Inge Kaul, pioneering development economist and architect of the global public goods framework, discusses her groundbreaking work on international cooperation and development financing in this 2015 interview recorded at her flat in Berlin. Economists define public goods — like street lighting — as things everyone benefits from that nobody can be excluded from using. The problem is that individuals won't voluntarily pay for them, so governments provide them through taxation. Kaul's insight was recognising that globalisation has created global public goods — climate stability, disease control, financial stability — that benefit everyone across borders but that no world government exists to provide. Her central argument: financing cooperation on global public goods requires "new and additional" resources beyond traditional development assistance, because they serve fundamentally different purposes — one driven by moral concern for the poor, the other by shared self-interest. The conversation explores the fierce political resistance her ideas encountered, the chronic diversion of aid money towards global public goods purposes in violation of international agreements, her critical assessment of the SDGs, and the structural reforms needed in multilateral institutions. Kaul passed away in 2023, making this interview a valuable record of her intellectual legacy.
Inge Kaul, pioneering development economist and architect of the global public goods framework, discusses her groundbreaking work on international cooperation and development financing in this 2015 interview recorded at her flat in Berlin. Economists define public goods — like street lighting — as things everyone benefits from that nobody can be excluded from using. The problem is that individuals won't voluntarily pay for them, so governments provide them through taxation. Kaul's insight was recognising that globalisation has created global public goods — climate stability, disease control, financial stability — that benefit everyone across borders but that no world government exists to provide. Her central argument: financing cooperation on global public goods requires "new and additional" resources beyond traditional development assistance, because they serve fundamentally different purposes — one driven by moral concern for the poor, the other by shared self-interest. The conversation explores the fierce political resistance her ideas encountered, the chronic diversion of aid money towards global public goods purposes in violation of international agreements, her critical assessment of the SDGs, and the structural reforms needed in multilateral institutions. Kaul passed away in 2023, making this interview a valuable record of her intellectual legacy.
The interview begins with Kaul explaining the origins and breakthrough of the global public goods concept. To understand why this concept matters, it helps to start with the basic economic definition. A public good is something that has two key characteristics: it's non-excludable (you can't prevent people from benefiting from it) and non-rivalrous (one person's use doesn't diminish another's). Classic examples include street lighting, national defence or clean air — once these exist, everyone benefits whether they pay for them or not. This creates a problem: rational individuals won't voluntarily pay for public goods because they can "free ride" on others' contributions. That's why governments typically provide public goods through taxation.
Kaul's crucial insight was recognising that globalisation has created a new category: global public goods. Just as street lighting benefits everyone in a city regardless of who pays, climate stability, control of infectious diseases, financial market stability and a rules-based trading system benefit everyone on Earth regardless of which countries contribute to providing them. But there's a fundamental problem: there's no world government with the power to tax and provide these goods. Instead, sovereign nations must cooperate voluntarily to produce them. While earlier scholars like Kindleberger and Bruce Russett had used the term in academic journals, it was the 1999 UNDP publication Global Public Goods: International Cooperation in the 21st Century, edited by Kaul, that brought the concept into policy discourse.
Kaul's central argument was that international cooperation operates along two fundamentally different tracks: traditional development assistance motivated by equity concerns for poor countries, and cooperation to provide global public goods driven by enlightened self-interest shared across all countries, rich and poor alike. Crucially, different countries have different priorities amongst global public goods. An Ethiopian woman facing maternal mortality risks might value accessible medicines more urgently than climate mitigation, even whilst recognising climate's importance. This variation in preferences means that international negotiations around global public goods resemble a political marketplace where agreements require fair terms of trade that make all parties better off. You can't simply impose solutions — you need to negotiate agreements where everyone perceives themselves as better off participating than not participating.
Kaul reserves her sharpest criticism for the widespread practice of diverting official development assistance (ODA) towards global public goods purposes, particularly environmental programs. She argues this violates international agreements dating to the 1992 Earth Summit, which stipulated that financing for global environmental challenges should come from "new and additional" resources, not existing aid budgets. By 2015, she notes, approximately 24% of ODA had climate change as a primary purpose, with even more having it as a secondary objective — a figure that had risen from 33% across all global challenges in 1999. This diversion, she contends, undermines the capacity to address the growing number of failed and failing states that need resources for conventional development purposes.
When Kaul challenged the chair of the Green Climate Fund at a resource mobilisation meeting in Berlin about whether they would require proof that contributions were "new and additional," the chair had to take a deep breath and look around for someone on the board to answer. The African delegate eventually admitted they had not discussed this issue. Kaul characterises the heads of agencies like the Global Environment Facility, the World Bank, and UNDP as acting in "non-compliance with the international agreements that exist on new and additional financing" when they accept ODA money for environmental purposes.
The conversation delves into the intense political resistance Kaul encountered. The United States strongly opposed the three-word phrase "global public goods," fearing it implied supranational taxation or production. Developing countries worried the concept would siphon resources from traditional aid budgets. Some interpreted "public" to mean state-provided goods, evoking concerns amongst former Soviet bloc countries about returning to centrally planned economies. Kaul describes being "shouted and screamed at" in UN meetings, facing opposition so intense that leading economists avoided engaging with the concept. She characterises this treatment as "the severest human rights violation that I have ever experienced in my life." She argues that global public goods are simply a reality created by globalisation — she merely put a name to them.
A French-Swedish commission on global public goods further muddled the concept by insisting that global public goods are "things that are good for everybody," which Kaul vigorously opposed. This interpretation, she argued, opened the door for hegemonic powers to impose their preferences on others under the guise of pursuing universal goods. Her dissenting voice stressed that precisely because countries have varying preferences and unequal power, decisions about global public goods are amongst the most contentious in international relations and must be negotiated fairly amongst sovereign equals. The commission even identified ten priority global public goods, which fed into developing country concerns that they would be told what was good for them.
