Thursday, September 5, 2013

G 20 Major Economies

The Group of Twenty Finance Ministers and Central Bank Governors (also known as the G-20, G20, and Group of Twenty) is a group of finance ministers and central bank governors from 20 major economies: 19 countries plus the European Union, which is represented by the President of the European Council and by the European Central Bank.[2] The G-20 heads of government or heads of state have also periodically conferred at summits since their initial meeting in 2008. Collectively, the G-20 economies account for approximately 80 percent of the gross world product (GWP),[3] 80 percent of world trade (including EU intra-trade), and two-thirds of the world population.[2] They furthermore account for 84.1 percent and 82.2 percent of the world's economic growth by nominal GDP and GDP (PPP) respectively from the years 2010 to 2016, according to the International Monetary Fund (IMF).
 
The G-20 was proposed by former Canadian Prime Minister Paul Martin[4] as a forum for cooperation and consultation on matters pertaining to the international financial system. The group was formally inaugurated in September 1999, and held its first meeting in December 1999. It studies, reviews, and promotes high-level discussion of policy issues pertaining to the promotion of international financial stability, and seeks to address issues that go beyond the responsibilities of any one organization. With the G-20 growing in stature after the 2008 Washington summit, its leaders announced on 25 September 2009, that the group would replace the G8 as the main economic council of wealthy nations.[5] Since its inception, the G-20's membership policies have been criticized by numerous intellectuals,[6][7] and its summits have been a focus for major protests.[8]
 
The heads of the G-20 nations met biannually at G-20 summits between 2008 and 2011. Since the November 2011 Cannes summit, all G-20 summits have been held annually.[2] Russia currently holds the chair of the G-20, and will host the eighth G-20 summit in September 2013
In addition to these 20 members, several other international forums and institutions, as represented by their respective chief executive officers, participate in meetings of the G-20.[2] These include the managing director and Chairman of the International Monetary Fund, the President of the World Bank, the International Monetary and Financial Committee and the Chairman of the Development Assistance Committee.
The G-20's membership does not reflect exactly the 19 largest national economies of the world in any given year. The organization states:[1]
In a forum such as the G-20, it is particularly important for the number of countries involved to be restricted and fixed to ensure the effectiveness and continuity of its activity. There are no formal criteria for G-20 membership and the composition of the group has remained unchanged since it was established. In view of the objectives of the G-20, it was considered important that countries and regions of systemic significance for the international financial system be included. Aspects such as geographical balance and population representation also played a major part.
All 19 member nations are among the top 29 economies as measured in GDP at nominal prices in a list published by the International Monetary Fund (IMF) for 2013.[28] Not represented by membership in the G-20 are Switzerland (ranked 20th by the IMF), Iran (21), Norway (23) and Taiwan (27), even though they rank higher than some members. Spain (13), the Netherlands (18), Sweden (22), Poland (24), Belgium (25) and Austria (28) are included only as part of the EU, and not independently.
When the countries' GDP is measured at purchasing power parity (PPP) rates,[29] all 19 members are among the top 25 in the world on April 2013, according to the IMF. Iran (17), Taiwan (20) and Thailand (24) are not G-20 members, while Spain (14), Poland (21) and the Netherlands (23) are only included in the EU slot. However, in a list of average GDP, calculated for the years since the group's creation (1999–2008) at both nominal and PPP rates, only Spain, the Netherlands, Taiwan, and Poland appear above any G-20 member in both lists simultaneously.
 
Spain, being the 13th largest economy in the world and 5th in the European Union in terms of nominal GDP, is a "permanent guest" of the organization, although the Spanish government's policy is to not request official membership.[34][35] As such, a Spanish delegation has been invited to, and has attended, every G-20 heads of state summit since the G-20's inception.

Role of Asian countries

A 2011 report released by the Asian Development Bank predicted that large Asian economies such as China and India would play a more important role in global economic governance in the future. The report stated that the rise of emerging market economies heralded a new world order, in which the G-20 would become the global economic steering committee.[36]
The report furthermore noted that Asian countries had led the global recovery following the late-2000s recession. It predicted that the region would have a greater presence on the global stage, shaping the G-20 agenda for balanced and sustainable growth through strengthening intraregional trade and stimulating domestic demand.[36]

Invitees

Typically, several countries that are not permanent members of the G-20 are extended invitations to participate in the summits. The invitees are chosen by the host country. For the 2010 summits, for example, both Canada and South Korea invited Ethiopia (chair of NEPAD), Malawi (chair of the African Union), Vietnam (chair of ASEAN), and Spain. Canada also invited the Netherlands, while South Korea invited Singapore. Both Canada and South Korea invited seven international organizations: the United Nations, the International Labour Organization, the World Bank, the International Monetary Fund, the Organisation for Economic Co-operation and Development, the World Trade Organization, and the Financial Stability Board.[37][38]

