Safeguarding Human Progress by United Nations Publications

UNDP’s 2014 Human Development Report, Sustaining Human Progress: reducing vulnerabilities and building resilience, notes that the most effective policies for supporting human development and reducing vulnerabilities are those that incorporate principles of universalism, by placing people at the centre of policy. Responding to life cycle and structural vulnerabilities through social investments and policy interventions deliver long-term benefits—by reducing vulnerabilities at critical life phases and mitigating structural disadvantage faced by discriminated groups in society. Yet, the emerging challenges and risks posed by vulnerability given the backdrop of globalisation require a concerted approach—and collective action that will measure up to the scale of these shared challenges. In building this argument, the report draws heavily on background research commissioned from eminent economists, demographers and social scientists, and this companion volume to the 2014 Human Development Report presents eleven of those research papers. The authors, representing different yet complementary disciplines in the ﬁeld of human development, provide important new contributions to human development thinking. Their research offers empirically grounded insights for a new and multi-disciplinary conception of vulnerabilities from a capabilities perspective. They outline broad principles guiding development strategy, policies and future prospects with implications for people and countries across the world. Taken as whole, these contributions illuminate policies that foster resilience and can promote and sustain progress, especially for those that are vulnerable, for decades and generations to come.

Safeguarding Human Progress: Reducing Vulnerabilities, Building Resilience Edited by: Khalid Malik

Edited by: Khalid Malik

ISBN: 978-92-1-126384-8

Safeguarding Human Progress: Reducing Vulnerabilities, Building Resilience

Real progress on human development is not simply a matter of enlarging people’s choices. It is also about ensuring these choices are secure. And that requires us to understand—and tackle—vulnerability. The 2014 Human Development Report shows that human development progress is slowing down and is increasingly precarious for many. In our increasingly connected world we face new vulnerabilities. Globalization, for instance, which has brought benefits to many, has also created new risks. Financial and food crises have swept through nations. Most work on vulnerability has traditionally been in relation to specific risks: disaster, conflicts. By applying the lens of human development we take a wider approach, to understand the underlying drivers of vulnerabilities, and how individuals and society can become more resilient.

Empowered lives. United Nations Development Programme Resilient nations.

Human Development Report Office 304 E. 45th Street, 12 Floor New York, NY 10017 http://hdr.undp.org/

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Safeguarding Human Progress: Reducing Vulnerabilities, Building Resilience Edited by: Khalid Malik

United Nations Development Programme Human Development Report Office 304 E. 45th Street, 12th Floor New York, NY 10017 http://hdr.undp.org

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UNDP Human Development Report Office 304 E. 45th Street, 12th Floor New York, NY 10017 Tel: +1 212-906-3661 Fax: +1 212-906-5161 http://hdr.undp.org/ UNDP Human Development Report The Human Development Report series has been published by UNDP since 1990 as independent, empirically grounded analyses of major development issues, trends and policies. Additional resources related to the 2014 Human Development Report can be found online at http://hdr.undp.org, including complete editions or summaries of the Report in more than 20 languages, a collection of Human Development Research Papers commissioned for the 2014 Report, interactive maps and databases of national human development indicators, full explanations of the sources and methodologies employed in the Report’s human development indices, country proﬁles and other background materials as well as previous global, regional and national Human Development Reports. United Nations Development Programme UNDP partners with people at all levels of society to help build nations that can withstand crisis, and drive and sustain the kind of growth that improves the quality of life for everyone. On the ground in 177 countries and territories, we offer global perspective and local insight to help empower lives and build resilient nations. The views expressed in this publication are those of the authors and do not necessarily represent those of the United Nations, including UNDP, or the UN Member States.

Copyright © 2014 by the United Nations Development Programme 1 UN Plaza, New York, NY 10017, USA All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior permission. ISBN: 978-92-1-126384-8

Cover design and production: Admir Jahic Design and layout: Laurie Douglas Graphic Design

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Table of Contents Introduction �� v 1

Fostering Sustainable Human Development: Managing the Macro Risks of Vulnerability �� 1 Inge Kaul

Vulnerability Traps and Their Effects on Human Development �� 23 Rehman Sobhan

The Social Value of Employment and the Redistributive Imperative for Development �� 81 Andrew M. Fischer

Reducing Vulnerability in Critical Life Course Phases by Enhancing Human Capital �� 151 Samir KC, Wolfgang Lutz, Elke Loichinger, Raya Muttarak and Erich Strießnig

Addressing and Mitigating Vulnerability Across the Life Cycle: The Case for Investing in Early Childhood �� 195 Mary Eming Young, MD, DrPH

Youth Vulnerabilities in Life Course Transitions �� 259 Abby Hardgrove, Kirrily Pells, Jo Boyden and Paul Dorna

Life Cycle Transitions and Vulnerabilities in Old Age: A Review �� 315 Asghar Zaidi

Evolution of Thinking and Research on Human and Personal Security 1994-2013 �� 365 Des Gasper and Oscar A. Gómez

Violence against Women as ‘Relational’ Vulnerability: Engendering the Sustainable Human Development Agenda �� 403 Naila Kabeer

10 Trans-border Vulnerabilities �� 451 Khalil Hamdani 11 Improving Global Collective Action in a Connected World �� 487 Thomas Hale

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Khalid Malik, Director UNDP Human Development Report Office Khalid Malik has been Director of the UNDP Human Development Report Office since June 2011. Mr Malik has held a variety of senior management and substantive positions in the United Nations, serving as UN Resident Coordinator in China (2003–2010); Director, UNDP Evaluation Office (1997–2003); Chair, UN Evaluation Group; UN Representative in Uzbekistan; and other senior level advisor positions. He has been active on UN reform and has worked closely with development partners and UN intergovernmental bodies. In 2009, Mr. Malik was one of ten ‘champions’—and the only foreigner—to be honored for their contributions to the protection of the environment in China.Mr. Malik has written widely on a range of topics. His latest book Why China Has Grown So Fast for So Long was published in 2012 by Oxford University Press. Earlier, he co-edited Capacity for Development: New Solutions to Old Problems (2002), and Lessons Learned in Crisis and Post Conflict Situations (2002). Before joining the United Nations, Mr. Malik taught and conducted research at the Pakistan Institute of Development Economics (1975) and at Pembroke College, Oxford (1974–75). He has studied economics and statistics at the universities of Oxford, Cambridge, Essex and Punjab.

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Introduction

eal progress on human development is not simply a matter of enlarging people’s choices. It is also about ensuring these choices are secure. And that requires us to understand—and tackle—vulnerability. The 2014 Human Development Report shows that human development progress is slowing down and is increasingly precarious for many. In our increasingly connected world we face new vulnerabilities. Globalization, for instance, which has brought benefits to many, has also created new risks. Financial and food crises have swept through nations. Most work on vulnerability has traditionally been in relation to specific risks: disaster, conflicts. By applying the lens of human development we take a wider approach, to understand the underlying drivers of vulnerabilities, and how individuals and society can become more resilient. The HDR 2014 makes a timely intervention to topical debates that are also underway, especially on the new internationally agreed set of development goals—like the successors to the Millennium Development Goals in the Post2015 agenda, or in developing the Rio+20 Sustainable Development Goals agenda. By addressing the topic of vulnerability, HDR 2014 puts the spotlight on the imperative to not only reach various development goals, but also to ensure the sustainability of such development gains: by addressing the risks and reversals in “getting to zero” and focusing on “staying at zero”. Successive HDRs have shown that most people in most countries have been doing steadily better in human development. Advances in technology, education and incomes hold ever-greater promise for longer, healthier, more secure lives. Yet, there is also a widespread sense of precariousness across the world today—in livelihoods, in personal security, in the environment and in global politics. High achievements on critical aspects of human development, such as health and nutrition, can quickly be undermined or reversed by natural disaster, conflict or economic slump. HDR 2014 interrogates prevailing conceptions of vulnerability, going beyond basic assumptions and commonplace understanding of what this entail. The report introduces the concept of structural vulnerabilities. These occur when particular groups suffer disadvantage on multiple fronts. The structurally vulnerable include, for example, the poor who suffer more from many risks, Introduction

