Sandler, and Kyle Morrison. The Future of Development Assistance: Common Pools and International Public Goods. Policy Essay 25.

Washington, D.C.: Overseas Development Council, 1999. Print.

Kaul, Inge, Isabelle Grunberg and Marc Stern. Global Public Goods: International Cooperation in the 21^st Century. Oxford: Oxford University Press, 1999. Print.

Samuelson, Peter. The Pure Theory of Public Expenditure. Review of Economics and Statistics 36.4 (1954): 387-389. Print.

Smith, Richard. Global Public Goods for Health: Health, Economic and Public Health Perspectives. Oxford: oxford University press, 2003. Print.

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