The discussion explores practical questions about financing arrangements. Kaul envisions a system where each country has separate budget lines: one for traditional ODA, and others within various line ministries (environment, health, transport, justice) for contributions to global public goods. The aggregate financing for global public goods would be the sum of contributions across these ministries, determined by each country's assessment of its willingness to pay for various global public goods based on how much it values them. She uses the example of New Zealand and ocean acidification — New Zealand cannot simply invest in its own coastal zones if it doesn't also invest upstream in places like Papua New Guinea to address the broader problem.
On the question of "incremental costs" — paying developing countries extra when they're asked to adopt more expensive climate-friendly technologies — Kaul is pragmatic. Whilst acknowledging that the concept has methodological difficulties, she argues it's "better to be vaguely right than precisely wrong". When paying countries like Brazil or India to provide environmental services (like forest preservation), she suggests letting countries themselves propose what they consider a fair price, then negotiating mutually beneficial bargains. There should be a profit margin for developing countries, not just reimbursement of actual expenditures.
Turning to the Sustainable Development Goals, Kaul is bluntly dismissive: "We will get it. No way. And there's nothing new, nothing new in it." Most SDG targets, she observes, already exist in national policy documents. What matters is implementation, and for that, the world needs fundamental institutional reforms. She advocates for issue-based management structures — essentially CEOs for major global challenges like climate change mitigation, disease control, or outer space governance — that can coordinate action across sectors, levels of government, and national boundaries. Current institutions are organised along geographic and sectoral lines, she argues, when what's needed is the capacity to produce specific outcomes like climate stability or food security.
Using the metaphor of Boeing designing an aeroplane, Kaul asks: imagine if the CEO simply said "wouldn't it be nice if we had a Dreamliner?" without actually organising production of wheels, engines, and the outer shell. That's what the international community does with the SDGs — setting aspirational goals without creating the operational structures to achieve them. For climate change, UNFCCC handles negotiations but there's no operational manager, no CEO for climate change mitigation who oversees sub-CEOs for different types of mitigation (energy, clean technology, etc.) and someone dealing with adaptation. The beginnings of issue-based management are emerging — special envoys appointed by UN Secretaries-General, the response to Ebola — but these arise from compulsion rather than foresight.
Kaul questions whether organisations like the World Bank have a clear future role, given competition from regional development banks and the emergence of new institutions like the BRICS bank. These "lumpy organisations" were interim solutions for a time when countries lacked capacity and when development cooperation had a stronger country focus. For global public goods, she suggests, the World Bank might serve as an umbrella organisation for global funds, but this requires serious rethinking. She envisions separate global funds financed by different line ministries — climate change programs funded by environment ministries, health programs by health ministries — rather than all international cooperation flowing through foreign affairs ministries and ODA budgets.
The interview explores why such logical structural reforms face such resistance. Kaul points to the political economy of budget rules and political incentives: politicians get credit for repainting houses after floods, not for preventing storms through climate mitigation. Budget structures in most countries prevent domestic line ministries from spending abroad, even as their mandates increasingly involve international dimensions. She sees "dual actor failure" — both markets and states failing to provide adequate global public goods — and argues this requires creative thinking about incentives and governance structures. She notes that pension funds and large investment firms actually cry out for standardised environmental regulation because search costs and risks are too high, but governments prefer to maintain flexibility hoping for initial advantage.
Despite the barriers, Kaul maintains optimism, noting that reality is forcing changes even when foresight fails. She observes that significant organisational changes have occurred in the UN system over decades. When she started at the UN, the department was called Department of International Economic and Social Affairs; after 1990, "International" was deleted because they started looking into countries, which had been forbidden before. Whilst scholar Richard Cooper suggests three major crises are needed before fundamental reform occurs, Kaul hopes that "a little foresight and goodwill" might suffice, noting that President Obama demonstrated what's possible with political will.
Throughout the conversation, Kaul's frustration with intellectual dishonesty and institutional inertia is palpable, yet she defends the UN's efficiency based on her experience: "My God, I mean, we are hard-working, we are efficient, we are quick" compared to national bureaucracies. The challenge is not within organisations but achieving genuine cross-institutional strategies, which requires overcoming departmental resistance and the deeply entrenched silo mentality.
The interview captures Kaul's intellectual rigour, her unflinching willingness to challenge powerful institutions, and her commitment to more equitable and rational approaches to international cooperation. Her insistence on distinguishing between equity-driven aid and efficiency-driven cooperation for global public goods, her demand for "new and additional" financing rather than aid diversion, and her vision for issue-based global governance structures remain profoundly relevant to contemporary debates about climate finance, pandemic preparedness, and the architecture of multilateral cooperation.
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Inge Kaul (opening grab): I think it is most amazing that the heads of our agencies, like the GEF, the World Bank, UNDP and the like, take ODA money in non-compliance with the international agreements that exist on new and additional financing and use it to pay for these environmental purposes, which really call for new and additional financing. They should not have accepted this money that is clearly ODA money.
Acknowledgement: We wish to acknowledge the Indigenous people of Australia, the wider Asia-Pacific region and other parts of the world, and express our respect for their traditional knowledge and practices, which stem from a deep connection to the lands and waters they have inhabited for millennia.
Robin Davies: Welcome to Devpolicy Talks, the podcast of the Development Policy Centre. We're part of the Crawford School of Public Policy at the Australian National University, on Ngunnawal and Ngambri country in Canberra.
I'm Robin Davies.
This is our twelfth season, and we're bringing you a mix of interviews, event recordings, and in-depth features on topics central to our research — Australia's overseas aid, development in Papua New Guinea and the Pacific, and other regional and global development issues.
This episode excavates a conversation I had over a decade ago, in April 2015, with the late Inge Kaul, an influential German development economist who was the principal architect of the global public goods framework that reshaped thinking about international cooperation. I interviewed her because at that time I was putting together a policy debate on financing the Sustainable Development Goals for publication in the journal International Development Policy. That’s a journal of the Geneva Graduate Institute, where I was a research fellow for a while. You can find a link to the policy debate in the Shownotes.
I recorded the interview with no thought of broadcasting it, through a pinhole microphone in a laptop that was sitting on the dining table between us. I just wanted to have a transcript that I could use to assemble Inge’s contribution to the policy debate. The sound quality was neither her nor there, so it was abysmal. It occurred to me recently to go back to the recording armed with a newly developed audio processing tool that uses artificial intelligence to isolate and enhance dialogue, and I think the result is actually OK. It’s not quite what we would ordinarily accept as broadcast quality, but it’s OK and Inge’s ideas have continuing relevance. So here it is.
Inge spent much of her career at the United Nations Development Programme, where she directed the Office of Development Studies and initiated the Human Development Report Office. She is best known for editing Global Public Goods: International Cooperation in the 21st Century, published by UNDP in 1999, which introduced a concept that would fundamentally challenge how we think about international cooperation.
To understand Inge’s contribution, it helps to start with the basic economic concept of a public good. Economists define public goods as things that are non-excludable — you can't prevent people from benefiting from them — and non-rivalrous — one person's use doesn't diminish another's. The classic example is street lighting: once it exists, everyone benefits whether they paid for it or not, and my use of the light doesn't reduce how much is available for you. The problem is that rational individuals won't voluntarily pay for public goods because they can "free ride" on others' contributions. That's why governments typically provide them through taxation.
This basic insight came from a brief 1954 paper by the economist Paul Samuelson, who gave it mathematical expression. Over the following decades, scholars extended the concept to international contexts — Charles Kindleberger in the 1970s argued that global economic stability requires someone willing to provide international public goods like open markets and exchange rate stability. But the terminology remained fluid. People spoke of "international public goods" or "transnational public goods" without much consistency.
Inge’s crucial insight was recognising that globalisation had created something new: global public goods. Not just international cooperation between a few countries, but truly planetary challenges. Climate stability, the control of infectious diseases, financial market stability, a rules-based trading system, scientific knowledge — these benefit everyone across borders and generations, but no single country acting alone can adequately provide them. The challenge is that there's no world government with the power to tax and provide these goods. Instead, sovereign nations must cooperate voluntarily, which makes the politics extraordinarily complex.
The 1999 UNDP volume that Inge edited was the breakthrough. It brought together leading scholars — Todd Sandler, Joseph Stiglitz, Amartya Sen and others — and systematically applied this framework across the domains of health, environment, knowledge, peace and justice. The book made the concept concrete and gave it a name that stuck. Suddenly, the term global public goods was everywhere — in donor policy documents, climate negotiations, World Bank strategies and academic journals.
This is where Inge’s position became controversial. She argued that cooperation to provide global public goods requires a fundamentally different approach from traditional development assistance. Development aid is motivated by equity concerns — helping poor countries because it's the right thing to do. But cooperation on global public goods is driven by shared self-interest — countries participate because they themselves benefit from climate stability or disease control. These require different financing: "new and additional" resources, not money diverted from existing development assistance budgets.
Her persistent advocacy for this principle, and her fierce criticism of agencies that violated it, made her a controversial figure in development policy circles. The heads of major institutions didn't appreciate being told they were violating international agreements by taking aid money to fund climate programs.
2015, the year of our interview, was a pivotal year in international development. The Sustainable Development Goals were being finalised, the Paris Agreement on climate change would be negotiated later that year, and the world was grappling with the unprecedented 2014-2016 Ebola crisis in West Africa.
The issues Inge raised about pandemic preparedness, climate finance, and the diversion of development assistance towards global public goods purposes have only become more urgent since. The COVID-19 pandemic exposed catastrophic gaps in global health preparedness. Climate finance has proliferated through multiple mechanisms while debates rage about whether these funds truly represent "new and additional" resources or are being taken from aid budgets — exactly what Inge warned about. And most recently there has been much agonising and little consensus about the global governance of artificial intelligence technologies. The questions she posed in 2015 about how we organise international cooperation for global challenges remain largely unanswered.
By 2023, some people estimated that approximately 60 per cent of bilateral development aid was addressing global public goods provision — up from about a third when Inge and I spoke. Yet as she would have predicted, actual funding remains vastly inadequate relative to need. We've mastered the rhetoric of global public goods but not the reality of providing them. The gap between the sophistication of the theory and the inadequacy of actual provision grows more dangerous as climate thresholds approach and pandemic risks multiply.
In our conversation, we discuss the origins and reception of the global public goods concept, the intense political resistance it encountered, persistent misunderstandings about what the concept actually means, the chronic diversion of aid money towards global public goods purposes, the structural reforms needed in multilateral institutions, and Inge’s critical assessment of the Sustainable Development Goals framework. Throughout, she displays the intellectual rigour, blunt honesty, and commitment to equity that characterised her entire career.
I corresponded with Inge for a couple of years after our interview and published a discussion paper in 2017 through the ANU Development Policy Centre further exploring the themes we had discussed. In 2016, Inge published the definitive edited volume of essays on global public goods that she had been working on when we spoke. This brings together seminal essays on the topic from key thinkers over several decades. You can find a link to that, and to my discussion paper, in the shownotes.
I interviewed Inge at her apartment on Niebuhrstrasse in the Charlottenburg district of Berlin. Her address was marked by a stolperstein or “stumbling stone” in memory of a Steffi Bernheim who was taken from there to Auschwitz. It’s a leafy, quiet and affluent part of town, close to the Kurfurstendamm shopping area. The apartment itself was very modest. We talked for a few of hours in total, but I have edited out the more incidental parts of the conversation.
Inge passed away in January 2023 at the age of 79.
I began the interview by asking her to talk about the development of the concept of global public goods.
Inge Kaul: They are the precursors, like here and there an article — Kindleberger and Bruce Russett using the term. And in 1998, Todd Sandler had used the term global public goods in an article on deforestation, but they were in professional journals which, of course, don't find the attention of many policymakers.
So the breakthrough came when we published the 1999 book on global public goods, and argued that there is a new sunrise business for multilateral organisations. And the whole purpose of putting out this book was to say, hey, we have a dual agenda. The conventional ODA agenda, where you turn to developing countries because you think they are poor and they have some financing gaps — you deal with the countries as countries because they are poor.