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such as natural disasters; women, who suffer pervasive discrimination globally; or older people who are more likely to be poor or disabled. The report also looks at how capabilities are formed over a person’s lifetime and the threats that people face at different stages of their life—from infancy through youth, adulthood and old age. It pays particular attention to sensitive phases of life-cycle vulnerabilities when the timely interventions can bolster such life capabilities or prevent its erosion. The formation of such life capabilities are path-dependent: affected by investments in the preceding stages of life, and by the interplay among the immediate environment, the community and society. Moreover, short-term shocks frequently have long-run consequences on such life capabilities, where individuals may not automatically bounce back from what appears to be a transitory shock. For instance, a setback in early childhood can have serious ramifications throughout the rest of a person’s life, including the chances of holding onto a job, the uncertainties associated with growing older and the transmission of vulnerabilities to the next generation. While some deleterious effects may be reversal, it is context-specific and not necessarily very cost-effective. The report develops some basic propositions. One is that people’s vulnerability is influenced by their capabilities—i.e. health, education, command over resources, personal security—and the societal context they inhabit. The other is that failures to protect people against vulnerability are often a consequence of poor policies and poor social institutions. The report examines the types of social investments and timely interventions which can reduce vulnerability and build resilience. HDR 2014 makes the case therefore, that the sustained enhancement of individuals’ and societies’ capabilities is necessary to reduce these persistent vulnerabilities—many of them structural and many of them tied to the life cycle. Progress has to be about fostering resilient human development. The report focuses on building resilience in individuals and across societies, emphasizing two central underpinnings for successful interventions. First, the report upholds the principle of universalism. Everyone should have the right to education, health care and other basic services. So there has to be a greater recognition that those most exposed to risks may require additional support to ensure that their life chances are equal to others. Universalism is about pursuing equal life chances for all. Equal consideration for all thus demands unequal treatment in favour of the disadvantaged. The second principle is about ‘putting people first’. All policies, especially macroeconomic ones, must be seen as means to an end, not as ends in themselves. Policymakers must ask basic questions about the impact of their intervi

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ventions and priorities. Who is benefiting from economic growth? Are people more vulnerable? Are people being left behind? The importance of universal access to basic social services—education, health care, water—which enhances resilience, and does so cost-effectively. The report documents that when benefits are narrowly targeted, it seems that the middle class are less willing to fund them through taxes. When provisioning is universal, they are more willing to fund services, and so inefficiencies in redistribution are offset by the greater funds. Many have argued that countries need to be wealthy to finance universalism, yet history shows us otherwise. In fact countries with varied levels of wealth and diverse political systems, have successfully started efforts towards building universal social provisioning of social services, for example, in Costa Rica, several Scandinavian countries and the Republic of Korea, the first step towards universal provision of basic social services was taken at relatively low income per capita; lower than what prevails in South Asia today. And while building universal coverage takes time, even decades, the gains from expanded coverage start to accrue long before coverage is universal. The report also reminds us that social spending should occur when it is most needed. But most countries don’t protect their social spending or provide for social investments, particularly during stress periods. For example, children’s development and brain growth is extremely rapid during the earliest years. But this is exactly when the budget allocations for public social services are currently lowest. The transition from school to the labour force is another sensitive transition. In many developing countries, for instance, the proportion of young people has increased over the past 40 years, creating a ‘youth bulge’. But the growing numbers of youth have not been matched by increases in jobs. The report uses various scenarios to look forward to 2050. Under a “business as usual” scenario the gap will continue to grow in most regions. But ambitious policies—fast track education and accelerated economic growth—can close the gap for South Asia and reduce it for Sub-Saharan Africa. The report makes a strong call for the return of full employment as a central policy goal as it was in the 1950s and 1960s. Since then it disappeared from the global agenda. Now is the time to return to that commitment. Because full employment brings social benefits that far exceed the wages paid. Jobs foster social stability and social cohesion, and decent jobs strengthen people’s ability to manage shocks and uncertainty. Protecting choices is another critical part of building resilience. In 2009 the Social Protection Floors Initiative set out a global framework for universal access to essential social transfers and services, such as health care, primary education, pensions, unemployment protection and childcare. This too is affordIntroduction

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able. Indeed, the ILO estimated the cost of such an initiative in 12 low-income as ranging from 4 to 10 percent of GDP. Improving the availability of basic social services, strengthening employment policies and extending social protection are all important. Yet these broader universal policies may not be enough if social norms and laws do not protect the rights of groups that face discrimination. In this case responsive and accountable institutions are particularly critical. Better norms and stronger collective action can help ensure that states and markets recognize and reflect the interests and rights of vulnerable people. National action can only go so far, especially when the sources of vulnerability itself do not remain bounded by boundaries. International action is required to address these challenges, which currently suffer from gridlock and deficits. First, there is an under provision of global public goods—ranging from disease control to global market regulations. This under provision permits shocks to have global reach. Managing and controlling food price volatility, global recessions and climate change are all essential public goods that markets so far are ill-equipped to provide. Secondly, there are ‘structural deficits’ in governance architectures that limit the pace of progress. This needs to be addressed since no single country or community can alone resolve global market failures. Moreover, regional or global shock absorbers—such as financial institutions—are needed to reduce the transmission of shocks and diminish the potential for global contagion. In undertaking the research for the HDR 2014 and in developing the above narrative which the HDR 2014 presents, several background papers were commissioned by UNDP’s Human Development Report Office. These research papers and think pieces looked in depth into particular themes and issues relating to vulnerability and human development. Summarizing the latest research and analysis from their respective disciplines, these background papers are extremely rich, informative and varied in their treatment of this complex subject matter. While the HDR 2014 picks up on some of the key messages from this background research, there remains a wealth of information and insight in these background contributions that readers will find valuable as resources that dwell on the technical debates in depth. These contributions, elicited from many of the leading figures in academia, research and policymaking, reflect the cutting edge debates in their respective fields, and take that extra step to summarize their findings in terms of the implications for vulnerability and human development concerns. This edited volume is a compilation of eleven papers, selected from this commissioned research for the HDR 2014, which are clustered around three distinct conversations that have informed the Report’s analytical insights and viii

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policy areas for engagement: (i) an overview of the macro effects of vulnerability on human development achievements (ii) a refinement of the concept of vulnerability itself, incorporating critical life phases and the intergenerational impact on human development and (iii) linking the concerns of human security with vulnerability, in the context of a globalized and interconnected world. The first three papers (Kaul; Sobhan; Fischer) address the risks posed by vulnerabilities for expanding human development. These examine the macrolevel challenges in responding as members of a global community, be it on the issue of sustainability, or of escaping vulnerability traps, or in implementing principles of universalism. Inge Kaul’s paper identifies and assesses the factors contributing to the multiplying signs and incidences of vulnerability currently observed, suggesting possible corrective policy steps to redress them. The findings document that the risks of vulnerability emerging during recent decades tend to be of a systemic or macro nature. Their root cause appears to lie in the persisting gap between the transnational reach and impact that marks more and more policy issues, and the still essentially national focus of public policy-making. The policy recommendations flowing from Kaul’s analysis include introducing global issues management into governance systems, nationally and internationally; promoting a notion of mutually respectful and ‘smart’ sovereignty to bridge this gap. Rehman Sobhan’s paper is a detailed exposition of the conception of vulnerability, which examines asymmetrical risks that leave some people more vulnerable than others to cope with risks. Sobhan relates these asymmetries to inequalities in their socio-economic circumstances, and focuses on vulnerabilities originating in the inequitable opportunity structures which create such differentiations in the exposure to risk. The paper examines the nature of such vulnerabilities and the ways in which these trap and retain particular segments of the population in persistent poverty. It then relates these traps to the unjust socio-economic circumstances and power relations that create and perpetuate them, concluding with a variety of policy and institutional interventions which may contribute to reducing vulnerability. Andrew Fischer’s paper offers reflections on structural vulnerabilities in a context of labour transitions and human development. Fischer notes that evaluating the relative and subjective social value of employment should occur within a broader inquiry of particular employment settings. He contends that workplace conditions are intricately related to redistributive processes within societies, and that a vital role of public policy is to strengthen progressive redistributive institutional mechanisms to cultivate resilience. This can trigger positive synergies between the social values of employment, and human Introduction

