Abstract: The concept of global public goods can help us understand and respond to the new global policy challenges likely to face nations in the twenty-first century. Tackling this growing agenda of common concerns will require fresh thinking, intense research efforts, new political instruments, and innovative policy responses. Up to now, global public goods consisted primarily of “traffic rules” between countries and such at-the-border issues as tariffs. But increasingly, the initiatives for international cooperation reach behind national borders. Global concerns are penetrating national agendas, and national concerns are becoming the subject of international debate and of policy coordination and harmonization. Today, concrete outcomes and targets – such as disease control, pollution reduction, crisis prevention, and harmonized norms and standards – matter. The reasons for these new exigencies: enhanced openness, growing systemic risks, and the policy demands of the growing number of transnational actors in both business and civil society. Nation states will witness continuing erosion of their capacities to implement national policy objectives unless they take further steps to cooperate in addressing international spillovers and systemic risks. But that cooperation must be of a new type. Not just cooperation that keeps global public bads at bay (until they reach crisis proportions) but cooperation that centers on creating global public goods and internalizing externalities. And not just cooperation that mistakenly assumes that the sphere of “public” ends at national borders, but cooperation that recognizes that an efficient system of global public policy is a necessary ingredient of an efficient global economy. To make cooperation work along these lines, its current structure must be reengineered to create: (1) clear jurisdictional loop, reaching from the national to the international (regional and global) level and back to the national; (2) participation loop, bringing into the process all actors – governments, civil society and business; all population groups, including all generations; and all groups of countries; (3) an incentive loop to ensure that cooperation yields fair and clear results for all.

Keywords: cross-border externalities, development economics, global public goods, international cooperation, international relations, public economics, public goods,