Author: Maria Wihardja, CSIS, Jakarta
In the upcoming G20 summit in Seoul, East Asian Pacific countries must be careful not to focus narrowly on their own regional institutions and issues. Instead, they must aim to bring momentum to the global economic recovery and reforms. The agenda must resist being sidelined by current European concerns, and maintain a focus on Asian economies as they move beyond the financial crisis.
The formation of the G20 is a delayed recognition of the shifting of the global economy to the East, especially with the Chinese economy’s emerging power. The cooperation of these economies represents an opportunity for significant global growth. Read more…
Author: Il SaKong, Chair Korea Summit Coordinating Committee
Since its inception in the mid-1970s, the G7 acted as if it were the informal global steering committee for global economic and financial issues. But over the last couple of decades many considered the G7 lacked political legitimacy because it did not include the major emerging players in the world economy. These critics rightly claimed that although the G7 was only an informal global steering committee, it needed to reflect the shift in global economic power that has taken place over recent decades.
Last November, in the midst of the unprecedented global financial and economic crisis, the G20 Summit—instead of G7—was held in Washington. Read more…
Author: Scott Snyder, Asia Foundation
As global leaders convened in Pittsburgh to address the global economic crisis for the third time in less than a year, there is cause for both optimism and a heavy sense of responsibility to sustain early signs of a global recovery.
Follow-up measures from Pittsburgh within the G20 will fall primarily to South Korea as the chair and host of G20 meetings during 2010 shifts from London to Seoul. This development will mark a significant symbolic turning point in global governance, as South Korea will be the first non-G8 country to hold those responsibilities Read more…
Author, Rajendra Abhyankar, Asia Foundation
For a country where job-creation has always been more important than wealth creation, the idea of a jobless recovery just does not exist. To meet the needs of its vast population, 65 per cent of whom are below age 35, the government is under constant pressure to create (literally) new jobs and succeeds by bringing in 12 to 15 million jobs each year. Yet, India is running to standstill. Hence the crucial importance of the National Rural Employment Guarantee Scheme (NREGA) that assures 100 days employment to every able-bodied person in the countryside. With the economic forecast looking up, the scheme has just been restructured to cover a larger segment of the population.
Author: Nina Hachigian, Center for American Progress & Bruce Jones, Brookings Institution
The agenda for this week’s meeting of the Group of 20 developed and developing nations is full, but when the leaders of all these countries sit down in Pittsburgh to discuss banking regulation, energy and poverty alleviation, one question will not be on the table—the question of who should be at the table in the first place.
Deciding which nations will sit at the global decision-making table is more politically charged than whether to tie bankers’ bonuses to the risks they take or whether countries can and should stop subsidizing fossil fuel consumption. Resolving which nations will try to forge consensus on these and other critical questions, however, is key to determining whether any resolving actually gets done.
Author: Jeffrey Frankel, Harvard
National leaders are meeting at the United Nations in New York to discuss climate change negotiations. Talks are continuing at the G-20 meeting in Pittsburgh. But hopes look very bleak for progress sufficient to produce at Copenhagen in December a successor treaty to the Kyoto Protocol. The biggest roadblock is the familiar game of ‘After you, Alphonse.’ The United States will not accept quantitative emission targets unless China, India and other developing countries do the same, at the same time. But the developing countries will not cut their emissions below the Business as Usual path (BAU) unless the rich countries go first.
Author: Andrew Elek
Last month, Arvind Subramanian published a valuable piece in the Business Standard, New Delhi in which he recommends that the G20 should promote increased international financing of international public goods, such as technology to help cope with climate change or raise agricultural productivity. He also recommends that the World Bank should devote a considerably larger share of its financing to this purpose.
The first of these deserves strong support, but it is not certain that reforming the World Bank is the most appropriate means of enhancing the funding of international public goods.
Author: Arvind Subramanian, Peterson Institute for International Economics
In the run-up to the G-20 Summit in London in April, China created a frisson of excitement by pushing for the use of Special Drawing Rights (SDRs) as an alternative to the dollar as a global economic currency. To be sure, China’s demarche was self-serving. It is also true that when China now talks, the world must listen. But the Chinese proposal was taken seriously because it had enough objective appeal and systemic relevance.
In all the discussions about the reform of the international economic architecture and the G-20 process, India’s predominant concern has been with getting a seat at the table. This desire for influence is appropriate and attaining it is long overdue particularly since existing international arrangements, especially at the IMF and World Bank, are outdated and inequitable. But acquiring influence cannot become an end in itself. ‘Influence for what’ is a question that India must continually ask.
Author: Shinji Takagi, Osaka University
The G-20 Summit of April 2009 called for a reform of the International Monetary Fund (IMF). Augmenting the IMF’s resources and making its lending more friendly to potential borrowers hit hard by the global economic crisis has been the easy part. More difficult to reform is the governance of the institution, which among others involves a reallocation of voices among the membership and an overhaul of its governance framework. Nevertheless, the Summit committed ‘to implementing the package of IMF quota and voice reforms agreed in April 2008 and call on the IMF to complete the next review of quotas by January 2011’ and agreed to give ‘consultation to greater involvement of the Fund’s Governors in providing strategic direction to the IMF.’