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and economic development. Fischer makes this argument in four sections: he presents some stylized facts of contemporary population growth and labour transitions across the global South. He then outlines the limitations of standard economics approaches in dealing with issues of labour market intermediation and employment regulation as well as a variety of alternative socially and institutionally embedded views. He then expands on the valuation of labour, drawing from the example of care work to illustrate the importance of redistributive mechanisms to socialize the costs of relatively skilled service sector employment; and lastly, presents examples of the redistributive imperative in contemporary development. These three papers together map the broader context and articulate the key notions to inform the conceptual grammar used in the analyses of vulnerability and its links with human development. The next four papers (Samir KC et al; Young; Hardgrove et al; and Zaidi) point to new and micro-level analyses of conceptualizing and intervening for reducing human vulnerabilities, by addressing critical life course phases. Early childhood interventions, youth vulnerabilities as well as those that emerge with old age are addressed in this quartet of essays. Samir KC, Wolfgang Lutz, Elke Loichinger, Raya Muttarak and Erich Striessnig’s paper examines vulnerability over the life course with a specific focus on differentials not only by age and gender—as is conventional in demography—but also by level of education and with a focus on health. This paper builds on a significant body of scientific literature which shows that changes in mental functioning, cognitive capacity and behaviour that typically result from education all lead to reduced vulnerability to virtually all threats to human well-being at all stages of life. Reducing vulnerability through educational attainment should therefore be a key strategy for operationalizing international policies aimed at not only empowering people, but also providing manifold positive consequences of education at individual and societal levels. Mary Young’s paper documents the latest evidence of the neurobiology of early childhood noting that the development of the brain’s architecture and function in early life affects health, learning and behaviour right up until death. She notes that what undertaken or neglected in early childhood has long-term ramifications for individuals and for societies. The first few years affecting a child’s life have a multiplier effect for society. Children who are well nurtured during this critical formative period tend to do better in school, emerging as more productive adults, hence societies stand a better chance of developing and improving the capabilities of their adult population. Investing in young children is an integral part of planning for human development. Early human developx

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ment is a powerful equalizer, as investments in early childhood yield significant long-term benefits that narrow the gap between high- and low-income families. Young’s paper builds on the Nobel laureate James Heckman’s work that emphasizes that investing in disadvantaged young children “is a rare public policy initiative that promotes fairness and social justice and at the same time promotes productivity in the economy and in society at large.” Young demonstrates from the latest research that it is more equitable and cost-effective to invest in early childhood development programmes, to enhance people’s potential, compared to remedial interventions later on to address their preventable deficits. Abby Hardgrove, Kirrily Pells, Jo Boyden and Paul Dornan’s paper examines youth vulnerabilities, with a particular emphasis on low- and middleincome countries. It touches on the challenges confronted by young people exposed to extreme, life-threatening circumstances, such as political violence and armed conflict, but focuses on vulnerabilities that emerge in key transitions experienced by most young people, such as those linked to school, work, partnership and parenthood. It draws on a range of secondary sources, and it makes extensive use of life course analysis from Young Lives, a longitudinal study of children growing up in poverty in Ethiopia, Andhra Pradesh (India), Peru and Viet Nam. The paper underlines how vulnerabilities not only hold young people back, but also are a barrier to capitalizing on the demographic dividend. The paper employs a life course perspective, highlighting the relationship between early influences and later outcomes, and examining individual life trajectories within a societal context. Asghar Zaidi’s paper reviews the concepts of vulnerability and resilience, and their applications for ageing and older people, concurrently reviewing the life course framework and the capability approach, and their relevance to human development. Current literature offers great insights on novel approaches to conceptualizing the quality of life and well-being of older people, as well as information on distinctive analytical tools (such as the Active Ageing Index and the Global AgeWatch Index) that help measure and monitor varying outcomes across different policy contexts. The paper demonstrates how policy interventions throughout the life course must aim to not just reduce vulnerabilities to risks but also boost the personal coping capacities (or resilience) of people moving into old age. These interventions are most effective when accompanied by a reduction in the socio-cultural constraints faced by older people as well as by enabling age friendly environments. The paper points to the long-term impact of transitions (such as the onset of disability or the death of spouse) and life course experiences (such as work and family history) on three key components of the quality of life and well-being of older persons: financial well-being, Introduction

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health, and social support and connectedness. The discussion extends to how contextual and temporal factors contribute to inequalities and vulnerabilities in old age, with an emphasis on identifying the role of gender disparities and institutional differences across countries. A review of evidence generated by the Global AgeWatch Index helped identify contexts in which older people fare better. It points to policy interventions effective in ameliorating vulnerabilities among current and future generations of older persons. This quartet of papers places the discussion of vulnerability in terms of live-cycle transitions, noting the importance of critical (pre-emptive or anticipatory) policy measures that can provide a buffer against vulnerabilities, and effective bolster human capabilities over people’s lifetimes. The last four papers (Gasper and Gomez; Kabeer; Hamdani; and Hale) revisit the concepts and research on human security since its articulation in the 1994 Human Development Report and the Report of the Commission on Human Security in 2003. Several themes resonate from this quartet—including the concern with personal security and gendered realities, particularly of violence against women. Cross border issues that manifest themselves in transborder vulnerabilities are addressed in Hamdani, which is picked up in the concluding chapter by Hale on the challenges of global collective action in a connected world. While quite divergent in their starting points, they all seem to concur on the need for a broader common agenda and collective public action. Des Gasper and Oscar A. Gómez examine the key concepts in human security analysis, and unpack the intersection of deprivation and vulnerability as an essential component of human development thinking. In doing so, they pay special attention to risks and forces of disruption and destruction. This paper highlights six strands in such work since 1994: i) violent conflict and its prevention and resolution; ii) crime and ‘citizen security’; iii) psychological insecurity; iv) environmental change; v) comprehensive identification and comparison of all major threats; and vi) study of selected priority threats in a particular time and place. The paper concentrates on the first, second and fifth of these topics. The authors note that the flexibility required in responding to challenges posed by violent conflict runs counter to vested interests and established patterns of inclusion/exclusion. Human security is too often equated to familiar means and root causes of conflict, instead of relating these to the changing agenda of threats. The authors urge identification of broad horizon priority areas and an examination of their linkages with narrower horizon studies that explore in depth the threats and alternatives within pre-selected priority fields. Naila Kabeer’s essay on violence against women which addresses physical security can be seen as describing ‘relational vulnerability’, reflecting on womxii

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en’s subordinate status within hierarchical gender relations and the dependencies associated with it. While such violence can take many different forms, this paper focuses on the interpersonal violence of ‘normal’ times, most often within the home at the hands of intimate partners. The paper provides estimates of incidence, which suggest that it varies considerably across countries and by social group. Factors that lead to violence against women operate at individual, relational, community and societal levels, and help to explain some of this variation. They also suggest the need for interventions operating at these different levels. In conclusion, the paper argues that not only is violence against women and girls a fundamental violation of their human rights, but also has serious consequences for their well-being and capabilities, and imposes significant economic costs. These comprise both the direct financial costs of dealing with the phenomenon and the indirect productivity costs that result from it. Ending violence against women is a key component in any sustainable human development agenda and a critical priority for the post-Millennium Development Goal (MDG) development framework. Khalil Hamdani’s paper highlights how global connectivity is fast becoming a powerful dynamic for human development. It is also an emerging source of vulnerability. As people become more mobile and countries more interdependent, their interactions give rise to vulnerabilities that transcend borders. This increasing trend is not necessarily in itself a negative development, but it is nonetheless a complexity that warrants a global assessment. The policy responses to transborder threats—protection, mitigation and adaptation—may entail collective actions that are not always forthcoming due to competing interests, opaque responsibilities and free-riders. When vulnerability is trans-border, it is more appropriately addressed within a global framework of principles, rules and institutions that enable the policy space for collective action. Such a framework is a global public good. The implication, from a human development perspective, is that public goods, and appropriate policies and institutions, can tilt the balance in favour of resilience. This is evident at the national level, but it is equally relevant at the global level. The efforts to contain pandemics and protectionism are examples; other measures are needed for a more sustainable world. Thomas Hale’s paper emphasizes that rising interdependence has accelerated the need for greater global cooperation to manage basic policy problems like providing economic stability and development, maintaining security and ensuring environmental sustainability. Yet the existing intergovernmental institutions that the global community has traditionally relied on to facilitate cooperation are increasingly gridlocked, resulting in a global ‘governance gap’. Introduction

