Recent Release | 07 Jun 2023

Multilateral Development Banks for Global Public Goods

Economic Consulting Team

Oxford Economics

The global challenges of today are transboundary and pose existential risks for our societies and economies – including climate change, biodiversity loss, pandemics, fragility, violence and conflict. In our new flagship report ‘Multilateral Development Banks for Global Public Goods’, commissioned by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), we show how the World Bank and other Multilateral Development Banks can play a key role in preventing and addressing these crises by supporting the provision and protection of Global Public Goods.

The Covid-19 pandemic and the interventions launched to contain its spread have thrown a sharp spotlight on the critical relevance of Global Public Goods (GPGs). Its devasting impact showed once again that global catastrophes such as the climate crisis or the global credit crunch can only be solved or prevented by concerted global action. This calls for multilateral development banks (MDB) and other multinational organisations to take on a more central role.

While emerging economies and developing countries are often hit hardest by global crises, they also play a key role in achieving the goals that the world has set itself to deal with these shocks. This means that as the leading global development institution, the World Bank can play a key role in preventing these crises by supporting the provision and protection of GPGs in its client countries.

On behalf of the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, Oxford Economics analysed how MDBs—and especially the World Bank—could foster the provision and protection of GPGs. The recommendations we provide are based on a clear-cut definition of the economic problem that GPGs face: their structural underprovision stems from the fact that an often sizeable part of the benefits delivered by the provision of GPGs benefits other countries rather than the country providing them.

The implication of what economists call cross-country externalities is that the provision of GPGs cannot be left to the market or individual countries and that MDBs and other multilateral organisations must take on a more central, coordinating role.

Johanna Neuhoff

Associate Director of Economic Consulting, Continental Europe

Hannah Zick

Economist, Economic Impact

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