The global public goods agenda is an agenda that concerns all of us. It concerns me living in the north and other people living in the north. We want a stable climate. We don't want to catch TB when we enter a plane. We want to have a proper multilateral trading regime, so we have a self-interest in providing certain global public goods.
Developing countries, also, because we are living in a globalising world, also have interest in global public goods. But the very important thing is that our preferences vary. Most Ethiopian women who only live up to the age of 45, or die before in childbirth, would probably also say that they think it would be good to save the climate. But that's not their first priority. The first priority is, for example, to get affordable medicines. They value the environment, but they have another order of priorities.
So just as we act in a market — if I go to a shop and I want to buy a coat or a jacket, I would not pay $1,000 or euros for a coat. I want a fair price, and then we get the bargain structure, and an exchange happens. So if we want developing countries to reach common decision-making points with us, terms of trade have to be fair.
And the important thing also to realise is that when states, our diplomats, appear internationally, they are quasi private actors, and international negotiations are a market, a political market. We can reach an agreement, because it has to happen voluntarily, just as in an economic market. We can reach an agreement if we are willing to make an offer that makes everybody better off, and that makes economic sense, political sense for both parties. So it is very important that we distinguish between these two strands of operational international cooperation.
Are you having some moral concerns? Some ethical concerns? Are you concerned about the country and about people because they are poor and not leading what one would call a decent life? Then I think we have an equity issue — transfers to help these people for whatever needs to be done in order to get them out of this miserable situation.
A totally different question is whether you turn to other countries because you want to enhance the provision of global public goods for your own sake and your own enhanced utility.
So in order to get the financing of international cooperation right, it is very important to recognise these two basic strands: development cooperation for the purpose of helping countries to develop, to put a basic development flow into their country; and cooperation because I want to enhance the provisioning of global public goods in which I am interested.
One could introduce a third branch, which would be the humanitarian assistance branch, for avoiding disasters and destructions of human-made origin, or natural disasters. Musgrave also distinguished the stabilisation branch, the equity branch and the efficiency branch, but I think one can also put the disaster and conflict issues under the efficiency branch, by making sure that you don't get into situations where you have conflicts due to sharp inequity or water shortage or natural disasters because of climate change. All of this can be taken care of by the efficiency branch.
So basically, we need the moral, ethical development branch and the global public goods branch. Important is, however, to recognise that developing countries have their own priorities for global public goods. So they can, of course, use their aid in order to do things or contribute so that they feel they are also really responsible global citizens. They can use aid in order to contribute to the achievement of global public goods for which they have a very strong preference. Nobody, nothing speaks against that.
But if I want them to advance their policy priorities to meeting my global public goods concerns, then I have to come up with new and additional resources. And one has to think in terms of paying past environmental debt, like for adaptation measures — flood gates and whatnot might be required. And that should all be new and additional money along the lines that we agreed since the Earth Summit in 1992, where we really laid down that the financing for global public goods like biodiversity preservation, climate change mitigation and things like this, related activities, should be paid out of new and additional resources and not taken out of ODA.
And I think it is most amazing that the heads of our agencies, like the GEF, the World Bank, UNDP and the like, take ODA money in non-compliance with the international agreements that exist on new and additional financing and use it to pay for these environmental purposes, which really call for new and additional financing. They should not have accepted this money that is clearly ODA money.
And the same story continues now with the Green Climate Fund. When they had their resource mobilisation meeting recently in Berlin, at one of the more public sessions, I asked the chair, because everybody was so proud that they had mobilised $9 billion compared to $200 billion. I mean, of course, it was only a modest beginning, but everybody was very proud. So then I asked the chair and said, "Madam Chair, will you be asking for proof that the money is new and additional when the donor countries submit their pledges to you as the cheque?"
She had to take a deep breath, and looked around and said, "Who of my board members wants to answer this question?" Everybody went under the table, and then they all looked at the African delegate, who then said, no, they have not discussed this, and maybe they take it up at a future session. But which means also the Green Climate Fund is being taken out of ODA, most likely, in most cases.
And by now, a report came from the UN Secretary-General, in connection with the joint meeting with the Bretton Woods institutions, where they confirm what we have been pointing out in many of our books before: that nowadays, they say 24 per cent of ODA has as a primary purpose climate, then there will be more activities that have it as a secondary purpose. And since 1999, thanks to Kumi Naidoo's buffer, we are pointing out that even then, in 1999, 33 per cent of ODA went into these global challenges, primarily global health issues and climate issues.
And how then do we expect, really, to deal with the rising number of failed and failing states? They need a lot of money for their conventional development purposes. So why not make a turn to the environment ministries or the health ministries and say, top up the available ODA resources so that we can focus those on development and use additional financing for the global challenges?
Robin Davies: I guess one thing that particularly interests me is the way that global public goods are used in political narratives domestically, in justifying the use of public resources for aid. And you see it everywhere. The typical foreign minister will talk about the moral case, the humanitarian case, which is one of the two branches you talked about, but they will often, and often much more strongly, press either the mutual benefit case or the global benefit case — the common interest case for aid. And you see this in Australia, because we live in a developing region. You see it everywhere.
So given that, I guess there are two questions. Is there a risk in very sharply distinguishing between the moral case for aid and the use of aid to support that, and the common interest case for financing global public goods? Do you thereby weaken the narrative which is essential for maintaining public support for the use of public financing for global public goods?
Inge Kaul: No, you would strengthen your rationale and the support for global public goods, in my view, because what you can see when you look, for example, at how the world reacts to China or some of the other emerging markets, they are nervous. Why? Because they see them competing for natural resources. They see them outbidding Western industrialised countries everywhere in Africa. And that is really a matter of their own economic security. So it is clearly in the self-interest also of developed countries to invest in the capacity-building of other countries so that they can be productive and produce the things they consume and not go and buy on the world market.
So there is definitely, when you understand what is in your economic interest, your security interest, your health interest, then you can make a clearer case vis-à-vis your domestic constituency. When you cloud it with the moral argument, then people say, "Well, but look, but we also have poverty at home." Then the whole discussion becomes confused.