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This paper identifies common trends—rising multipolarity, harder problems, institutional inertia and fragmentation—that lead to gridlock across issue areas. It then identifies the vulnerabilities that this gridlock creates with reference to three issue areas: financial stability, human security and climate change. For each, global gridlock generates new implications for the world’s most marginalized populations. Hale considers the potential of new forms of global governance, many of them involving sub- and nonstate actors, to supplement multilateral processes and help fill some of the ‘governance gap’. While such solutions offer no panacea, under certain conditions, they may help to reduce the vulnerabilities associated with a breakdown in multilateral cooperation. This final quartet of papers brings the discussion back to the macro-level and global issues that the initial three papers addressed—highlighting the need to address the challenges posed by vulnerability through collective action, at the local, national and global levels. While the clustering of these papers in the above three conversations around the topic of vulnerability allows us to engage the topic at different levels from their original articulation within their respective fields of expertise, they also are stand-alone contributions for the HDR 2014. Each paper encapsulates the latest thematic research and analyses from its respective disciplinary field, engaging in specific treatment of their subject matter from a human development perspective. Ranging from international relations, macro-economic analyses, political economy analysis, behavioural studies, demography, sociology and gender studies, these papers bring together diverse perspectives towards building a truly multi-disciplinary appreciation of the concept of vulnerability and its impact on human development. We hope this edited set of background research goes some way towards building complex, nuanced and multi-disciplinary understandings both of the concept of vulnerability, and of our broader conception of human development.

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Fostering Sustainable Human Development: Managing the Macro-risks of Vulnerability Inge Kaul

Introduction Issues of vulnerability have, in recent years, received added political attention, nationally in the North and the South, and internationally. Their greater prominence reflects how growth and development have been increasingly crisis-prone, with one crisis grabbing the political spotlight from the other. According to the Global Risk Reports of the World Economic Forum (2012, 2013), the world can ill-afford another major challenge, as policy makers are still struggling to come to grips with global climate change, the effects of the 2008 financial crisis, persisting poverty, migration, cyber-insecurity, and international crime and conflict, to name but a few of the pending issues. Yet further challenges, such as the spectre of natural resource scarcities and rising resistance to antibiotics, are already looming on the political horizon. The lengthening list of global challenges has not gone unnoticed. In fact, it has unleashed a flurry of efforts aimed at risk management and the strengthening of resilience, including for local communities, vulnerable countries, firms and international supply chains. Innumerable corrective efforts have been taken in most areas of global challenge, such as through the policy responses to global warming, the 2008 financial crisis and the fight against terrorism. Nevertheless, judging from recent global reports (e.g., IEA 2013; Potsdam Institute of Climate Impact Research and Climate Analytics 2012; United Nations 2013; World Economic Forum 2012, 2013), change is happening too hesitantly, leading the United Nations Secretary-General to warn that â&#x20AC;&#x153;the worst is still to comeâ&#x20AC;? (United Nations 2013, p. iii). So, why do threats of vulnerability linger unresolved? And what could be done to improve the current response patterns? 1 Fostering Sustainable Human Development: Managing the Macro-risks of Vulnerability

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The present paper will address these questions. Its starting point is the observation that instability and volatility have arisen in a growing number of diverse issue areas, which suggests that they may have common root causes. Moreover, the challenges confronting us are, in large measure, of a global, transnational nature. This means that, in many instances, it is not possible for any one country or nonstate actor, however powerful, to resolve them through unilateral action. It can be conjectured that more recent threats to vulnerability result from a lack of effective international cooperation, that is, weaknesses in how global challenges are being governed. In other words, they are of a systemic or macro-risk nature, linked, as it seems, to the structure and functioning of global governance. Section I of this paper will test this conjecture by examining what recent literature on specific and cross-cutting global issues reveal about the origins of problems in respective policy areas. The main finding is that today’s vulnerability can be traced back to the ‘sovereignty paradox’: States, notably their governments, hold on to a strict, conventional notion of sovereignty, which makes them shy away from international cooperation in order to protect sovereignty. Yet with global challenges that involve policy interdependence among countries and require cooperation, such behaviour undermines rather than strengthens national policy-making. The harder states try to be sovereign, the more sovereignty they actually lose. Section II will discuss reform steps that could allow policy makers to break out of this paradox. The main thrust of these reforms is to render international cooperation more compatible with sovereignty in order to strengthen states’ willingness to cooperate and craft public policy that catches up with globalization. If these steps were taken, the resolution of many global challenges might proceed faster, facilitating, in turn, an easing of vulnerability.

Exploring the macro-risks of today’s vulnerability Judging from recent risk analyses, the world at present seems to be entangled in an ever denser web of unresolved global challenges. These include global warming; the need for energy transition while enhancing energy security for all to fight poverty and meet rising energy demands; the looming spectres of land and water scarcity; rising migration and urbanization pressures; new and resurgent diseases; excessive financial volatility; and international crime and violence, including cyber-attacks and privacy infringement. Although already long, this list does not yet include what the Global Risks Report calls the ‘X-factors’, or risks we have not even begun to think about, such as rogue 2

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deployment of geo-engineering or brain-altering technologies (World Economic Forum 2013). Moreover, warning calls are multiplying that some of these challenges are forming risk clusters that, were they to materialize, could result in crises of mega-proportions. Why do we face such a lengthening list of global challenges? And why now?

Tracing contributing factors: Layer-one macro-risks of vulnerability As discussed in box 1, it is useful to distinguish between micro- and macro-risks of vulnerability, and, within the latter category, among various layers.1 Macrorisks can originate in different sub-systems, including entities like the international financial architecture or the trade regime. The risks associated with these sub-systems—called here layer-one risks—could, in turn, emanate from further underpinning factors, so-called layer-two, -three to -n risks. This sub-section starts the search for the macro-risks of vulnerability by exploring factors that contribute to direct external threats (e.g., storms, droughts or excessive financial volatility) that afflict agents, be they private households, firms, local communities or countries. A review of recent global risk analyses and issue-specific studies reveals that underpinning the various direct threats of vulnerability are a number of contributing factors linked not just to one threat but to several. They include the following. Overuse of the global natural commons. This manifests in several ways, including, for example, deforestation, land degradation, loss of biodiversity, emerging water scarcity and the overload of the atmosphere with emissions of greenhouse gases. In light of the water-food-energy-climate ‘nexus’ (World Economic Forum 2011), excessive greenhouse gas emissions and global warming are also being seen as potential sources of new conflicts and security risks, especially in developing countries, given their relatively low capacity to cope with disasters and adapt to changing climatic conditions (Guillaumont and Simonet 2011, IPCC 2012, Panetta 2012). Political short-termism. Besides contributing to the overuse of the global natural commons, this is a factor in intergenerational equity problems such as high indebtedness and resultant underinvestment that gives preference to current

In line with the IPCC (2012, p.5), vulnerability is defined here as the propensity or disposition of agents or systems to be adversely affected by external effects; and resilience is defined as the ability of agents and systems to anticipate, absorb, accommodate or recover from hazardous external effects in an effective and timely manner.

