A Study On International Public Finance

Currently, our country has entered into the new stage of seeking sustained growth given globalization conditions form the old stage of merely pursued domestic economic growth, the new development stage can be called economic globalization. National finance is playing a very different role than before in economic globalization, at this moment principals and means of finance are faced with new problems and challenges. Firstly, the challenge is the insufficient provision of energy resources. In recent years, the development of our country's economy and society has encountered one of the most severe choke points is inadequate resources. So the sustained development of economy objectively needs distributing resources from the whole world, which depends on international cooperation and coordination. It is obvious that the public spending of finance has extended to the seven seas. Secondly, the challenge is the changeable environment of international trade. Along with our country's economic development is more dependent on international trade, economic and social development is more and more sensitive to the changeable environment of international trade. It requires that financial policies of government must proceed from the considerations of the environment of international economy and comprehensively think over the relation between the public environment construction in policy level of employment policies, industrial policies, social stable policies, etc. and the environment of international trade. Thirdly, the challenge is from the risk of global circumstances and economy. Globalization increases various economic and social risks and linkages of different countries' economy, which makes externalize the origin of risks and adds uncontrolled factors, and which means the external effect of a country's macroeconomic policy is increased and the balanced development of the national economy can't be realized merely depending on domestic financial policies and monetary policies. Thereby, globalization not only guides China into the global risky social system, but also breaks the traditional national or regional borderline of the provision and distribution of public service and public resources, the internationalism and globalization of financial actions are inevitable.As a core component of international public finance theory, global public goods has been a new concept since the mid 1990's, which extends the public goods to the global scope and embodies the purpose of the correction of market failure and the realization of cooperation and development. So the thesis selects the angle of view of global public goods and reanalyzes the income and expenses and political coordination mechanism of international public finance surrounding the production and provision of global public goods.The logic train of thought of the thesis increases progressively at each level, it first constructs the theoretical system and fundamental framework of the research on international public finance, and then indicates that public finance under the globalization frame has already extended the situation which get to the heart of the single country, and public finance includes almost all aspects of the international and domestic demand in order to confront the globalization challenge. And it is about how the government independently and collectively introduces the public and private capital to the global public policy challenge and public finance is new public finance for the purpose of supplying global public goods. Later this thesis centers on global public goods analyzing how to prepare international public financial resource for the provision and financing to it. Lastly the thesis takes the goal of seeking maximum national interest in the win-win manner and researches China's countermeasures answering the challenge of global public goods. Based on above logic system, the paper comprises introduction, straight matters(six chapters) and concluding remarks.Chapter One: Introduction. Firstly, this chapter expounds and defines the title's background and meaning as well as some key conceptions related to the background. The notional component contains different dimensional definitions of "Globalization" and national inside and outside probing into the meanings of "Economic Globalization", and elaborates representative theories of "Regional Economic Integration". It particularly introduces the general trend of world economy development which is the economic globalization and regional economic integration, consequently establishes the era setting and theoretical basis for giving birth to the theory of international public finance. And it points the connection between globalization and global public goods. Secondly, the chapter arranges for the content and framework of this thesis. Thirdly, it lists adoptive research methods which are that normative analysis is combined with positive analysis, qualitative analysis is combined with quantitative analysis, logic analysis is combined with historic analysis. And it points out innovative parts and shortages: first, research develops in an innovative angle of view. This thesis brings forward getting to the heart of global public goods to analyze the theory of international public finance under economic globalization and international economic integration situation. And it extends research scope of the theory of international public finance using developmental viewpoint over again (for instance, international finance, international trade, international environment, international communication network can be brought into the research scope), and newly constructs the income and expenses system of international public finance. Secondly, the research on the theory of global public goods' provision is innovative. The theory of global public goods is research view and scope of public goods theory expanding in open economy system. And it is the intercrossing theoretical research on several subject domains of international public sector economics, welfare economics, development economics, international relations etc. The public choice provision decision of global public goods, financing mode, institutional arrangement, the follow-up efficient management of the international supply agreements are relatively forward research task. The paper researches the theory of global public goods' provision in three innovative aspects: firstly, it applies international cooperation theory to analyze the cooperation supplies of global public goods. Secondly, it applies incentive mechanism theory of management and economics to analyze how to encourage individuals' supplying actions. Thirdly, it applies public finance theory to analyze financing problem of global public goods' provision. Thirdly, the research methods are innovative. The thesis sets up several dynamic game models(such as correspond game, assurance game, persuasion game, cooperation game, weakest-link game, best-shot game, minimal threshold game etc.) and designs incentive mechanism given asymmetry information conditions to probe into how to implement effective organization management among countries, how to offer effective incentive to spur more countries participating in the provision of global public goods and how to design financing