'Landmark' book offers tools to manage global risks

01 Mar 2006

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Innovative financial mechanisms that could dramatically reduce the cost of managing global risks can now be implemented by governments across the world, according to a ground-breaking book by the United Nations Development Programme (UNDP).

New Horizons - UNDP Administrator Kemal Dervis launched the book entitled ‘The New Public Finance: Responding to Global Challenges’ on 28 January 2006 at the World Economic Forum (WEF) in Davos.

The New Public Finance: Responding to Global Challenges’ presents how, through using creative, incentive-based tools, governments could respond in a more affordable and sustainable way to international challenges such as avian flu, terrorism, and climate change. The widespread adoption of these approaches could break the cycle of under-funded and inadequate responses to global problems, and foster a new, less crisis-prone globalized world.

More affordable, sustainable crisis response would ensure that existing and future development aid could be used more effectively, improving the prospect of reaching the Millennium Development Goals (MDGs) of halving poverty by 2015, and of sustaining development beyond the target date.

Speaking at the launch, UNDP Administrator Kemal Dervis said: "The growing interdependence between countries and the challenges this brings requires more effective management of globalization - management characterized by new levels of cooperation between public and private actors, between states and global markets."

'Landmark' text

The New Public Finance is the third in a series on global public goods published by Oxford University Press for UNDP's Office of Development Studies (ODS). It is edited by Inge Kaul who is the Director of ODS at UNDP and Pedro Conceição from the UNDP.

It has already drawn high acclaim from prominent international figures. Nobel Prize winner Joseph Stiglitz called the volume "a landmark text that provides the important beginnings of a field that will be tilled for years to come".

Trevor Manuel, Minister of Finance for South Africa said: "This is a bold and penetrating compilation of papers on the most profound challenges of modern public finance – how to construct better partnerships between governments and private sector players and how to strengthen cooperation between nations in pursuit of common interests."

The UK's Chancellor of the Exchequer Gordon Brown, a primary proponent of public–private partnerships noted: "The New Public Finance shows how we can equip people and countries for the future – for a new global economy that combines greater prosperity and fairness both within and across nations. It is important reading for today's policymakers".

The current concentration of financial innovations, all aimed at finding more efficient and effective ways of meeting global challenges, reflects a fundamental change in the traditional role of the state, argue the report's editors. "Governments act more and more as intermediaries between the policy demands of global, mobile actors, and those of local, domestic constituencies," says Inge Kaul, the lead-editor of The New Public Finance.

The emergence of this new 'intermediary state' is evident in the political debates surrounding outsourcing, labour-market flexibility, and capping harmful emissions. It underlies the added policy emphasis on managing cross-border risks to, for example, prevent an outbreak of avian flu, fight international terrorism, or prepare for violent weather patterns associated with global warming.

"Governments who learn to strategically manage such long term and financial risks are the ones who will ride out brewing fiscal storms," said the book's co-editor Pedro Conceição.

For background information on the book and a breakdown of the topics considered, please click here. The book overview is available in Arabic, Chinese, English, French, German, Portuguese, Russian and Spanish on the website.