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Box 1: Categorizing the risks of vulnerability For a full, policy-oriented understanding of the risks of vulnerability, it is useful to distinguish the following types. Micro-risks are linked to particular characteristics that individual agents possess, be they persons, private households, firms, local communities or countries. Examples include ill health or young and old age that may limit a person’s coping capacity, notably her/his ability to cope with devastating events such as war and conflict, or severe storms and floods; weak management of a firm; or a country’s being landlocked and underdeveloped. Macro-risks emanate from the structure and functioning of the socio-economic, cultural or political systems that form the human-made environment in which individual agents function. Depending on the scope of the system, such as whether it is local, national, regional or global, these risks may haphazardly affect all or anyone within their respective reach. The existence of risks makes itself felt through external effects like excessive financial volatility that results from lax regulation of national and/or international markets, or the emergence of severe weather events that have their origin in global warming, a trend that, in turn, could be due to slow progress in limiting the emission of greenhouse gases. The last element could be linked to failed international negotiations and, as the discussion in this paper will show, hesitance on the part of governments to engage in effective international cooperation. Thus, in order to devise effective and efficient strategies for the reduction of vulnerability, it is important to explore the full chain of risks, layer by layer, down to the root causes. While correcting the effects of micro-risks calls for interventions that are targeted to individual—vulnerable—agents, macro-risks call for a two-pronged approach: as an immediate measure, the strengthening of the resilience of all who could potentially come into harm’s way; and in order to better manage, control or eliminate a particular macro-risk, adjustments in the structure and functioning of the concerned system, starting from the root cause to the top risk layer. Reducing vulnerability, thus, might be a complex task. But it will pay to undertake it, because risks may turn into costly crises, perhaps even, as in the case of global warming, into a catastrophe with irreversible consequences.

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generations at the expense of future ones (Oxford Martin Commission 2013). Another expression of short-termism is the limited attention being paidâ&#x20AC;&#x201D;despite the impressive rise of the global Southâ&#x20AC;&#x201D;to such issues as the future global division of production and work, and its implications for sustainable economic growth and human development in different parts of the world (see, for example, Bourguignon 2013). The worldwide phenomenon of ageing populations is another issue that deserves higher political attention. Inefficient management of knowledge and technology. This results from the fact that the present regime of intellectual property rights tends to favour innovators and their right to protect their intellectual property over the widest possible dissemination and use of available knowledge and technology (Kennedy and Stiglitz 2013). As a result, poorer countries and people may not be able to afford medical and pharmaceutical products, so that disease burdens remain high, holding back economic growth and human development (Odagiri et al. 2012, Pollock 2006). For similar reasons, the current intellectual property rights regime could prove to be double edged for transitioning towards a green, low-carbon economy (Abdel-Latif 2012): It may facilitate technological innovation but constrain its dissemination. Non-availability and non-affordability of knowledge and technology are often further exacerbated by a lack of national and international public policy incentives aimed at encouraging pro-poor research and development (Hogerzeil et al. 2013, Kiddell-Monroe et al. 2013). Technological advances outpacing regulatory activity. This manifests in a range of problems such as the lack of food safety or mal- and overuse of medicines like antibiotics, causing antimicrobial resistance (WHO 2012); rapid financial innovation leading to novel ways of tax avoidance and illicit trade (see, for example, World Customs Organization 2013); and the challenge of balancing privacy and security in the digital age (Schmidt and Cohen 2013, Thierer 2013). Inadequate global market regulations. These lead to crucial problems of excessive financial volatility, as witnessed in the 2008 meltdown (Eichengreen 2008, Shiller 2008, United States General Accountability Office 2013), or price spikes in commodity markets that may add to problems of hunger and starvation (von Braun and Tadesse 2012, Hoekman and Martin 2012). Inadequate global market regulation also impedes the universalization of labour rights, opening the door to disasters like the 2013 building collapse in Bangladesh that killed more than 1,000 textile workers (Alam and Hossain 2013). With the rise in population numbers and economic growth, lack of regulations has led to land-use patterns, including the emergence of mega-cities and the 1 Fostering Sustainable Human Development: Managing the Macro-risks of Vulnerability

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establishment of industrial estates in coastal zones, that have caused natural disaster costs to surge (Guha-Sapir et al. 2013, MunichRe 2013).2 Rising global political tensions. These stem, in part, from the widening inequity between the rich and poor in both industrial and developing countries (Galbraith 2012, OECD 2011b, Stiglitz 2012), a trend that has given rise to new forms of opposition and protests like the Arab, Russian and Brazilian springs, the Occupy Wall Street movement, and demonstrations in Europe against the high costs of the euro crisis being passed on to the general public in countries like Greece, Ireland, Portugal and Spain (Mason 2013). While these protests often take place locally and nationally, they are directed against a common experience: the dominance of markets and inequity. In other words, they reflect an opposition to the current paradigm of globalized growth and its origin, the West, a fact that may explain the return of religion as a factor of national and international conflicts (Karakoç and Başkan 2012). In essence, the factors contributing to vulnerability that are identified above are all different expressions of one and the same underlying factor: weak public policy-making. This comprises insufficient management of cross-border and intergenerational externalities, and a tendency to resolve problems like emerging natural resource scarcity through rivalry among states rather than effective international cooperation likely to generate positive returns for all tomorrow.2 Assuming that governments are key actors in promoting ‘good’ public policy, the forgoing findings thus suggest that government failure in the presence of global, transnational challenges is an important layer-one macro-risk of today’s vulnerability. But why does this type of government failure occur? To which layer-two macro-risks could it be adduced?

Searching for root causes: Layer-two macro-risks of vulnerability At this point in the analysis, it is important to recall that many if not most global challenges possess the properties of a global public good.3 In line with standard economic theory, one would expect markets to fail in efficiently providing these. The reason is that the goods’ properties are public, i.e. there for all to consume. But

Some risk and vulnerability analyses also attribute the rise in the frequency and severity of disasters to deeper economic integration. Yet while this clearly spreads and magnifies existing risks, it does not necessarily cause them. In many instances, perceived threats may be more the outcome of inadequate market regulation or another contributing factor than a result of connectivity per se.

The interested reader may turn to annex A for a more detailed discussion of the concepts of public goods and global public goods.

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how can we explain the evident failure of states in this context—in other words, through the lack of international cooperation required for the full, efficient and effective provisioning of most global public goods? An important reason for states’ reluctance to cooperate on these goods appears to be due to what has been termed the ‘sovereignty paradox’. According to Kaul (2013), this arises when, in policy areas that involve interdependence, states shy away from international cooperation, hoping to safeguard their policy-making sovereignty, but achieving just the opposite result: a further erosion of their national policy-making capacity. This occurs as non-cooperation leaves problems unaddressed, and exposes nations to further, perhaps increasingly severe risks, and deepening, multidimensional vulnerability. This behaviour of states is evident from the fact that, while the existence of global challenges is being recognized, and a myriad of policy responses are underway, these measures have, so far, primarily followed a two-pronged approach aimed at: first, encouraging, or leaving it altogether to markets to generate new types of private goods designed to help achieve desired global goals like ‘green growth’ or ‘pro-poor’ agricultural and health products and services; and second, supporting non-binding multilateral agreements or voluntary international action, as well as domestic interventions, notably in areas in which global and national priorities overlap (see, for more detailed empirical evidence, Kaul 2013). For the most part, corrective steps to date have stayed within the conventional governance moulds. They fit with the Westphalian state model and its basic principle of the sovereignty of national policy-making. Yet this principle has, in effect, come under pressure. While its weakening is not a necessary and unavoidable accompaniment of globalization, it has been happening. One reason for this is today’s greater mobility of capital, which has tilted the state/market balance in favour of the latter. By implication, states have less control over markets and less control over the shaping of the governance system. Market actors may, for example, threaten exit from a country if its government considers a policy measure that they dislike, such as an increase in tax rates to raise public revenue and lessen state dependence on financial markets. Another factor that prompts states to hold on to whatever sovereignty they have left resides in the current global power shifts (UNDP 2013). These have unsettled the earlier division of the world into ‘policy setters’ and ‘policy takers’, a fact that, at least for now, appears to weaken governments’ willingness to engage in effective international cooperation in the North and the South. While the North fears a loss of its global rule-setting powers, the countries of the South feel that the existing pattern of decision-making does not yet fully reflect their newly won positions as major economic and political powers. 1 Fostering Sustainable Human Development: Managing the Macro-risks of Vulnerability