When you have separate financing lines and you have your equity budget, yes, moral, of course. I mean, I'm not saying leave the moral argument aside. But I think one has to be clear. And that is so simple. If a Finance Ministry has to allocate spending across education, on the environment, on infrastructure — do we give more money to this or that? Of course, they first think, where do we have a more dire need? But then also, where do we have a higher return?
And this would strengthen the case, because as I said, we have a self-interest. And the self-interest goes beyond climate and health. As I said, food security — if other countries can feed themselves, they will not bid up the prices for food on the international markets, and that is good for poor people in my country. So there is a clear enlightened self-interest case to be made.
And also, look at remittances. I don't want, with traditional aid people, discuss remittances as if they contribute to development. This is for grandma's refrigerator in Africa. Don't start claiming it as development. We know what the country's income is, but don't single it out here as if it's some sort of aid equivalent.
Where is the discussion on the specificity of the role of the private sector vis-à-vis the non-profits or the public and the state? We have different strengths. So how can we just say, "Oh, look at this pile of private money going"? And aid agencies should be suspicious about every private sector person coming and asking for some subsidies or guarantees or something. We have experience with this — export guarantees. Who asked for them? Not the companies that were really on the tip of their toes.
Robin Davies: I wanted to ask you about additionality. So you referred to Nick Stern's recent paper, where he's very fatalistic about the concept of additionality.
Inge Kaul: Where he said, "No, no, no, it must come together." Of course, infrastructure development — you wouldn't send engineers or anybody who tell them, "Oh, don't worry about climate change." Of course not. But if there are incremental costs involved, then you can't expect the country to take a normal infrastructure loan. Then there must be a subsidy, an incremental cost payment.
Robin Davies: But in practice, that concept of incremental costs has been fairly difficult to work with. I mean, the GEF basically has abandoned it.
Inge Kaul: But I'm totally against it. You know, as much as it's often said, it's better to be vaguely right than precisely wrong. So even if there are some methodological problems here and there, but you know, you have a gut feeling that you probably should pay something.
Robin Davies: And then this raises a really interesting question. I'm curious. So you talked about the case, which often comes up, of spending money in Brazil or another quite advanced middle-income country for global benefits, essentially buying environmental services from them, because we're asking them to do something that they would not necessarily do as part of national policy. But how do you get the price right?
I mean, a lot of donors, because they start with thinking, "Okay, we've got these country relationships. We're linked to these four or five key countries," then they talk to the countries about what they want and what we want, and we negotiate a price. But that's a very non-competitive way of doing it. You could be paying a lot more than you strictly have to for Brazil to provide those services, particularly given that Brazil should be taking some responsibility. So how do you price the services?
Inge Kaul: No, I mean, that's a very difficult issue. And there I would be also pragmatic. I would expect Brazil or India, or I don't know, South Africa or which country, that they think through themselves what they would consider to be a fair, mutually beneficial bargain. And, I mean, imagine the prices we pay for private goods, you know. It's also not — it's also like this, you know, always with a thumb up.
But this is also a purchase and trade relationship. So Brazil can think through, and we can think through, up to what level of price we would go in order for that deal to happen. And then you see, you get it vaguely right, you know, so that everybody goes home and feels this bargain is worth it for us.
And that was a point that the developing countries made from day one of the GEF. It should be more than the actual expenditures they incur for afforestation. There has to be a profit, a certain profit margin. And that you can, as we do with the profit margin in so many private good cases, we can do it there, because it's essentially a private good thing.
Robin Davies: The problem comes if there is a perception of windfall profits. And I guess, because it's public money, that's a big risk. If you've got Australian taxpayers saying, "Well, why is our government giving Indonesia X dollars per tonne for carbon avoidance when it would cost more to do it at home?"
Inge Kaul: Because it would cost more to do it at home.
Robin Davies: Yeah, but they might perceive that —
Inge Kaul: The logic is so strong. I mean, the best thing would have been in the climate area, a global common market. Then one could have let the permits go where they are most needed. But then even here, the climate specialists say, "Oh, then we would have had Dutch disease in developing countries. They would have gotten too much money."
I'm a holistic thinker, but one thinks holistically, but one acts concretely. And you always look for the staff, but you keep the feet on the ground. And therefore one can say, yes, sustainable development and three dimensions of sustainability and whatnot. But when you start acting and you have a global agenda, you don't lock it all up, because then you confuse yourself.
Robin Davies: Sometime around the late 2000s, people, at least in the aid community, really stopped talking about global public goods. The discussion is just coming back now, I think, with the SDGs. And I wonder why that is, and I wonder if it has a bit to do with both the MDG narrative sort of swamping everything else, but also the aid effectiveness story that was being developed in the second half of the 2000s, which was so totally about country ownership and alignment and didn't leave a lot of space for global public goods. It even created suspicion about the vertical funds that were springing up in response to the MDGs.
What's your feeling about how do you reconcile that concept of country ownership, which is still central to the aid effectiveness agenda, and —
Inge Kaul: Because you have to have interventions that are national. Many reasons. The first reason, which was for me personally awful, was that the US absolutely did not want to hear these three words. If it is global and public, what good is it? That was the question. And there was such strong opposition from the US, which led to, I think, the most eminent economists of this world shying away from touching this concept.
And which I really thought it was the severest human rights violation that I have ever experienced in my life, because I mean, global public goods — first of all, we all know public goods is an established theory, and globalisation has happened, and these global public goods are a reality. The reality is there. I only put a name to it.
Why was I such an evil person to be shouted and screamed at in public, in the UN? It was awful. But then they were so — for the US, global, public, and good... Now, there was even a commission by France and Sweden financing various events there. This commission, guests put in a dissenting voice. Me. Why? Because the commissioners insisted that global public goods are things that are good for everybody.
And now imagine some countries on this earth don't know what is good for them, and therefore the hegemon or the oligopoly traditional powers have to tell us where we better go and move so that we all enjoy this good which is good for everybody? And I said no, precisely because they are between us, and precisely because we have disparity and inequity and varying preference, these are the most contentious things. I don't care whether you smoke. I don't care whether you eat white bread or black bread. But I care about you if you were to put the fumes into the room or pollution of other types. I would care, because it bothers me.
