Presumably, you have now read all about what on earth the G20 is, and you care deeply. But what does it actually do?
The aim of the G20 is clear. The 2009 G20 Framework for Strong, Sustainable, and Balanced Growth states that members will “promote balanced and sustainable economic development in order to narrow development imbalances and reduce poverty”.
Launched at the 2009 Pittsburgh (US) Summit, this “Growth Framework” constitutes the matrix of policies in which 1) each G20 country makes commitments and to which each country is held accountable; and 2) G20 collective commitments are articulated and tracked.
Both of these functions are monitored through the IMF’s Mutual Assessment Process, which also charts different global scenarios in terms of growth, and rebalances in response to the action (or lack thereof) of the G20’s member countries.
The G20 does not bind any other country. But G20 countries do play a strong donor and governance role in many of the world’s key institutions.
These leaders’ commitments are decided during a long series of meetings between the different tracks of the G20, such as the sherpas, finance ministers and central bank governors, and many, many (oh, so many) reports commissioned from the World Bank and IMF.
Based on all this spadework, G20 leaders tend to make commitments laid out in the Final Communique. The G20 made a total of 282 commitments at the 2011 Cannes Summit (with the full list available here). The Washington Summit in 2008 usefully included an ‘action plan’.
Many of these actions are often issues of technical financial regulation, and are ongoing but also reactive to markets and politics. For example, Australia committed in Cannes to make “clear and credible fiscal consolidation plans to halve deficits by 2013 from 2010 levels, and to stabilise or reduce government debt-to-GDP ratios by 2016”, and the IMF is tracking this commitment.
But sometimes it is very difficult to find out how those commitments by member states are being implemented in any qualitative sense, and so academics and think tanks have attempted various ways to do so. There is a general view that more accountability is required.
Sometimes it is extremely clear what the G20 can do as the site of 84% of the world’s economic output - in a crisis, it can mobilise resources.
The London Summit mobilised $1.1 trillion to withstand the global financial crisis to restore “credit, growth and jobs”. This included $50 billion directly for low-income countries (LICs) through the multilateral development banks (MDBs), along with $5 trillion for a combined fiscal stimulus package.
But long-term strategic coordination between all members on some of the global issues has proven more difficult. The G20 has not been able to reinvigorate global trade and complete the WTO Doha development round.
Many financial regulation issues remain tough nuts to crack at the domestic level (and hard to communicate to a lay-audience).
Within the G20 development agenda from the Seoul Summit, many initiatives have either proved controversial, or remain at the initiative stage and have not led to action or commitment of resources.
I would nominate the development of an Anti-Corruption Plan and political support and pressure to ratify the UN Convention Against Corruption by all G20 members as a success.
A new initiative also has potential for both the G20 and developing nations. Produced at the request of the G20 and introduced at the G20 Finance Ministers’ meeting in Moscow, OECD’s Action Plan on Base Erosion and Profit Shifting (BEPS) offers a global roadmap that will give governments the domestic and international instruments to prevent corporations from paying little or no taxes.
If all the G20 countries endorse this plan, we could move some way towards decreasing transnational corporate tax evasion, but more would need to be done.
Controversy around implementation is not limited to the development agenda. G20 experts often speak of “mixed” and “uneven” progress about the G20 as a whole.
So should the G20 do different things?
Most commentators would like the G20 agenda narrowed to core macroeconomic coordination, rather than encompassing issues added to a large agenda.
On some important issues the G20 has shown leadership, but then has not followed through. The G20 asked Bill Gates to consider innovative financing for development in 2011, and his report recommended members adopt a Financial Transactions Tax (or so called Robin Hood Tax), keeping it on the G20 agenda (but barely).
Mexico introduced the concept of a ‘green growth’ agenda but generally the G20 has not adequately addressed climate and environmental sustainability issues, albeit with some attention given to fossil fuel subsidies. As the President of the World Bank Jim Yong Kim told the G20 in February 2013:
“I would be remiss in not highlighting the serious consequences to the economic outlook of failing to tackle the serious challenges presented by climate change. These are not just risks. They represent real consequences. I also know that issues around climate change do not typically come before Finance Ministers and Central Bank Governors. This, I firmly believe, is a mistake.”
Part of the debate is where the G20 could add value to such issues and where it is more appropriate that bodies like the United Nations, with universal membership, should keep the lead role in issues like climate finance.
In my view, the G20 should at least do no harm to poor people living inside its own member state borders, nor people living in pockets of extreme poverty in non-member countries, nor Least Development Countries (LDCs).
Beyond that, it can provide political pressure and mobilise resources to end stalemates that affect progress to the provision of global public goods (like fairer trade rules) in other fora.
The G20 should analyse, forecast, share, model good behaviour and pressure, and support mandates given to institutions with universal membership, especially where its actions affect poor nations excluded from the conversation.
But we shouldn’t be too hard on the G20. As we navigate global shifts in economic power we need to keep talking. As Mike Callaghan has written:
“The G20 has shortcomings, but it is an active forum of international economic consultation at the highest level. In a highly integrated global economy, cooperation and dialogue are essential.”
Susan Harris Rimmer is attending the G20 Leaders Summit in St Petersburg and will be a media correspondent for The Conversation.