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The result is a retreat from multilateralism and a more fractured system of global governance. In part, of course, the fractured nature of global governance is also an expression of the facts that it is becoming more open and participatory, and that a search is on for new and innovative forms of international cooperation.4 Nevertheless, the ‘sovereignty paradox’ has led to a widening governance gap, with public policy-making remaining essentially national at a time of deepening policy interdependence, and a growing number of global public goods calling for often swift and decisive reform steps on the part of states. The national character of policy-making is especially evident from the fact that there is not yet much awareness and recognition of the fact that globalization has led to the emergence of two new public policy spaces. The global issue policy space is formed by the ensemble of policy interventions that, as shown in annex figure A.1, contribute to the typically multilevel, multisector and multiactor provision of global public goods. At present, states holding on to the strict, conventional notion of sovereignty and its corollary, a strong foreign and domestic divide, tend, in many cases, to disrupt this provision. The global public domain comprises the relationships—synergy and conflicts—among various global public goods (box 2). The promotion of human rights, for example, would perhaps often be conducive to poverty reduction and other aspects of human development, whereas the underprovision of the global public goods of ‘international financial stability’ or ‘climate change mitigation’ are likely to have the opposite effect. At present, there is no body mandated to keep an eye on the public domain in order to ensure coherence among the global public goods, and a structure and functioning of the domain that generates net benefits for all—the global public. The global public domain today is an ‘orphaned’ policy space.5

See, on the fractured nature of global governance in finance, energy, health and the environment, respectively, Elson 2012, Dubash and Florini 2011, Kickbusch and Gleicher 2012, and Biermann et al. 2009; and on the innovative and experimental dimensions of the current multiplication of new, additional international mechanisms of cooperation, Kaul and Conceição 2006, and Kaul 2013.

In fact, it is still quite rare to find scholars discussing issues pertaining to the structure and functioning of the public domain. A rare exception is Drache (2001). It is even rarer to encounter a discussion on the global public domain. If being employed, the term ‘global public domain’ tends to refer to the fact that decision-making on global issues now is increasingly a multiactor process (see, for example, Ruggie 2004 and Stone 2008). This paper uses the term to refer to the ‘things’, i.e., the global public goods, contained in the global public domain.

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Box 2: Defining the global public domain According to Drache (2001), the term ‘public domain’ is defined as the ensemble of things we have or experience in common. These can include tangible products like land or street signs, services like information made available to all, and conditions like peace and security, financial stability or climate change. Public goods are the main things in the public domain, which has a reach depending on the span of the goods’ costs and benefits. Global public goods are in a global public domain. As the provision of public goods, including global public goods, can change over time, the utility of the public domain in supporting economic growth and human development can also vary. Goods may be neglected, or, as in the case of impure public goods like the natural global commons, they may become overused. If well stocked, the public domain can serve as an important facilitator of growth and development. If composed of underprovided goods, it may pose threats and undermine growth and development. Throughout history, tension has existed between various political forces striving for making things more or less public or private. Today, there are also struggles over the global public domain, and how deep it should reach into and overlay the national and regional public domains. In today’s multiactor world, the public domain has become less coterminous with the economic activity of the state in the public sector. Although the global public domain concerns all, no one is yet in charge of it, acting as a trustee to alert us if gross imbalances arise between the public and the private, or the national, regional and global. Establishing, as proposed in this paper, a UN Global Stewardship Council, composed of independent, eminent personalities, could perhaps fill this policy-making void. Source: This box draws on Arthurs 2001, Dulong de Rosnay and De Martin 2012, Drache 2001, Pollock 2006 and Stone 2008.

The systemic source of today’s vulnerability: A lack of incentives for states to engage in international cooperation The forgoing analysis suggests that vulnerability today is, in part, perhaps even primarily, an outcome of the present systems of governance, nationally and internationally. To the extent that it is of a systemic, as opposed to an idiosyncratic, nature, its roots reach down to the core of the present world order: the repartition of the world into individual sovereign nation states, which has been here identified as the most basic layer-two macro-risk of vulnerability. Reinforced by the greater global mobility of market actors, and due to the relatively limited role accorded to states since the 1980s with the shift in pol1 Fostering Sustainable Human Development: Managing the Macro-risks of Vulnerability

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icy orientation towards economic liberalization and privatization, governments’ reluctance to cooperate has not only engendered national and international imbalances, but also increasingly upset the relations between, for example, public and private, the longer and the shorter term, and rich and poor. Without effective management and resolution of macro-risks, fighting just against the direct threats of vulnerability will, most probably, prove to be an uphill, inefficient and ineffective battle, and will not lead to sustainable poverty reduction and human development. Is the world caught in a global prisoners’ dilemma, where all states focus on their goals, but hesitate to embrace international cooperation that leads to more balanced growth and development, and a more adequate provisioning of global public goods? The next section answers “no, not necessarily.” Reform measures could be implemented without much further delay.

Policy options for international cooperation more compatible with national sovereignty In light of the multilayered set of factors causing vulnerability that were identified above, it is useful to begin removing factors from the bottom up. Accordingly, the following discussion will focus on three possible reform steps pertaining to the layer-two macro-risks: 1) the forging of consensus on a notion of ‘smart’ and mutually respectful sovereignty to facilitate states’ escape from the ‘sovereignty paradox’; 2) the creation of a Global Stewardship Council under the umbrella of the United Nations to enhance management of the global public domain; and 3) the introduction of global issues management into national and international governance systems to bridge the foreign and domestic divide, and facilitate a more concerted and integrated provisioning of global public goods.

Escaping from the ‘sovereignty paradox’: Forging global consensus on a notion of ‘smart’ and mutually respectful sovereignty Given that one of the root causes of today’s structural vulnerability is the ‘sovereignty paradox’, it can be conjectured that persuading policy makers and their constituencies to break out of this situation requires defining a rationale for global public policy that is compatible with sovereignty.6 This entails two main steps. First, it must be established that in policy areas, especially those involving interdependence challenges, it is rational and feasible for states to engage in 6

This section draws on Kaul 2013.

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effective—and to that end, fair—international cooperation. This could be done, for example, by undertaking more studies on the economics and politics of particular global issues, such as the Stern Review (Stern 2007), and complementing them with region- and country-specific analyses. Such studies could be useful in demonstrating, in a disaggregated way, the costs and benefits of resolving global challenges in a timely and decisive manner, as opposed to letting them linger and become exacerbated. From such cost/benefit analyses undertaken to date, it appears that, in many cases, swift and resolute action would often be cheaper than a delayed response. Second, based on such evidence, it would be useful to forge global consensus on a notion of mutually respectful sovereignty. This notion would combine the pursuit of national interests with respect for the sovereignty of other states, and, therefore, would entail respect for planetary boundaries and other global systemic balances (De Brabandere 2012, Ţuţuiana 2013). Such a consensus might go a long way in reassuring countries that other nations will bring similar strategies with a positive orientation to the negotiating table (see box 3). If framed in this manner, sovereignty would allow policy makers to engage in global public policy-making without being concerned about betraying—or being perceived as betraying—national interests. It would then be clear that sovereignty, as such, is not the question. On the contrary, strategies of exercising sovereignty would be adjusted to current policy-making realities, notably the challenge of interdependence, in order to safeguard national sovereignty. In other words, a rationale for global public policy that is compatible with sovereignty—addressing global public goods and providing oversight of the global public domain—would state that mutually beneficial international cooperation is the preferred strategy for responding to interdependence challenges, because, first, it fosters effectiveness and maintains national policy-making capacity, and second, it shows respect for the national concerns of others, and reinforces the norm of mutually respectful sovereignty. This norm, if widely adopted, would protect countries against negative spillovers from abroad. It seems unlikely, however, that studies and research demonstrating the benefits of international cooperation would jolt states out of their ‘sovereignty paradox’. What is perhaps needed in addition to this is either a major, catastrophic event—a scenario that ought to be avoided—or strong public pressure, notably at the national level, as it is here where politicians have to stand for election. Citizens have to become more informed about global interdependence and demand of politicians more willingness to cooperate. The social media revolution and the globalization of supply chains could play an important role in fostering such citizen awareness and empowerment (see Birdsall 2013). 1 Fostering Sustainable Human Development: Managing the Macro-risks of Vulnerability

