Trade, foreign policy, diplomacy and health

1. Global Public Goods and Health: concepts and issues

David Woodward, Richard D Smith

Financing GPGH: coercion or compensation

Those who lose from provision of GPGs have incentive for non compliance or action against the provision of GPGH.
Thus, provision requires:
Formal coercion-can only be limited on global level
Informal coercion-is unstable and unreliable
Compensation-will be essential with or without coercion.

Those who may lose from the provision of GPGs, financially or otherwise, have an incentive for political and economic action against the decision to provide the public good and no incentive to play any part in its provision.
There are two ways to negate these problems: coercion and/or compensation.
Formal coercion is determined legally and politically. Limitations of international law impose constraints on formal coercion: there are no mechanisms available for formal coercion of national governments, and formal coercion of non-state actors relies on governments introducing laws within their respective jurisdictions. The problem is compounded by the influence of companies, organisations and individuals by national political systems.
Informal coercion includes, for example, offers to developing countries of (or threats to withdraw or withhold) economic or military aid, favourable market access, and support for membership of, or loans from, international institutions. However, it is often easier to secure formal agreement than actual compliance.
Compensation for costs incurred by low-income country governments (even with coercion) is likely to be essential for the provision of GPGs as resource constraints can undermine political will. NGOs also who are involved in GPG provision (eg polio eradication) are also likely to need compensation for their services, both to ensure that they participate (the rather vague definition of NGOs undermines the potential for formal or informal coercion to achieve this), and to ensure that their activities are adequately resourced.