IFI’s and IPG’s

The global International Financial Institutions (IFI’s) increasingly justify their operations in terms of the provision of International Public Goods (IPG’s). This is partly because there appears to be support among the rich countries of the North for expenditures on these IPG’s, in contrast to the “aid fatigue” that afflicts the channeling of country specific assistance. But do the IFI’s necessarily have to be involved in the provision of IPG’s? If they do, what are the terms and conditions of that engagement? How does current practice compare to the ideal? And what reforms are needed to move us closer to the ideal? These are the questions that this paper attempts to ask, in the framework of the theory of International Public Goods, and in light of the practice of International Financial Institutions, the World Bank in particular. For the World Bank, a series of specific operational and resource reallocation implications are drawn from the reasoning. JEL Classification: F0, H4, O1, O2 * Paper prepared for the G24 Technical Group meeting, Beirut, March 1-2, 2002. The paper was also presented at the fifth annual conference of the Centre for the Study of Globalisation and Regionalisation, University of Warwick, March 15-17, 2002. I am grateful to participants at these meetings for their helpful comments.