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Box 3: ‘ Smart’ and mutually respectful sovereignty: A collective approach to safeguarding national policy-making capacity International cooperation is often seen as undermining states’ policy-making sovereignty. No doubt, it often does, and therefore, governments tend to shy away from global, concerted policy responses, even on transnational challenges that no single nation can effectively and efficiently address alone. In the absence of such a cooperative approach, global challenges linger unresolved, potentially making everyone worse off. Thus, while confronting global challenges that entail policy interdependence, it would be in the enlightened self-interest of all concerned states to offer to cooperate, and to do so on fair and mutually beneficial terms. This requires mutual confidence and trust, and, therefore, a shared commitment among states to act responsibly, towards their own countries by protecting them against possible negative spillovers from abroad, and towards other nations, because non-cooperation could undermine their welfare and well-being. In other words, exercising smart, respectful sovereignty means pursuing one’s own national interests in a way that respects the sovereignty of other nations, as well as global balances and planetary boundaries. Just as states’ commitment to collective security strengthens the inviolability of national territorial borders, their commitment to policy-making sovereignty practised in a mutually respectful, responsible manner could potentially be the best way of securing national policy-making in areas of policy interdependence. Source: Based on Kaul 2013.

Once the political will to engage in more effective international cooperation is generated, the United Nations, the body that has granted countries their recognition as sovereign states, would also perhaps be the most obvious choice as a forum for countries to commit themselves to the notion of a smarter, respectful and, thereby, also more globally responsible sovereignty. If such a notion were to find traction and support, and states could trust each other and feel confident enough to try and abide by this norm, everyone would witness their sovereignty being strengthened. Moreover, under today’s conditions of economic openness such a conceptualization of sovereignty would conform to the UN Charter and its principle of non-interference to a greater degree than the current policy of lax externality management, in practice. In fact, ‘smart’ and mutually respectful sovereignty could be seen as one of the key missing global public goods at present, and, hence, as a core ingredient of a more secure, yet dynamic and prosperous future world. 12

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Yet for consensus to emerge on such a norm, international policy-making would need to become more open and participatory. The ‘three P’s’ of global public policy-making would need to be properly matched: publicness of consumption, publicness of decision-making, and publicness—in other words, fairness—in the distribution of benefits and costs.

Assigning responsibility for keeping an eye on the global public domain: Creating a UN Global Stewardship Council When national policy makers or diplomats appear at the international level for multilateral negotiations, they are quasi ‘private’ actors. For the most part, they tend to represent and pursue national interests, which, from a global perspective, constitute particular interests that may or may not overlap with global concerns and priorities. Therefore, little, if anything, would perhaps be gained towards enhancing management of the global public domain by creating yet another new multilateral body, however high level. This lesson can be drawn from the experience of the Group of 20 leaders meetings to date. What might better serve the promotion of a more coherent, fairer global public domain would, perhaps, be the creation of a Global Stewardship Council under the umbrella of the United Nations. Such a council could be a standing body of eminent personalities, wise men and women, appointed in their individual capacities. They could be mandated to support the international community in creating and maintaining a global public domain that serves all people, in both current and future generations, in furthering their welfare and well-being, while ensuring respect for state sovereignty and the longer-term carrying capacity of the globe. The council’s role would be to scan global trends to assess whether or not the world is ‘in balance’, issues that require attention are getting resolved, and emerging concerns move, as speedily as possible, to policy agendas.7 Considering that various global risks are beginning to cluster, and that in a number of issue areas, including climate change, we are rapidly approaching criti7

Several studies have called for a revitalization of the currently defunct UN Trusteeship Council as a body to assist in the governance of the global natural commons. For an overview of these proposals, see, for example, Biermann (2012), who proposes the establishment of a Trusteeship Council for Areas beyond National Jurisdiction. The difference between the earlier proposals and the one set forth here is that: (1) the present proposal focuses not only on the natural commons but on global public goods more broadly and the global public domain as a whole; and (2) it suggests an independent, advisory body, not an intergovernmental entity. On the concept of public trust that underlies all the proposals, see also Turnipseed et al. 2012.

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cal limits, while concurrently undermining communities’ capacities to withstand disaster, the creation of a Global Stewardship Council would be urgent. By establishing it, UN Member States and the public at large would recognize that besides national jurisdictions, global policy spaces now exist. Given the res communis nature of these spaces, it would only be appropriate for the Global Stewardship Council not to be another intergovernmental body. By being comprised of independent personalities, its advice would be guided not by particular interests, but by what is good for the global public—all people, countries, regions and the globe as a whole. The only power that the members of the Stewardship Council would have is the legitimacy and trust that the world’s public would bestow on it based on its vision and foresight, as well as the neutrality and do-ability of its advice.

Bridging the foreign and domestic divide: Introducing global issues management Today, many issues are dealt with in a separate and disconnected way, with technical, social, economic, environmental, financial, national, regional and global aspects evaluated in isolation. Rarely are all of these brought together for a holistic view of related challenges. There is a tendency to treat private goods with much more respect than public goods. As far as the former are concerned, we have invented the institution of the firm: an organizational structure that pulls together the building blocks and requisite financing, enabling the desired product—for example, a pencil, show or car—to emerge (see Williamson 1985). In the case of public goods—global public goods being no exception— we often just express concern about their underprovisioning. In cases where national or business incentives are strong enough to create a provision network, for example, the network of international civil aviation, the good may actually be adequately provided. But, in other cases, where such incentives do not exist, the process of addressing concerns related to provisioning of a good may stop at the level of rhetoric, or remain spotty and incomplete, as discussed above. The primary reason for this is that, in most instances, nobody is mandated to manage, oversee, and facilitate the typically multifaceted and complex provision process. This, in turn, is due to the organizational design of governance systems, which are mainly structured along geographic and sectoral lines. As such, they are unable to deal with the complexity of global challenges. While many transnational sectoral and actor networks have emerged, the conventional foreign and domestic divide remains a major friction point in the provisioning of global public goods (see annex figure A.1). 14

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It would be desirable to introduce a ‘global issues focus’ as a new, additional organizational criterion in the existing framework of governance systems, and to appoint, nationally and internationally, global issue managers. They could oversee the coming together of global public goods and nudge all concerned actors—at all levels, and in all sectors, public and private—into action. The managers could also be charged with keeping an eye on the financing of global public goods, and offer periodic reminders to the parties involved that inaction is more expensive than timely corrective actions. Some tentative beginnings of such global issues management exist. Mention can, for example, be made of the UN Secretary-General’s high-level advisers on particular global issues, including the Special Representative for the Implementation of the International Strategy for Disaster Reduction,8 or the UN Framework Convention on Climate Change Secretariat.9 Yet for global issues management to work effectively, the role of issue managers in relation to concerned legislative and operational bodies needs to be more precisely clarified. Moreover, ‘missing’ managers need to be appointed. Overall, their work should be coordinated. If, for example, the managers for global climate and disaster reduction could work in consultation and cooperation with those for renewable energy, water and food security, synergies among these issues could be more fully developed and faster progress achieved in all of them.

More incentives for states to cooperate The forgoing reform steps could significantly enhance states’ willingness to engage in fair and effective international cooperation. They would gain powers to intervene, individually and collectively, in redressing imbalances that generate some of today’s vulnerabilities. Change along these lines might help avoid the costs of future crises. There might be a real chance for the world to escape from the current ‘bad’ policy equilibrium—and relatively soon. More effective multilateral cooperation aimed at controlling the layer-two macro-risks would reduce the layer-one risks, which, in turn, would limit the severity and maybe also the number of vulnerability threats.

The list of the Secretary-General’s high-level advisers on global issues can be found online at: www.un.org/sg/srsg/other.shmtl/.

For the mandate of the UN Framework Convention on Climate Change Secretariat, see: https://unfccc.int/secretriat/.