incentive mechanism to reveal real preference aiming at different properties of supply aggregation technology of global public goods. Above illumination establishes key and orientation for following research.Chapter Two: Theoretical analysis of the research on international public finance. The first section demonstrates financial issue in the economic globalization takes on internationalism. It mostly results from the foundation of financial activity is market economy which is open, and national financial activity necessarily contacts with other countries' financial activity through international economic association, thereby which arises mutual influence and harmony. Based on it, the academic research on the international financial issue in macro and micro point of view has made important progress, especially the theory of international tax competition and coordination among microeconomic units.Section two reviews and summarizes the domestic and overseas research on theory of international public finance, indicates that these theoretical research evolves surrounding two definitions of international public finance. The first definition deems that international public finance identical to "international taxation", which just analyzes and discusses various connections generated when national finance deals with international association; The second definition illuminates international public finance issue from public economics view and deems "international public finance" existing as an international pubic economic financial entity, which forms a kind of new conception different from "international taxation" in nature. The second definition represents the evolvement trend of the theory of international public finance. And then the section constructs the basic frame of international public finance using Musgrave, Rosen etc. research on international financial income and expenses system: A Introduction; B The coordination theory of international public financial income and expenses: a The coordination of international pubic income, b The coordination of international pubic expending; C Finance federation and finance integration; D International regional financial policy.Section three discusses the functions of international public finance: function of resource allocation, function of income distribution, function of economic stability, and the three functions bring into play via global public goods.Section four concludes form the evolvement of the theory and practice of public finance: international public finance is public sector economics under the globalization framework in nature, is new public finance about how the government independently and collectively introduces public and private capital to the global public policy challenge to provide global public goods, and its development trend inevitably centers on global public goods.Chapter Three: Global public goods-evolved theory of public goods. Firstly, the section sums up the traditional theory of public goods and points out the current theoretical development focuses on supply entities, mechanism, efficiency and benefit space and econometric and international stream has been advanced research on the theory of public goods. Then the chapter defines the concept of global public goods: it will benefit more than one group of countries and will not discriminate against any population segment or generations and it will meet the needs of the present generations without jeopardizing those of the future generations at present and in the future. Later the chapter analyzes the characteristic, typology of global public goods and the difference form national public goods. The typology of global public goods comprises five categories: the first category of global public goods is classified by Kaul from the supply and using angle into: Natural global commons, Human-made global commons, Global conditions; The second category of global public goods is classified through the triangle of publicness into: global public goods' decision-making is not completely public, but consumption and the distribution of benefits are; global public goods' distribution of benefits is not completely pubic, but consumption and formal decision-making are; global public goods' distribution of benefits and decision-making are not completely public but consumption is; a regional public good with growing externalities-making this good more public in consumption, globally; The third category is classified in terms of the extent to exclusive and rival into: pure public goods, impure public goods, club goods, joint goods; The fourth category is classified in terms of aggregation technologies into: Summation global pubic goods, Weakest-link global pubic goods, Best-shot global pubic goods, Weighted sum global pubic goods; The fifth category is classified in terms of the production process into: continuous, discrete, binary global public goods. Lastly, it illuminates global public goods is public goods evolving given globalization conditions. This part offers theoretical basis and research orientation for the following concrete international public finance income and expenses study on providing strategy and mechanism of global public goods.Chapter Four: Distribution aspect of coordinating international financial expenditure-research on the provision problems of global public goods. This chapter parses the provision of global public goods all-around, which consists supplying units, mode, affecting factors, means of evaluating the profile of provision and so on. The provision is faced with terms of absent world government, so the choice of supplying units possesses particularity. In reality, supreme countries, every country's government, international organizations, regional countries alliance, private and transnational corporations mutually cooperate and synergy to provide public goods. The supply modes include free or payable, direct or indirect, direct production or commission production. And that the number of countries participating in providing global public goods, different properties of productive process, different aggregation technologies of global public goods all shall affect the overall provision level of public goods. After this, the chapter brings forwards means of evaluating the profile of provision and makes use of the means to analyze the cost and benefit pertaining to provision of several representative global public goods (international financial stability, multilateral trade regime, global climate stability), finally probes into the reasons why international financial expenditure can not provide adequate global public goods. Owing to the problem of provision actually is the problem about how to effectively distribute global resource, so it inevitably comes down to global public expending coordinated among countries, which is the distribution aspect of international financial expending coordination. The purpose of analysis is in the interest of finding out how to raise global public income.Chapter Five: The new domain of coordinating international financial revenue-research on financing mechanism of global public goods. Firstly, this chapter analyses the characteristic of financing to provide global public goods other than that of general public goods; Secondly, some indispensable elements attributed