Three Universal Statements
The concept of Global Public Investment (GPI) is being developed to make the case that international public finance has a critical role to play in tackling the climate emergency, preparing for the next pandemic, and financing the Sustainable Development Goals. We need a concrete system of meeting our global ambitions through long-term, reliable investment in the goods, capital and infrastructure they require.
The new system needs to be truly global, with all countries contributing, all benefiting, and all having a say in what decisions are made. It needs to respond to the massive global challenges we face in the 21st century, and the opportunities we have to make the world a better place.
The new system must be built with public money at its core because it needs to respond to the public will, be held accountable by the public, and be directed at public goods, services and infrastructure. Private money will be crucial as well, but it can’t substitute for the unique nature of public spending.
And we need to think of this system as investment intended to realise social and economic returns, through building social infrastructure, and securing the provision pathways of complex global public goods which would otherwise go under-supplied (if left to individual nations and private actors alone).
GPI comprises three universal principles, reflecting a more horizontal approach to addressing the world’s challenges. No more top-down decision-making; no more patronising donor-recipient narratives. It’s time for all countries to work together.
Given the host of challenges the world will face in the coming years, we need a more appropriate means of allocating international public finance. We should always prioritise the poorest people and increasingly that means recognising the poverty, inequality and sustainability needs in middle-income as well as low-income countries, including narrowing gender and ethnicity gaps. Under a GPI approach, countries will not “graduate” – instead their receipts would be calculated according to a transparent fair- share arrangement, as would their contributions. Many factors would be considered in country assessments as we move beyond GDP per capita as the main measure of need.
One of the biggest problems with international governance in the economic arena is the lack of effective country and sectoral representation. GPI would involve a more representative decision-making structure, including civil society, leading to enhanced legitimacy and effectiveness. In the short-term vision for GPI, such principles would be incorporated via tweaks and amendments to existing governance arrangements. In the longer-term vision for a more structured GPI approach, a new institutional arrangement would be needed.
The simplest way to source GPI is via country-level contributions, extending the 0.7% ODA commitment to all countries, but at a tiered level of contributions. Where GPI would differ from “aid” is that it would fall at the more statutory end of the international public finance spectrum: while incentives would be the main driver, sanctions could also help deal with non-compliance issues. These upfront country contributions, possibly backed by new wealth taxes, would be sufficient to operationalize GPI in the first instance. They could be complemented by international sources such as transnational taxes, special drawing rights, debt cancellations and possibly bonds.
In order to understand why GPI is needed and how it would work, we need to push for five major evolutions in our approach to international public finance, to underpin the next fifty years of development cooperation.
From a narrow focus on reducing poverty to meeting broader challenges of inequality and sustainability.
From seeing international public money as a temporary last resort to valuing it as a permanent force for good.
From one-directional North-South transfers to a universal effort, with all paying in and all benefitting.
From outdated post-colonial institutions to representative decision-making.
From the patronising language of “foreign aid”, to the empowering multilateralism of a common fiscal endeavour.