The G-20 and International
Economic Cooperation:
Background and Implications for Congress
Rebecca M. Nelson
Analyst in International Trade and Finance
October 23November 7, 2013
Congressional Research Service
7-5700
www.crs.gov
R40977
CRS Report for Congress
Prepared for Members and Committees of Congress
The G-20 and International Economic Cooperation
Summary
The G-20 is an international forum for discussing and coordinating economic policies among
major advanced and emerging economies. Congress may want to exercise oversight over the
Administration’s participation in the G-20 process, including the policy commitments that the
Administration is making in the G-20 and the policies it is encouraging other G-20 countries to
pursue.
Background
The G-20 rose to prominence during the global financial crisis of 2008-2009, when it played an
arguably influential role in coordinating international responses to the crisis. Leaders agreed that
the G-20 would be the “premier” forum for international economic coordination, a position
previously held by a smaller group of advanced economies (the Group of 7, or G-7, which
includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States).
G-20 leaders have annual meetings (“summits”), and meetings among lower-level officials from
the G-20 countries occur more frequently. Meetings primarily focus on international economic
and financial issues, although related topics are also discussed, including development, food
security, and the environment, among others. Previous summits have, for example, focused on
financial regulatory reform, global imbalances, funding for the International Monetary Fund
(IMF), voting power of emerging economies in international financial institutions, and fossil fuel
subsidies.
The G-20 in 2013 and 2014
The G-20 has a rotating presidency, which is held by Russia in 2013. The Russian government
indicated that it wanted to use its presidency to focus on macroeconomic and financial sector
issues. The Russian government hosted the 2013 G-20 summit in St. Petersburg, Russia, on
September 5-6, 2013, which focused on a wide range of economic issues, including trade,
investment, jobs, financial regulation, and corruption. Foreign policy issues, most notably the
situation in Syria, were also discussed. Australia is scheduled to assume the G-20 presidency in
2014 and host the next summit in Brisbane on November 15-16, 2014. In addition to the summits,
several meetings among lower level officials, including finance ministers and central bank
governors among others, are scheduled throughout the year.
Effectiveness of the G-20
Some analysts say that while the G-20 was instrumental in coordinating the response to the global
financial crisis of 2008-2009, its effectiveness has diminished as the urgency of the crisis has
waned. They argue that the G-20 has failed to provide adequate international leadership in key
policy areas, including responses to the Eurozone crisis and forging a conclusion to the World
Trade Organization (WTO) Doha Round of multilateral trade negotiations. They also maintain
that the G-20 as a group is too heterogeneous to achieve real coordination and its agenda is too
ambitious. Others argue that the G-20 serves as an important institution in the international
economy. They argue that the G-20 is a critical forum for discussing major policy initiatives
across major countries and encouraging greater cooperation, even if agreement on policies is not
always reached. They also argue that it serves as a useful institution as a steering committee for
other international organizations, such as the IMF, and that having the G-20 policy-making
infrastructure in place is important for timely international responses to future crises.
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Contents
Introduction...................................................................................................................................... 1
The Rise of the G-20 as the Premier Forum for International Economic Cooperation ................... 1
Motivations for Economic Cooperation .................................................................................... 1
1970s–1990s: Advanced Economies Dominate Financial Discussions..................................... 2
1990s–2008: Emerging Economies Gain Greater Influence ..................................................... 2
2008–Present: Emerging Economies Get a Seat at the Table .................................................... 3
How the G-20 Operates ................................................................................................................... 5
Frequency of Meetings .............................................................................................................. 5
U.S. Representation ................................................................................................................... 5
Location of Meetings and Attendees ......................................................................................... 5
Agreements ................................................................................................................................ 6
Overview of the G-20 Summits ....................................................................................................... 7
Highlights from Previous Summits ........................................................................................... 7
Russian Presidency in 2013 ....................................................................................................... 9
Debating the G-20’s Effectiveness................................................................................................. 10
Scenario 1: Effective ............................................................................................................... 10
Scenario 2: Ineffective ............................................................................................................. 10
Scenario 3: Effective in Some Instances, but Not Others ........................................................ 11
Figures
Figure 1. Expansion of the G-7 to the G-20..................................................................................... 4
Tables
Table 1. Chairs of the G-20 .............................................................................................................. 6
Table 2. G-20 Summits: Context and Major Highlights .................................................................. 7
Table A-1. World’s Largest Countries and Entities ........................................................................ 13
Appendixes
Appendix. World’s Largest Countries and Entities ........................................................................ 13
Contacts
Author Contact Information........................................................................................................... 13
Acknowledgments ......................................................................................................................... 13
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The G-20 and International Economic Cooperation
Introduction
The Group of Twenty, or G-20, is a forum for advancing international economic cooperation and
coordination among 20 major advanced and emerging-market economies.1 Originally established
in 1999, the G-20 rose to prominence during the global financial crisis of 2008-2009. It is now
the lead forum for international economic cooperation, a position held for decades following
World War II by a smaller group of advanced economies (the Group of 7, or G-7).2 The G-20
leaders meet annually. The most recent G-20 leader meeting was held in St. Petersburg, Russia, in
September 2013; the next G-20 leader meeting is scheduled to be held in Brisbane, Australia, on
November 15-16, 2014. Meetings among lower level officials are held throughout the year. The
G-20’s focus is generally on financial and economic issues and policies, although related issues
have also been discussed, including food security, foreign aid, and the environment, among
others. Foreign policy issues were also prominent issues of discussion at the 2013 G-20 summit.
