Can we define global collective action problems away?

Abstract

The adoption of the Sustainable Development Goals has rejuvenated an old debate: Can foreign aid be used to finance global public goods (GPGs)? There are those who see aid exclusively as a source of development funding for poor countries. And there are others who are open to answering the question in the affirmative. I put forward five arguments why the latter position is reasonable. Firstly, the formal definition of official development assistance (ODA) cannot be said to exclude its use in financing GPGs as these goods by definition benefit developing countries. Secondly, the amount of ODA provided has never been the gold standard of rich country effort envisaged by some. In particular, the level is boosted by the self‐interests of donors. Thirdly, there is ample precedent for following the benefit principle when it comes to multilateral organisations, which are often seen as GPGs. Fourthly, distinguishing between national public goods and GPGs is not always straightforward as the former are in many cases inputs into the production of the latter, and in such cases, the dividing line between ‘traditional aid’ and ‘funding for GPGs’ is blurred. Finally, it is not obvious in practice that aid as country finance always generates greater welfare gains for developing countries than the provision of GPGs. In sum, being overly normative with respect to what ODA is distracts us from the real problem, namely, that collective action problems result in too little spending on all international public goods, including poverty alleviation in poor countries.