Increasing the voice and representation of new economic powers is important if the IMF is to maintain or restore relevance and legitimacy. In this context, what has been achieved in the 2006 and 2008 quota reforms is disappointing: the weight of the Asia-Pacific region has risen only by about 1.5 per cent, while that of Europe has hardly changed. The G-20 Summit called for an acceleration of the next round of quota reform but, given the nature of the voice reform as a zero-sum game, the pace of reform can only be incremental.
Author: Brad Glosserman
According to conventional wisdom, the global economic crisis is accelerating the transfer of power and influence from the West to Asia. The United States has been particularly hard hit by the downturn and America’s loss is China’s gain.
The Group of Eight industrialized nations, the traditional locus of power, has been fatally wounded. In the future, goes the argument, the most important forum will be the Group of 20.
If this analysis is correct, it suggests that another fundamental shift in global economic activity is due. Western demand will no longer serve as the primary engine of growth. Instead, Asian nations will abandon export-oriented economic models and embrace domestic consumption to generate growth. That will put in train another set of ‘knock-on effects,’ the most important being the development of social safety nets that no longer oblige their citizens to save so much of their income and instead encourage them to consume.
Authors: Hadi Soesastro and Peter Drysdale
Now that the dust has begun to settle, it’s time to assess British PM, Gordon Brown’s claim that the G20 Summit saw the creation of a new world economic order.
This was a remarkable event. In less than a year the leaders of a representative group of twenty the largest or most important economies in the world met for a second time to address the challenges of global economic crisis. They and their advisers have crafted a coherent set of strategies to turn the international economy around and to deal with the structural frailties that sent world markets into free-fall.
The crisis bears sobering witness to the interconnectedness of the global economy today. Open trade and open capital markets and the break-neck speed of the flow of ideas and technologies have delivered huge benefits through globalisation and lifted millions of people, especially in Asia, from poverty to relative prosperity on a scale of which there is no historical precedent. But, as we now see more clearly, this was also a global economy fraught with system risk, without institutions and structures of governance that gave proper attention to the global impact and repercussion of national policy strategies and market failures.
There are three major achievements out of London.
Author: Lex Rieffel
Five Asian countries will participate in the G20 London Summit: China, India, Indonesia, Japan, and South Korea. The United States will undoubtedly be the most important player in the meeting, but there is a strong case to be made for Asia being the second most important. A deal for the IMF is likely to be extremely difficult. But a deal without the full support of Japan, China, and India will probably not provide the ﬁllip to conﬁdence that the London Summit must deliver to put the world ﬁrmly on the road to recovery.
In this article, I look at Asia’s perspective on the summit meeting and the global financial crisis, noting the core issues surrounding agreement on increasing resources for the IMF.
This article is part of the Brookings Institution‘s series on the G20, entitled ‘The G-20 London Summit 2009: Recommendations for Global Policy Coordination‘, and may be found here.
Author: Yiping Huang, Crawford School, ANU and Peking University
People’s Bank of China Governor Zhou Xiaochuan’s article on the international currency system last week signaled an important departure in Chinese policy thinking. Since the outbreak of the U.S. financial crisis, Chinese leaders had maintained that promoting a stable domestic economy was China’s best contribution stabilizing the world economy.
Just before the G20 Washington Summit, the State Council hastily announced a stimulus package of CNY4 trillion, about 16 per cent of GDP in 2007, to boost domestic demand. But China was much more reserved on international policy issues. This strategy was consistent with the strategy enunciated by Deng Xiaoping: focus on developing the economy but keep a low profile in international affairs. Read more…
Author: Hadi Soesastro, CSIS, Indonesia
East Asian members of the G20 must participate strategically in this emerging global forum. They need to make sure that the G20 can produce policies and actions that will help bring the global economy out of the current crisis as soon as possible. Existing international institutions have been helpless in dealing with the issues the world now confronts and are in dire need of major reforms. There is now no better forum than G20. Essentially, it will act as a ‘steering committee for the world economy’, as Barry Eichengreen aptly said of the G20, and this forum should now replace the G7 or G8 for good.
Yet the G20 is still very fragile. In part, this is due to its ad hoc nature. But it also suffers from problems of legitimacy in respect of how its membership is being determined. The problem has deepened with the inclusion of a few additional participants at the coming London Summit: why they and not others? The European members of the G20 are facing the greatest challenge from fellow Europeans on this issue although the EU already has a seat at the table.
Author: Andrew Sheng
We are seeing a change all over Asia. Thanks to Asian giants like Gandhi, Nehru, Mao and Deng, the revival of India and China is changing the 21st century.
If we were to take a grand macro-historical perspective, with India and China both growing at more than 8 per cent per year, whilst the G-3, US, Europe and Japan are growing at less than 2 per cent a year, the relative power between the mature economies and the emerging markets is changing dramatically.
Angus Maddison projects that, by 2018, China will overtake the USA as the largest economy in the world, with India as number 3. By 2030, he estimates that Asia (including Japan) would account for 53 per cent of world GDP, whereas the US and Europe would only account for 33 per cent.
If this were the case, the global financial architecture would have to be significantly different from the present.