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The Governance Of Global Negative Externalities: Great-Power Cooperation

Posted on:2011-07-04Degree:DoctorType:Dissertation
Country:ChinaCandidate:W H YeFull Text:PDF
GTID:1119360332956135Subject:Industrial Economics
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Global negative externalities are the thorniest issues that the international community has to face in the age of globalization. With the development of globalization, the whole world is being closely linked together in terms of production, consumption, trade, investment, finance, technology development and transfer. As a result, all countries have never been more interdependent than ever before. Globalization has brought not only opportunities for development but also huge challenges, including resource depletion, environmental pollution, climate change, population explosion, poverty, economic crisis, terrorism, epidemic disease outbreak, etc.Global negative externalities are broadly related to nature, politics, economics, health care, national security, etc. The causes of global negative externalities are also related to historical problems, interest conflicts, and the discrepancies in economic and social development in the world. But the common cause is however the indifference that the individual shows to the public interest or the conflict between individual rationality and collective rationality. Global negative externalities, for instance, occurs when a firm, in order to cut the production cost, emits greenhouse gases (GHGs) which may contribute to the global climate change and eventually harm the earth, and will not have to pay the cost of emitting.The essence of externalities is actually concerned with the scarcity of resources and the nature of man. Externalities need to be remedied since they cause inefficiency and inefficient distributions of resources. At the national level, externalities can be corrected by means of government regulations, legal methods, unitization, taxation (Pigouvian Taxes), and/or the application of the Coase Theorem.A global negative externality is not a simply-extended conception of externality in terms of space. Global externalities can also generate inefficiency of global resources and thus need remedying. Approaches for remedying externalities on the national level would however fail to apply to the global level due to the existence of the governance dilemmas, including 1) the world government dilemma. In the absence of a world government that has supranational authority, externality governing approaches at the national level would fail.2) global tax dilemma. Without a world government, a global tax would only be theoretically possible. Carbon tax is subject to a few countries in the region and is also opposed by many countries on the global scale.3) the dilemma of global property rights. A dilemma also exists when Coase bargaining is used to correct global negative externalities. In many cases, the property rights of global public resources cannot be clearly defined and the costs for property rights negotiation can be very high, which leads to very low efficiency. As the externalities spill over the national border, national approaches for correcting externalities cannot be used and new approaches are thus called for in both theory and practice.The solution to the dilemmas of the global negative externalities rests on international cooperation. Since a global negative externality creates a global effect and causes a global harm as well, global cooperation is thus needed. A single country is not likely to provide a solution to the global negative externalities and has no incentive to do so. Even though a country or some countries would offer to solve the global issues, yet its/their enthusiasm can be curbed as long as there are countries in question which refuse to join. Consequently the effect of the global governance will not be achieved.Nevertheless, the dilemma of international cooperation also exists despite the call for global efforts to eliminate the global negative externalities. Due to the state rationality and the free riding problem, the rationality of an individual state will not lead to that of the international community. Plus the world anarchy and a great number of countries in the world, the cases of "the Tragedy of the Commons", "the Dilemma of the Prisoners" and the dilemma of collective action thus prevail. International cooperation seems to be a long bickering and very inefficient process on the issues concerning global security, environmental pollution, nuclear proliferation, poverty, and climate change,Despite the dilemmas of international cooperation, there still exists the likelihood of it. A state can be personified in order to explore its nature. As is proven, the nature of man is not homo economicus but rather a complicated social man, in other words, "the totality of social relations". Man is a mix of being self-interested and altruistic. Man can either cooperate or compete and his decision making is determined by his social existence. The "social existence" suggests that the resources are scarce and social men are interdependent. Communication and interdependence will lead to repetitive competition for the ownership, utilization, and consumption of the scarce resources. Repetitive and dynamic competition, common benefits and compatible norms will result in cooperation to boost the effective utilization of the resources. The co-existence of competition and cooperation and the interactions between competition and cooperation will make a social man both self-interested and altruistic. A state is also a social man. The scarcity of global resources leads to countries competing against each other, but the interactions, interdependence, the common benefits and compatible norms will all enhance the collective action of the countries. Whether to choose cooperation or competition is determined by the social existence of the state. As a mix of being self-interested and altruistic, cooperative and competing actions are both normal for a state.International cooperation can be implemented under anarchy in the international community. Anarchy suggests the absence of a supranational world government, but it does not necessarily follow that the international community is in the Hobbes' state of nature nor the state described by Locke or Kant, but rather in a dynamic and orderly state of self-governance. Under anarchy, international institutions, international organizations and sovereign states will interact and guarantee the basic order and stability of the international community.Although the international community exists where there's anarchy and a state can be rational, yet the study of the mechanisms of self-governance by Ostrom,2009 Economics Nobel Prize laureates, and the successful cases of cooperation prove that there's still likelihood for international cooperation in the long term because the international community shares broadly common benefits and states are complexly interdependent. The social development of mankind will meanwhile help the international community recognize and accept the international institutions and norms. As a social man, the dualism of being self-interested and altruistic can cooperate on the basis of promoting common interests and thus foster the global cooperation.International cooperation can be implemented without a hegemonic power. Hegemony does not help stabilize the international community and neither can it provide global public goods in the long run. International institutions can effectively help foster international cooperation.International institutions, international organizations and international non-government organizations (INGOs) are important parts of the international regime. International institutions can help reduce the transaction costs, promote the interdependence, and improve the expectations of the benefits. International organizations can help foster the coordination of