No, they insisted that global public goods are things that are good for everybody. So I put in a dissenting voice. And so the developing countries got concerned, you know, that they are being told what is good for them. And then the commission also identified ten priority global public goods for everybody.
And then the aid community didn't like global public goods either, because they feared for their money, some of them. And then there was the other group of people amongst the delegates who remembered their university introductory courses into economics, because every year I did surveys, but at first they were afraid that when we say, "Oh, now we deal with global public goods," and that was also a fear of the developing countries and the US, that we would say, "And now we need tax for this."
Because when I did a survey, because I got this argument, I thought, "Why do they say this?" But then I looked at all worldwide textbooks of public economics, of public finance. And they, of course, you know, immediately have two parts, the expenditure part and the taxation part. And they say that, first of all, public goods are state-provided. That was also — someone from Russia came and said to Kofi Annan, "You know, we thought we had just abandoned it, and now you bring it back."
So there was such a misunderstanding. It was for many Arabs, it was public interest goods, which is also something else, but it comes close to "good for everybody." There was such a misunderstanding problem in terms of concepts. But they all got married for these reasons. And in addition, the translators didn't get it right in the UN, so you didn't know what was translated.
For the Russians and former Soviet Union, they thought, "Oh, my God, you know, they come with state production." The others were worried about the UN starting to levy a tax. It was awful. And then I had the misfortune that in 1995 I came up with my book, and this book on the Tobin tax. And we said, "No, the Tobin tax is an instrument of the 1970s and all of this. Now we can be more refined." But nevertheless, the US submitted a bill that we should stop working on this topic.
So I had this tax reputation. And then when I came out with the 2003 book, apparently it was sent through a word search on the US side. And it got stuck on page three in the introduction — "There, she talks about taxes."
Mark Malloch Brown said, "You don't." I said, "No, no." And what was there? The old Musgraves at the age of 99, before they went to heaven, he said that it became evident in the Middle Ages that people free ride on sanitation, on street lights and things like this, and therefore one introduced taxation. And then the computer stopped. And it was a quotation that the old Musgrave mentioned from 1886.
So when you consider this political climate, the aid-to-developing countries community was right in their fear that this new agenda would siphon off the money from the ODA budget. So there was the fear of the developing countries. Some countries feared we would introduce taxes. So the others — all three words were horror. And as a result, it took very, very long for the academic community to really start working on this concept.
And I feel like the concept got a bit degraded, to the point where you would have people saying that poverty reduction is a global public good because it's in the global interest. So then that is partly due to the French commission.
But all of this, by and by now, I think it is coming back, because it gives the way out of conventional aid. It introduces the second stream, but it should come with an additional stream of resources.
Robin Davies: This is on the SDG framework itself, and you've already referred to it. I'm interested to get a slightly fuller appraisal from your perspective of the framework that we're likely to get. It's very clear that it won't be changed much. The only real question is whether it is framed in certain ways, and the Secretary-General has made one suggestion in that regard. So assuming that that's roughly the framework, I'm interested in your perspective on how useful, how rational it is, whether it's any advance on the MDGs.
Inge Kaul: We will get it. No way. And there's nothing new, nothing new in it. Most of the goals that are there, we have them already. In addition, most of them are already in national-level policy documents. So there is nothing. It can serve us as a reminder, if it then comes to the implementation.
What would be important is that developing countries formulate their own country programmes. Those who still hope to get aid should have strong country programmes. Developing countries should formulate their own GPG agenda. In which areas do they hope that we will move on, on which global public goods, in which way, in order to achieve what?
And then we would have to think through a reform, because we need, nationally and internationally, one layer, an organisational layer that is missing, and that is the issue focus. We are now, nationally and internationally, organised according to geographic lines and economic sector lines. But we don't want to strengthen just the health sector. We want to control diseases. We don't just want to do agriculture. We want to achieve food security. We don't just want to have clean air in cities. We want climate stability. So we need this issue management.
And when we take the climate change area, we have UNFCCC involved, but they are an issue manager for the negotiation side, and it's a very complex site. So poor UNFCCC has its hands full with the negotiations. But we have no operational manager, no CEO for climate change mitigation. And then that CEO would need sub-CEOs for various types of mitigation, whether it's energy or clean energy or whatnot. And one would need someone dealing with adaptation.
And in the health area, we are coming. The beginnings are all there. You know, we have this Ebola crisis. So the beginnings are there, very much out of compulsion and not foresight. That's the sad part. Reality is forcing it on us — issue management. Security as well. And the Secretary-General, Kofi Annan started, and Ban Ki-moon has continued it with his special issue envoys. It all points to the fact that we need to pull multi-sector, multi-level, multi-actor threads together in order to get to the good.
And when I make presentations, I often say, you know, imagine the CEO of Boeing Company, and he would sit in his office and say, "Wouldn't it be nice if we had a Dreamliner?" But we say, "Wouldn't it be nice to leave nobody behind?" and we read the charter of dreams. But then the CEO, he or she knows where to get the wheels and where to get the engines constructed, and where the outer shell and this and that, and whatever goes into a plane, and they assemble a plane. And they don't one year just make the wing, and ten years later a wheel.
Robin Davies: So when you talk about these issue-based functions, let's say — not necessarily organisations — are you thinking only in terms of global public goods, or a broader range of issues?
Inge Kaul: You could do it on a regional basis, but have a CEO for the major ones, and then sub-components underneath. And for some issue areas, like I'm fascinated, there's nobody who actually deals with outer space. There is a committee also. But imagine what is going on up there. But this issue — we have an environmental umbrella with UNEP, but they have been taken apart into so many components. So they could also be the guardian who looks, or the steward who looks whether everything that should happen is happening. But then there would need to be some managers underneath.
And most global issues are so complex that you really need a clever CEO. And so this should clearly have been — in fact, it's written into the mandates of organisations like WHO, FAO. But they are negotiating organisations. They are not operational. Well, they've become operational, but much more in a servicing donor sort of way. But also, in order to — if you had a staff for malaria, that entity should even probably be in a position to hold property rights. The WHO cannot. The UN cannot. What we need, really, are operational agencies.