Criticisms

Exclusivity of membership

Although the G-20 has stated that the group's "economic weight and broad membership gives it a high degree of legitimacy and influence over the management of the global economy and financial system,"[39] its legitimacy has been challenged. With respect to the membership issue, U.S. President Barack Obama has noted the difficulty of pleasing everyone: "everybody wants the smallest possible group that includes them. So, if they're the 21st largest nation in the world, they want the G-21, and think it's highly unfair if they have been cut out."[40]
 
A 2011 report for the Danish Institute for International Studies, entitled "The G-20 and Beyond: Towards Effective Global Economic Governance", criticised the G-20's exclusivity, highlighting in particular its under-representation of the African continent. Moreover, the report stated that the G-20's practice of inviting observers from non-member states is a mere "concession at the margins", and does not grant the organisation representational legitimacy.[41] However, Global Policy stated in 2011 that the G-20's exclusivity is not an insurmountable problem, and proposed mechanisms by which it could become more inclusive.[42]

Norwegian perspective

In a 2010 interview with Der Spiegel,[6] Norwegian Foreign Minister Jonas Gahr Støre called the G-20 "one of the greatest setbacks since World War II." Although Norway is the seventh-largest contributor to international development programs in the United Nations,[43] it is not a member of the EU, and thus is not represented in the G-20 even indirectly.[6] Norway, like the other 170 nations not among the G-20, has little or no voice within the group. Støre characterized the G-20 as a "self-appointed group", arguing that it undermines the legitimacy of organizations set up in the aftermath of World War II, such as the IMF, World Bank and United Nations:
The G-20 is a self-appointed group. Its composition is determined by the major countries and powers. It may be more representative than the G-7 or the G-8, in which only the richest countries are represented, but it is still arbitrary. We no longer live in the 19th century, a time when the major powers met and redrew the map of the world. No one needs a new Congress of Vienna.
—Jonas Gahr Støre, 2010[6]

Global Governance Group (3G) response

According to Singapore's representative to the United Nations, UN members who are not G-20 members have responded to the G-20's exclusivity by either reacting with indifference, refusing to acknowledge the G-20's legitimacy, or accepting the G-20's status while hoping to "engage the G-20 as the latter continues to evolve so that [their] interests are taken on board."[44] Out of this latter group, Singapore has taken a leading role in organizing an informal "Global Governance Group" of 28 non-G-20 countries, seeking to collectively channel their views into the G-20 process more effectively.[45][46] Singapore's chairing of the Global Governance Group was cited as a rationale for inviting Singapore to the November 2010 G-20 summit in South Korea.[47]

Foreign Policy critiques

The American magazine Foreign Policy has published articles condemning the G-20, in terms of its principal function as an alternative to the supposedly exclusive G8. It questions the actions of some of the G-20 members, and advances the notion that some nations should not have membership in the first place. For example, it has suggested that Argentina should be formally replaced in the group by Spain, because Spain's economy is larger.[7] Furthermore, with the effects of the Great Recession still ongoing, the magazine has criticized the G-20's efforts to implement reforms of the world's financial institutions, branding such efforts as failed.[48]
 
On 14 June 2012, an essay published by the National Taxpayers Union was forwarded to Foreign Policy, espousing a critical view of the application of G-20 membership. The essay's authors, Alex Brill and James K. Glassman, used a numerical table with seven criteria to conclude that Indonesia, Argentina, Russia and Mexico do not qualify for G-20 membership, and that Switzerland, Singapore, Norway and Malaysia had overtaken some of the current members. However, the gap between current members Mexico and Russia and the lower-ranked entries in the authors' list (Malaysia and Saudi Arabia) was only slight. Thus, it was concluded that there is no obvious group of twenty nations that should be included in the G20, and that fair and transparent metrics are essential, as they justify the difficult decisions that will be required in order to differentiate among similarly situated countries.[49]

Wider concerns

The G-20's transparency and accountability have been questioned by critics, who call attention to the absence of a formal charter and the fact that the most important G-20 meetings are closed-door.[50] In 2001, the economist Frances Stewart proposed an Economic Security Council within the United Nations as an alternative to the G-20. In such a council, members would be elected by the General Assembly based on their importance in the world economy, and the contribution they are willing to provide to world economic development.[51]
 
The cost and extent of summit-related security is often a contentious issue in the hosting country, and G-20 summits have attracted protesters from a variety of backgrounds, including information activists, nationalists, and opponents of Fractional Reserve Banking and crony capitalism. In 2010, the Toronto G-20 summit sparked mass protests and rioting, leading to the largest mass arrest in Canadian history.[8].[9]
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