the international cooperating, manage the global public goods, mediate the international conflicts, establish and implement the international institutions. INGOs play an important part in providing consultation and information for governments and inter-governments, exerting influence on governmental policy making and mass media, supervising the conduct of the governments and inter-governmental organizations.The existence of likelihood for international cooperation does not mean the success of international cooperation. The successful solution to the dilemma of international cooperation can and should be through the great power cooperation. A great power is a nation or state which has relatively great influence on a global scale, compared with other nations or states. The logic of great power cooperation is as follows:1) due to the large share of the global benefits that great powers possess, great powers have the incentive to initiate, propose, or support the global collective action and meanwhile promote its own internationally influence and benefits as well.2) due to the relatively small number of great powers, the great powers cooperation can greatly help eliminate the dilemma caused by the great number of players in the international cooperation and thus reduce the transaction cost and promote the efficiency of cooperation.3) the agreement reached by the great powers will help make international institutions formed, implemented and supervised and then reduce the possibilities of other states taking a free ride.4) leading by example that the great powers show how they themselves follow the existing international institutions will in return have an effect on their followers and eventually foster the international cooperation on the governance of global negative externalities. International cooperation will not come easily because there are some factors which have impacts on it. These factors include national security concern, political and economic interest concerns. However, the mechanism of great power cooperation can greatly reduce the risks of these factors by means of bilateral and multi-bilateral talks, world summits, international organizations and INGOs.Greenhouse gases (GHGs) emission is a typical case of a global negative externality. From the perspective of property rights, the global atmosphere can be seen as a global public good, which is excludable. By excludability, it means that it is impossible to exclude any nation or state from consuming the atmosphere technologically. As a result, the so-called "tragedy of the commons" may arise. To prevent from emitting GHGs, all countries will have to take globally collective action to battle the climate change.About 20 years have passed since the international community began to cooperate on the battle against the climate. A series of important international agreements like United Nations Framework Convention on Climate Change (UNFCCC), Kyoto Protocol, etc., have been reached but so far there is no binding agreement for all nations.The international cooperation dilemma is closely related with factors concerning a state's political interest, economic interest, science recognition, etc., among which the economic interest is most vital. Disagreements over cooperation principles, GHGs emission programs, finance loom over international cooperation on climate change. Cooperation principle determines the possibility of whether to initiate the cooperation. The most important fact concerning the cooperation principle is equity. However different nations do not have a consensus understanding of equity. The developing countries value the "common but differentiated responsibilities" (CBDR) principle, emphasizing the historical responsibilities of the developed nations. The developed countries, on the contrary, emphasize the principle of common responsibilities, arguing that in history they did not emit the GHGs on purpose due the limitation of scientific level then. So far the developed countries and developing countries seem to have reached an agreement over the principle of CBDR. However disagreements still remain over how to embody the principle and it is still the focus of the negotiation. As many developed countries have not yet fulfilled their commitments as are listed in the existing agreements to provide financial aids and technology for the developing countries, of which the enthusiasm to participate in the negotiation of GHGs emission reduction has been affected.International cooperation on the climate change is in essence a game in which the players of nations try to maximize their own benefits. The major players, mainly three countries or three groups that represent their followers or allied countries, are the EU, the US (or the Umbrella Group), and China (or BASIC countries). The EU, as a well-developed and stable economic entity, has advantages in terms of management and technologies to battle climate change over other groups and thus acts as a pioneer at the table of the international negotiation. The USA, which has also better abilities to address the climate change, suggests it will only promise to reduce GHGs emission significantly as long as the developing countries are also included in the binding agreement. So the USA is blamed by the developing countries for putting its national interest above the global interest. China, as the biggest developing country and also the biggest carbon emitter due to the fast growth of its economy over the recent years, is faced with increasing pressure coming from the international community. As China is growing fast, its influence also increases. China now plays an important role in the stage of the world politics. Nevertheless, it must be pointed out that China is still a developing country rather than a developed one. As a great developing country, China must exert its influence and assume its matching responsibilities. As a big country of carbon emitter, China will have to volunteer to cut out carbon emission and conserve energy, take an active part in participating in the international cooperation, and adopt flexible strategies at the negotiating table.Looking to the future, a legally binding climate deal is still expected of the great powers as long as they continue to perform constructively and productively in the international cooperation. To achieve this goal, these conditions will have to be met:1) The great powers will have to balance their national interest and the global interest. The base for international cooperation will be eroded if each of the great powers puts its national interest above the global one.2) The great powers will have to strike a deal before all the other countries come to the negotiating table. Only in this way, can it help reduce the snail-paced international negotiation caused by the great number of the international negotiating parties and unrelenting bickering between rich and poor. The great powers must follow the principle of CBDR established by UNFCCC and Kyoto Protocol, which is also seen as the precondition for moving the cooperation forward.3) an agreement must be reached between the great powers before the all the other countries come together again to the negotiating table in order to avoid the inefficiency of large scale conventions. But it is a must to strike a balance between the developed countries with the legally binding commitment to carbon emission reduction and the developing countries with non-legally binding promises to cut out carbon emission.4) the great powers will have to show a leadership example by implementing the existing international institutions, including the provision of financial aids to the poor by the developed countries, and the provision of accurate and transparent statistics concerning carbon emission reduction by the developing countries in a measurable, reportable and verifiable manner.
Keywords/Search Tags:global negative externalities, great-power cooperation, climate change
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