From G8 to G20: Towards Global Governance? Part II
3: What went wrong?
From the end of the 1990s, the share of the “old world” (mainly the West) in the world economy fell sharply, while the share of new countries increased. From 1993 to 2008, the G7 share of the world economy (measured in GDP) fell from 68 to 53%, while the share of the new G20 countries increased from 12 to 21%. For China alone, the share increased from 2 to 7%. In total, the G20 countries had a share of the world’s GDP in current USD of 75% in 2007. The share of the world’s population was 60%.
This change in the world economy, combined with an ever stronger focus on the development dimension of international politics, led the G8 to gradually expand its meetings with other participating countries. From the Gleneagles meeting in 2005, this was an important component. At the G8 summit in Aquila, Italy in 2009, 18 countries participated as observers, of which 14 were developing countries. The dialogue with important developing countries was also confirmed through the aforementioned Heiligendamm process after the G8 summit in 2007.
According to ALLCITYCODES, the G20 was established in 1999, after experimenting with other groups in up to 33 countries. In the wake of the Asian crisis of 1997, there was a need for stronger global coordination in the economic and, most of all, the financial area. The G20 was therefore established as a forum for the countries’ finance ministers, which met once a year until 2008. Following the development of the financial crisis in 2008, a summit was convened in Washington in November 2008. This was followed by new summits in London. , June 2009, and in Pittsburgh , September 2009. In 2010, the G20 will have two summits, followed by annual meetings from 2011.
4: The G20 has already led to results:
- The G20 has contributed to agreeing to face the financial crisis with a more expansive economic policy (increasing state budgets, often with large deficits in some cases) rather than resorting to protectionism and crisis solutions at the expense of the neighbor. This has been largely successful: approaches to protectionism have been the exception rather than the rule.
- The G20 has adopted a plan to promote stability in international financial markets and replaced the FSF (Forum for Financial Stability) with the newly established FSB (Council for Financial Stability). While about ten countries governed the FSF, the FSB’s member countries have been expanded to include all G20 countries.
- The G20 has also promised that the locked round of negotiations in the WTO (World Trade Organization) will end in 2010. However, it remains to be seen whether this will succeed; If India and the United States could not agree on the WTO, why should they join the G20?
Also for the G20, there will certainly be a debate about talk versus action – about representativeness, legitimacy and democracy versus efficiency. Some of the measures for financial management take place by initiating lengthy processes and committee work where there is a long way to go before the concrete results. Regulating international finance is not easy at all, and there is a clear risk that some of the initiatives will run out of steam. Nevertheless, the first impression is that the G20 has shown action, and that increased membership has made the organization a heavier and more legitimate player than the G8 was.
5: Who can join?
The G20 is a self- appointed group that is not elected by anyone but themselves. How fair is this selection? Foreign Minister Gahr Støre has mentioned that the Nordic countries could try to get a place in the G20. Is this an opportunity?
There are no formal criteria for selecting countries for the G20, but the countries’ position in the world’s financial system has played a role in addition to the population and representation from different regions (see www.g20.org ).
If we rank all the countries of the world on the basis of their shares in the world’s GDP, trade and population, we find that in each case there are a number of countries that have been “bypassed” in that they are larger than some G20 countries.
For trade, many rich countries in Europe have been bypassed, and for population, many poor countries are larger than some of the G20 countries. The G20 is most “representative” of GDP, especially for price-adjusted GDP where no G20 country is ranked lower than number 23. This means that only four countries have been “bypassed” in the sense we have mentioned. The table shows which ten countries would be the first on the list if the G20 were to be expanded on the basis of such size criteria: