The Common Pool Dilemma of Global Public Goods: Lessons from the World Bank's Net Income and Reserves

The function of international organizations (IOs) as suppliers of international or global public goods (GPGs) has received increasing attention in recent years. But in a world with many claimants and limited resources, GPGs are more likely to have common pool properties than be pure public goods. The paper develops a joint-products model of public goods supply by international organizations, examining how specific institutional features of international organizations affect the supply of GPGs. The sources and distribution of the World Bank's net income—the single largest source of discretionary funds available annually to an IO—are used as the lens to analyze the issue. The paper examines the tension between control rights on net income (which reside primarily with nonborrowing shareholders) and the sources of net income, which largely lie with minority, borrowing shareholders. The analysis suggests that while the joint-product model of member-country support for international organizations has much merit, institutional features that were incorporated when these institutions were established sharply affect both the absolute magnitude and the distribution ratio of the benefit streams.