Hugh Jorgensen is a Research Associate in the Lowy Institute's G20 Studies Centre.
While much of the G20 commentary in early 2013 has tended towards a diagnosis of doom for the forum, to borrow from Mark Twain, the reports of the G20's death 'are greatly exaggerated'. The latest G20 Monitor from the Lowy Institute's G20 Studies Centre responds to some of the common criticisms leveled at the G20, namely that it is ineffective, illegitimate and/or ill-equipped to tackle the complexity of issues that have stifled the post-GFC economic recovery. Here are some key takeaways:
- Achieving anything like a meaningful outcome when you have twenty world leaders in one room is very difficult. Yet to criticise the G20 is to implicitly benchmark it against some alternative. If the comparison is with a Platonist-like 'ideal G20 outside of time and space' then the G20's record is poor. But when compared with past efforts at international economic coordination, and taking into account the complexity and sensitivities of the issues being confronted, the G20 should be seen as a surprising success.
- The G20 has played an important role in getting leaders from major advanced and emerging markets to work together in avoiding a second great depression, boosting IMF funding, and energising the Financial Stability Board. In doing so, the G20 has played a niche role as a 'ginger group' in accommodating structural shifts in global economic power. G20 leaders are uniquely equipped to cut through the bureaucratic inertia that often characterises the major institutions of the global economy.
- It is often overlooked that the G20 has been effective in generating political momentum for existing initiatives in the area of anti-corruption, the combating of money laundering and tax evasion. Rather than creating new initiatives, the G20 has thrown its heft behind the UN Convention on Corruption, the OECD 'blacklist of tax havens' and a similar Financial Action Task Force 'blacklist of money launderers.'
- The idea of the G20 being 'one G to rule them all' is a common misconception about the forum. The G20 is an informal forum and was never intended to ‘sit on top’ of other bodies like the UN, IMF or World Bank. While the G20 has the potential power to cut through any inertia in these bodies, it ‘wields this heft lightly’ and must continue to work closely and constructively with all other organizations.
- A common criticism is that the G20 is not sufficiently representative in that over 90% of countries are excluded. But it is more representative than the G7/8 and its members account for over 85% of global GDP. There is a trade-off between the size of a grouping and its efficiency, and it can be debated whether the membership of the G20 has the balance right between efficiency and representativeness. However, if the main focus of G20 members is on whether the implementation of their national policies – and how they fit together – is contributing to achieving sustainable global economic growth, then the absence of universal representation should not impede the effectiveness of the forum. The political pain involved in opening up a debate over the membership of the G20 is unlikely to enhance the effectiveness of the forum.
In short, don't call in the undertakers for the G20 just yet.
Photo by Flickr user Downing Street.