Robin Davies: Really, the biggest problem is you can set up a structure or even a secretariat within the UN system, but that system controls very few resources. The big problem seems to be integrating what happens across the multilateral and regional development banks and the UN system and also bilaterally.
Inge Kaul: You would think differently. I mean, the World Bank — I don't know what to do with the World Bank. You think — I mean, they should wonder what their future is, because these lumpy organisations were an interim solution for a time where countries were still lacking a lot of capacity and where we had a stronger country focus. So as long as we have country programmes, you need something like UNDP or the World Bank. But the World Bank has now all the competition from the regional banks and from the BRICS Bank and from the Asian bank. So they have to think hard where their comparative advantage lies.
And for global public goods, I mean, they could become like a budget for global public goods. But what would they do? You have to give the money to the global health fund for this or that. In order to get the incentives right, you don't need a lumpy organisation. I mean, maybe for economies of scale, but it requires a lot of thinking. They could be an umbrella for all the global funds, but it may be cumbersome.
So that was actually a motivation why I started talking about global public goods, because you have to produce a good. And so you better think about how to produce it. It's not just strengthening and improving the thing. So preferably, these goods should be produced. And maybe sometimes you can just stop there, you know. But we have to see. We are still in the experimental stage.
For the time being, I think we need global funds to fight externalities in a very targeted way. But therefore they should be financed — when they are health, out of health budgets; when they are environment, out of environment budgets. Because most of the time they are externality factors, or conditionality. Conditionality through the back door. But when we are open and we say it's for GPG purposes, I have no problems with conditionality, because then I buy the good or an input to it.
Robin Davies: Going back then to the structure of the SDGs, would you have preferred to see a more binary approach, where there are goals which are essentially about national development outcomes for developing countries, and then there are global public goods goals which are relevant to all countries?
Inge Kaul: What I would have preferred is to have kept the focus on poverty and the vulnerables. Because what is totally absent now — I look at the documents, and I look especially at the means of implementation. Where is the ODA in there? Where is it properly featured? Yes, there is a reference that developed countries should meet their 0.7 commitment. But when I look at how the ODA is discussed in the document, it's very vague. There's no clarity.
And for example, when they talk about the means of implementation, they talk about new and innovative financing mechanisms. Well, we know now what new and innovative financing mechanisms are. It's another siphoning off from the ODA budget. Because now they go, for example, for the advance market commitments, or they go for blending. And blending means that you take an ODA grant and you use it to leverage more private sector money.
But in reality, what does it mean? It means that the ODA grant becomes a subsidy to the private sector. So the poor people don't see the money. The private sector gets it as a subsidy so that they can enter into a project which they considered too risky. So in fact, the ODA grant is being used to de-risk private sector investments. That's what blending is about in most cases.
So I would have preferred that we keep a very strong focus on the Millennium Development Goals as they were — focused on the poor, focused on the vulnerables. And then separately, have a global public goods agenda where every country, including developing countries, formulates what they think should be the global public goods priorities. And then we negotiate, just as we are negotiating at present climate change, just as we are negotiating health issues in various forums.
So keep the two separate. Keep the focus on poverty. Don't dilute it by bringing in sustainability and all the other things. Of course, sustainability is important. Of course, inequity within countries is important. But by wanting to do everything at once, we are doing nothing.
Robin Davies: So you mentioned means of implementation. That raises the whole question of where you locate the responsibility and the budget for global public goods provision at the national level in donor countries.
Inge Kaul: Very simple. You have budget lines. So whatever you have, 0.29 per cent or however much it is, that goes into your ODA line. And then you have a ministry for the environment, I would assume, and in the ministry for environment, there should be a sub-budget line which says, "This is for allocations to the Green Climate Fund or for any other climate fund, or however much specificity you have." In the health budget, the same. In the transport budget. In the judicial budget, because they have to deal with human rights with others.
So the aggregate financing for global public goods would be essentially the sum of your agreed allocations in a range of ministries, because you have to determine your willingness to pay. And your willingness to pay should result from your consideration of how important do you judge ocean acidification? New Zealand people are obsessed with it. So they cannot just invest in their coastal zones. They may as well stop doing that if they don't think a little further and invest also in Papua New Guinea, wherever, because they may be the first to feel the consequences of lacking investment.
It's very simple. And this is what drives me nuts when I'm in these meetings. When people — Nick Stern came out with an impossible paper on this topic. It is not difficult. If I in the north distinguish between my ethical — if I'm not ethical, then say it. Then you have no ODA. Don't pretend to be ethical and have your self-interest in ways that are not accountable and transparent. And determine how much you want to pay for having greater stability in your own situation.
So upstream, there is no problem differentiating. Then you give the aid, preferably as budget support, to the developing countries, and they fill their budget with it. You can discuss with them their strategies, but not be a micro-manager and say, "My aid, you can only use for this and for this and for that."
So if you think in terms of budget support and discuss with them the overall strategy, you may even find that some would say, "You know, we also in Nigeria, for pure national concerns, we will do something about air pollution." And they may even use your ODA for it, but it's their decision, not your decision. Because they say it's expensive to treat the respiratory diseases. We reduce local air pollution, and that has positive spillovers. Basically, we should say, "Bravo." And now we go to our climate budget and say, "Here, because we also benefit from that, we pay you for the spillover effects, the positive spillovers, a little reward."
It would change the tone of the debate. Countries would feel motivated. And if you again, Ghana or Nigeria, if they have a transport strategy, they want to improve their transport system. And of course, if they then turn to Australia and say, "Can you send us a few buses?" You wouldn't send them stinky buses, polluting buses. You would go for the newest technology. Or if they ask for an electricity plant of one sort or the other, we wouldn't sell them dirty technology. It goes without saying. So if there is a coal-fired plant and they — we ask them prematurely to shift to another technology or cleaner smokestacks, then we should pay the incremental costs.
So it's easy. So at present, I've looked at the numbers just recently, using DAC data, which are not very helpful, but they're the best we've got. So it looks like it's still the case that at least a third of ODA is being spent on global public goods.
