Capacity-Building to Meet International Standards as Public Goods

UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION, 2006

By Peter Holmes, Leonardo Iacovone, Rungroge Kamondetdacha, Lara Newson

Abstract 

As the world becomes increasingly globalized, the role of national borders is changing and the governance of markets can no longer be seen as a local matter. This paper looks at one aspect of market governance, the provision of standards and the capacity to deal with standards for the global market, with particular reference to sanitary and phytosanitary (SPS) measures, which deal with food safety, animal health and plant protection. Standards are part of the architecture within which markets operate. On the face of it, they are quintessentially "public goods". According to economic theory, they may be undersupplied, especially if the costs of provision are borne in one market and some of the benefits fall elsewhere. This paper seeks to analyse the role played by standards and standards-related activities both in the world economy and in the process of economic development.

Although there is a strong public-goods aspect related to standards definition and compliance, there is also an element that is supplied through the market. The paper tries to analyse whether the balance between the public and private aspects of standards is likely to be correct, and where the scope for public-goods provision at an international level might be most in need of development. Based on some concrete case studies, the paper focuses on capacity-building-related activities and analyses the supply of and demand for capacity building based on proxies developed specifically for this study.

The paper also gives a preliminary measure of the shortfall in developing countries' capacity to cope with developed country SPS measures, which might affect their sales.

The paper uses a variety of indicators as proxies of "demand" for the public good of standards assistance. The "supply" of public goods provisions and related technical assistance programmes is proxied by the funds recorded by the online database of the Standards and Trade Development Facility (STDF), which assists developing countries in complying with SPS and related issues.