to production process to supply global public goods are clarified to ascertain corresponding financing channels, and an idealized "global public goods delivery system" is constructed; Thirdly, on evaluating international financial needs basis corresponding steps to finance and various financial financing channels of global public goods are studied. The feasibility of various financial financing channels is compared to conclude that internalizing externalities (particular international taxation and fee) and public capital resources (particular international capital) for financing global public goods are most in favor of providing sufficient capital to production and consumption of public goods. Innovative financial financing modes are analyzed in terms of classifications belonging to the two financing channels. Lastly, financing incentive mechanism is designed according as various aggregation technologies of global public goods, and mechanism to reveal real preference for supply of global public goods is expected to institute for the purpose of resolving lacking incentive to finance.Chapter Six: Optimal strategy and institutional arrangement applied by international Cooperation to promote provision of global public goods. This chapter discusses the optimal strategy to improve the deficient provision of global public goods and how to arrange institution to ensure strategy implement. First it analyses efficient provision of different sorts of global public goods from economic point of view; Next it makes up theoretical equilibrium models of global public goods' supply and demand, which includes two countries model, more countries model, and the model of big country and small country's various influence on the capital yield in international capital market as well as the two kinds of countries' various effect on provision and consumption of global public goods; Again it selects six kinds of elementary games strategies adopted by countries participating in the supply of global public goods. There are prisoners' dilemma game, wit pigs game, chicken game, catching deer game, sex game and so on. And international cooperation is the optimal strategy to realize Pareto equilibrium for participating parts; Finally, the optimal institutional arrangement is found out to spur cooperation becoming dominant strategy, and prisoners' dilemma game, minimal threshold game(no refunds, no cost-sharing), minimal threshold game(refunds, no cost-sharing), minimal threshold game(refunds, cost-sharing) are used to explain the institutional arrangement method. Then some principles are thought to be obeyed during the institutional arrangement process.Chapter Seven: Research on China's countermeasure answering to global public goods challenge. The present interest in global public goods is driven largely by industrial countries and developing countries benefit little. Of course, it is in respect that most developing countries supply a few global or regional public goods, so they lack the capacity of using global public goods to benefit. If such status wants to be altered, developing countries must build national capacity to actively participate in providing global public goods. It needs effort taken from national and international level; Next considering our practice, it analyzes what strategies should be taken to provide global public goods under international cooperation background for China. China's foreign assistance and participation in international organizations and affairs have made great progress, which shows that Chinese government has all along actively supplied global public goods, certainly there exists shortage. For the future various means especial financial policy measure and instruments should be more utilized to furthermore penetrated into international cooperation and strive for more benefit for most developing countries. It needs China contributes more for the establishment of world new political and economic order. One side, China must actively attach itself to international financial and economic cooperation to boost sufficient provision of global public goods. China should continuously act on the multilateral and bilateral financial and economic cooperation and attach importance to integrate governmental financial functions and bring NGOs into more play. On the other hand, China must base itself upon East Asia regional financial economic cooperation to provide regional international public goods. Regional international public goods is effective complementary to global or international pubic goods, which means arrangements, mechanism or institution that service the region and suitable for the region. And the cost of regional international public goods is commonly shared by countries inside the region. As the biggest developing country in East Asia region, China should actively provide regional international public goods. The economic and financial cooperation mechanism of East Asia region begins after financial crisis in 1997. ASEAN "10+3", "10+1" and "Chiang Mai Initiative" represent the two cooperation mechanism. China can play a leading role to provide trade and economy, security, financial stability regional international public goods in the cooperation framework, and can get common profit from the provision. Especially given current global financial crisis conditions. China even more should make the following four aspects efforts: firstly, positively participating in global intervention in markets and international cooperation to answer up international financial crisis to provide global public goods; Secondly, adjusting to macroeconomic policies orientation and combination to realize the growth aim. In fact Chinese economic stable growth can dedicate to global and regional economic and financial stability. Thirdly, actively advancing CJKFTA course to create condition for thirteen countries' Free Trade Arrangements. Fourthly, dominating the construction of cooperation mechanism of East Asia currency.Concluding remarks. As a whole, most contribution of theory of international public finance consists: Firstly, international public finance expands research domain-from national to global. Secondly, international cooperation incentive was mostly explained by politics and moral ethic before whereas international public finance brings "selfish nature" into consideration to reconstruct international cooperation incentive mechanism. Thirdly, the theory of international public finance abroad uses various subjects for reference. In the future the evolvement of the theory of international public finance will be faced with three problems to be exactly settled: firstly, what is the optimal provision criterion of global public goods? "Samuelson conditions" based on national public goods can be applied to global public goods? Secondly, who ought to correct market failure and government failure? Thirdly, owing to differences among countries around the world exist, how to deal with the equity problem resulting from different preference to provide global public goods? Of course, if national public policy wants to give better attention to demand home and abroad and more flexibly be employed to maximize national interest, it is a long way to go, especially for developing countries at a disadvantage in international political and economical domain.