Robin Davies: Let's assume that 30 or 40 per cent of aid is devoted to global public goods at present. So if a government like, let's say my own, decides, "Okay, we will separate the financing schemes that we have for traditional ODA and global public goods," the first step we will take is to not touch the envelope, because we don't have the money to change anything. We will just move a third of our ODA into a different basket and set up a different set of management arrangements. Now obviously that's not what you want to happen, but let's say that was all that happened. Are there benefits even in that, in terms of building support for spending money overseas, or do you think it would expose the residual aid part to steep decline?
Inge Kaul: I think that donors are afraid of that. Every day. But then you cannot get up and ask developing countries to be transparent and accountable if you yourself don't set an example.
But I wonder if that is what is worrying countries. The story sort of has two faces. It might be that donors are sneaking expenditure into their own budgets, or it might be that, in a sense, they're protecting their advantage by having that hidden. But it is also — I wouldn't say where I experienced this — there is a frightened aid community out there. And they are noticing that other people are sticking their hands into their budget.
So when you go to these meetings under this currently popular term "beyond aid," there is nobody from beyond. There are only aid people. And they discuss remittances. Take that right away. You have nothing to do with remittances. This is for grandma's refrigerator in Africa. Don't start claiming it as development. We know what the country's income is, but don't single it out here.
Where is the discussion on the specificity of the role of the private sector vis-à-vis the non-profits or the public and the state? We have different strengths. So how can we just say, "Oh, look at this pile of private money going"?
And aid agencies should be suspicious about every private sector person coming and asking for some subsidies or guarantees or something. We have experience with this — export guarantees. Who asks for them? Not the companies that were really on the tip of their toes.
Robin Davies: I wanted to ask you about the multilateral system. It really has not changed, except to generate new mechanisms. In the last, what, 40 years, we've seen a rash of new environmental and health financing mechanisms in the last 15 years, but nothing has ever been closed down, whether it be UNDP or anything else. Do you see any drivers for significant change in the multilateral architecture?
Inge Kaul: It's a dramatic change, from walking on our feet until the late 1980s — no, what am I talking about, early '80s — and then when structural adjustment came out, we made a flop. Where there is a will and a push, there is a way. And I mean, the conditionality came and tapered off again. It always takes 10, 20 years, but there have been significant changes.
When I started in the UN, the department was called Department of International Economic and Social Affairs. After 1990, "International" was deleted because we started looking into countries, which was a no-no before. So yes, it's possible. But I mean, at the same time, I can see that Richard Cooper has a point when he says it needs three big crises before change happens. But it's sad if it should be really necessary. Why not with a little foresight and goodwill? When Obama can tell people at the time of direct interference, or whatever —
Robin Davies: I mean, the kind of structure that you portray is so logical and so compelling. What do you see as the barriers? Why is it not the case that all governments require their multilateral institutions to cooperate to develop cross-institutional strategies for delivering major global public goods? Why do they run around separately?
Inge Kaul: The political economy. One thing is, as I said, a lot has to do with how budgets are being designed, that as a politician, you want to spend your money in your constituency, and you don't get credit for saying I averted a storm, but you get credit for repainting the house after flooding. So there is this bias towards local expenditure and not letting money go.
And so we have, at present, no theory for this. We have a market failure theory, but in the presence of global public goods, we have dual actor failure, state and markets. And this raises the question, how do we, under these circumstances, nevertheless get a relatively efficient provision of global public goods? And that needs a lot of incentive thinking.
But the biggest, in my view, the biggest obstacle to — and therefore the crises are accumulating to less crisis-prone growth and development — other than state governments, because I have seen pension funds and other big investment firms and other firms crying out for standardised environmental regulation, because they say the search costs for us, or the risk that we take, are too high. But then governments go back and rather maintain their flexibility by not having a common regulation with financial markets or the environment, hoping to have an initial advantage from it.
Robin Davies: I'm just very interested. Even after governments have made financial allocations to the multilateral system, which we're talking about, so they've already made the resource appropriation and allocation decisions, but then they have such low expectations of the multilateral system. They don't say, "With the money we've given you, we expect you to do so much more than you do." And I'm not sure why that is. Maybe it has to do with the way multilaterals are positioned as delivery agents of bilateral aid?
Inge Kaul: I think it's a myth, I must say. Compared to what I see here, the UN is great. I was influenced by this talk about multilateralism when I was in the UN. But my God, I mean, we are hard-working, we are efficient, we are quick compared to national bureaucracies.
Robin Davies: I'm sure that's true within organisations. I guess what I don't see is genuine cross-institutional strategies.
Inge Kaul: No, because this is the organisational transformation that is still needed, and it's political economy. Then you have department heads who don't want to move and people who don't want to transfer. In the UN, we went through a lot of organisational change, change management, and it was brutally tough. And Mark Malloch Brown had a strong hand in this. But I can't see that here — it's still very silo-type.
And we need someone who deals with climate. Environment is too broad. And then you have a ministry of the economy. But how does it relate to environment? So we should have someone who deals with energy specifically. And nobody deals really with global health. It's a mere unit within the health ministry, and certainly not identified in the budget. So there is — it has much to do with budget rules of most countries. Only foreign affairs can disperse money abroad, or also aid or BMZ, not the others. But all ministries by now have some external relations and operations abroad.
But therefore we put the climate money in the ODA budget, and the climate ministry spends all its money in Germany. And only UNICEF is in foreign affairs — such a relic of the wartime, the poor children. And refugee money, I think, too.
So one has to do this restructuring, and it is coming. I'm very optimistic, because I always see that reality is ahead. You see, in Canada, they do a lot of this identifying of money, whether it's going for national purposes or internationally. In the Netherlands, they did. I think by now they have stopped doing it, but basically we need some adjustments. A few years more, and I discussed this with —
So the multilateral system has really not changed, except to generate new mechanisms. Reality is forcing the changes even when foresight fails.
Robin Davies: And that’s where we left our conversation. For more on these issues, please have a look at the links in the shownotes on Simplecast.
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