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Conclusion This paper has explored the reasons for the growing signs of, and concerns about, vulnerability. Its focus has been on the systemic or macro-risks of vulnerability. The discussion in section I identified a main risk factor as the tendency of states to hold on to a strict conventional notion of sovereignty, even in policy fields where effective international cooperation would be the better way to tackle global challenges. They assume they are protecting their sovereignty, but in fact lose it each time that non-cooperation prevents the resolution of transnational problems. Accordingly, section II has offered reform steps that appear desirable and feasible. They are likely to foster globalization more compatible with sovereignty, and strengthen states’ willingness to be more forthcoming in terms of fair and effective international cooperation. Clearly, fostering sustainable human development will be an uphill battle, if not a futile effort, as long as the macro-risks of vulnerability go unchecked. The focus here on macro-risks is not to suggest that micro-risks of vulnerability—or risks peculiar to particular population groups or countries—matter less. Rather, the main message is that we need to focus on both micro-risks and macro-risks, strengthened resilience, and reforms making it possible to have both globalization and sovereignty. Progress along these lines appears to be feasible. Much is already happening with respect to the strengthening of resilience. Councils with a composition and mandate resembling the Global Stewardship Council proposed here have emerged in several countries. Examples include: the World Future Council; Finland’s Committee for the Future; Foresight in the United Kingdom; and the commissions or commissioners for sustainable development in Brazil, Canada, Chile, Germany, Hong Kong and New Zealand. Mention can also be made of the constitutional references to future generations in Albania, Belgium, Bhutan, Bolivia, Burundi, Cuba, Ecuador, France, Germany, Kenya, Poland, South Africa and Sweden (Oxford Martin Commission 2013, pp. 46-47; United Nations 2013, pp. 9-13). Evidently, reality is already moving towards greater balance and sustainability. The changes proposed here could be further steps along the path of tackling global challenges more effectively, and preventing vulnerability and human deprivation. Despite all the crises today, we possess enormous strengths to create a better future for all.

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ANNEX 1 Introducing public goods and global public goods Standard economic theory distinguishes between two main categories of goods: private goods and public goods. Private goods can be parcelled out and made excludable, so that clear property rights can be attached to them. An example is a bicycle or car. Public goods, by contrast, are non-excludable, meaning that everyone shares their effects (benefits or costs). Examples are peace and security or climate stability. If a good is to be purely public, it must be both ‘non-excludable’ and ‘nonrival’ in consumption—in other words, an additional consumer of the good does not reduce its availability for others. Examples are peace and security. If a good has only one of these characteristics, it is impurely public. The atmosphere, for example, is non-excludable, but rival in consumption, because pollution can change its gas composition and contribute to global warming. Patented pharmaceutical knowledge illustrates a non-rival good, whose use has, at least for a limited period of time, been made excludable. It falls in the category of an impure public good as well. The public effects of a good can be of different geographic reach—local, national, regional or worldwide—and can span one or several generations. Global public goods have benefits or costs of nearly universal reach, or potentially can affect anyone, anywhere. Together with regional public goods, they constitute the category of transnational public goods. The term ‘good’ is used here as a short form for goods or products as well as services and conditions that exist in the public domain. Moreover, publicness and privateness are often not innate properties of a good, but the result of social or political choice. For example, land can be freely accessible to everyone, or fenced in and made excludable. Globalness is a special form of publicness, and in most cases, results from a policy choice, for example, a decision to promote free trade or financial liberalization. While some public goods are referred to as ‘final goods’, others constitute ‘intermediate goods’, because they serve as inputs into the provision of other public goods. Green technologies, for example, could be inputs for the final good ‘climate change mitigation’, and international agreements on enhanced national financial regulation could be an input into international financial stability. Importantly, many public goods, including global public goods, are not only public in consumption, but, as the forgoing examples already indicate, also public in provisioning. This means, in order for the final good to emerge, a complex set of multiactor and multilevel interventions is required, as shown in the figure 1 Fostering Sustainable Human Development: Managing the Macro-risks of Vulnerability

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below. In particular, the global public goods, whose provisioning calls for such a so-called ‘summation process’, tend to entail policy interdependence among countries. These goods, therefore, call for effective, and, to this end, fair—meaning open and mutually beneficial—international cooperation.

Figure A.1: The provision path of a summation-type global public good Global public domain Regional public goods

➐

Global public goods

Intermediate global public goods

➋

Voluntary cross-border collective action (CSOs, GPPPs)

➐

➐ National public goods 1,2, …200 countries

➐

➍

➋ ➎

➎ Households and firms

➊

➌ ➊ ➏ Governments

➌ ➊

Interest groups

Multilateral global and regional organizations

➍

➊ Incentives

➍ Political Pressure

Encouraging actors to deliver direct and indirect inputs or to change behavior to account for social concerns

➋ Opportunity

Offering households and firms the possibility of consuming goods and services that generate externalities that enhance the provision of the public good

➌ Demand for international

cooperation Reflecting national preferences for cooperation beyond borders

Lobbying governments to fund or deliver goods

➎ Consumption

Consuming goods and services made available to enhance the provision of the public good

➏ Coercion

Compelling individuals and firms to change their behavior to account for social concerns

➐ Externality

Emerging as a result of individual action

Source: The figure is taken from Kaul and Conceição 2006, p. 14. For further reading, see also Barrett 2007, Kaul et al. 2003 and Sandler 2004.

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Kaul, I. 2012. “Global Public Goods: Explaining Their Underprovision.” In E. U. Petersmann, ed., Multilevel Governance of Interdependent Public Goods: Theories, Rules and Institutions for the Central Policy Challenge of the 21st Century: 41–60. Florence: European University Institute. _____. 2013. “Meeting Global Challenges; Assessing Governance Readiness.” The Governance Report 2013: 33–58. Oxford: Oxford University Press. Kaul, I., and P. Conceição, eds. 2006. The New Public Finance: Responding to Global Challenges. New York: Oxford University Press. _____Kaul, I., P. Conceição, K. Le Goulven and R. U. Mendoza, eds. 2003. Providing Global Public Goods; Managing Globalization. New York: Oxford University Press. Kennedy, D., and J. Stiglitz, eds. 2013. Law and Economics with Chinese Characteristics: Institutions for Promoting Development in the Twenty-First Century. Oxford: Oxford Universty Press. Kickbusch, I., and D. Gleicher, eds. 2012. Governance for Health in the 21st Century. Copenhagen: WHO (World Health Organization) Regional Office for Europe. Kiddell-Monroe, R., J. Iversen and U. Gopinathan. 2013. “Medical R&D Convention Derailed: Implications for the Global Health System.” Journal of Health Diplomacy, 12 June. Mason, P. 2013. Why It’s Still Kicking Off Everywhere: The New Global Revolutions. London: Verso. MunichRe. 2013. NatCatSERVICE. www.munichre.com/dere insurance/business/non-life/georisks/ natcatservice/default.aspx/.

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Von Braun, J., and G. Tadesse. 2012. “Food Security, Commodity Price Volatility, and the Poor.” In M. Aoki, T. Kuran and G. Roland, eds., Institutions and Comparative Economic Development: 298–312. Houndmills, Basing-stoke, Hampshire: Palgrave MacMillan. WHO (World Health Organization). 2012. The Evolving Threat of Antimicrobial Resistance: Options for Action. Geneva. Williamson, O. E. 1985. The Economic Institutions of Capitalism. New York: The Free Press. World Customs Organization. 2013. Illicit Trade Report 2012. Brussels. World Economic Forum. 2011. Water Security: the water-food-energy-climate nexus. Washing-ton, DC: Island Press. ____. 2012. Global Risks Report. Geneva. ____. 2013. Global Risks Report. Geneva.

Inge Kaul is adjunct professor, Hertie School of Governance, Berlin, and former director of the offices of the Human Development Report and Development Studies of the United Nations Development Programme (UNDP) in New York. She has published widely on issues of global governance and the financing of international cooperation. She was the lead editor of Providing Global Public Goods: Managing Globalization and The New Public Finance: Responding to Global Challenges, and co-authored The Governance Report 2013. She can be contacted at inge-kaul@ t-online.de; see also www.ingekaul.net/.

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