Congress may want to exercise oversight over the Administration’s participation in the G-20,
including the policy commitments that the Administration is making in the G-20 and the policies
it is encouraging other G-20 countries to pursue. Additionally, legislative action may be required
to implement certain commitments made by the Administration in the G-20 process, and
commitments made at the G-20 may shape the congressional legislative agenda. In the 112th
Congress, the Security and International Trade and Finance Subcommittee of the Senate Banking
committee held a hearing on the “G-20 and Global Economic and Financial Risks” in October
2011.
This report analyzes: why countries coordinate economic policies and the historical origins of the
G-20; how the G-20 operates; major highlights from previous G-20 summits, plus an overview of
the agenda for the next G-20 summit; and debates about the effectiveness of the G-20 as a forum
for economic cooperation and coordination.
The Rise of the G-20 as the Premier Forum for
International Economic Cooperation
Motivations for Economic Cooperation
Since World War II, governments have created and used formal international institutions and
more informal forums to discuss and coordinate economic policies. As economic integration has
increased over the past 30 years, however, international economic policy coordination has
become even more active and significant. Globalization may bring economic benefits, but it also
means that a country’s economy can be affected by the economic policy decisions of other
governments. These effects may not always be positive. For example, if one country devalues its
currency or restricts imports in an attempt to reverse a trade deficit, another country’s exports
1
The G-20 includes Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan,
Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United Kingdom, and the United States, as well as
the European Union (EU).
2
The G-7 includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
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may decline. Instead of countries unilaterally implementing these “beggar-thy-neighbor” policies,
some say they may be better off coordinating to refrain from such negative outcomes. Another
reason countries may want to coordinate policies is that some economic policies, like fiscal
stimulus, are more effective in open economies when countries implement them together.
Governments use a mix of formal international institutions and international economic forums to
coordinate economic policies. Formal institutions, such as the International Monetary Fund
(IMF), the Organization for Economic Co-operation and Development (OECD), the World Bank,
and the World Trade Organization (WTO), are typically formed by an official international
agreement and have a permanent office with staff performing ongoing tasks.3 Governments have
also relied on more informal forums for economic discussions, such as the G-7, the G-20, and the
Paris Club.4 These economic forums do not have formal rules or a permanent staff.
1970s–1990s: Advanced Economies Dominate Financial Discussions
Prior to the global financial crisis of 2008-2009, international economic discussions at the top
leadership level primarily took place among a small group of developed industrialized economies.
Beginning in the mid-1970s, leaders from a group of five developed countries—France,
Germany, Japan, the United Kingdom, and the United States—began to meet annually to discuss
international economic challenges, including the oil shocks and the collapse of the Bretton Woods
system of fixed exchange rates. This group, called the Group of Five, or G-5, was broadened to
include Canada and Italy, and the Group of Seven, or G-7, formally superseded the G-5 in the
mid-1980s. In 1998, Russia also joined, creating the G-8.5 Russia did not usually participate in
discussions on international economic policy, which continued to occur mainly at the G-7 level.
Meetings among finance ministers and central bank governors typically preceded the summit
meetings. Macroeconomic policies discussed in the G-7 context included exchange rates, balance
of payments, globalization, trade, and economic relations with developing countries. Over time,
the G-7’s and, subsequently the G-8’s, focus on macroeconomic policy coordination expanded to
include a variety of other global and transnational issues, such as the environment, crime, drugs,
AIDS, and terrorism.
1990s–2008: Emerging Economies Gain Greater Influence
Although emerging economies became more active in the international economy, particularly in
financial markets starting in the early 1990s, this was not reflected in the international financial
architecture until the Asian financial crisis in 1997-1998.6 The Asian financial crisis demonstrated
that problems in the financial markets of emerging-market countries can have serious spillover
3
For more information about formal international institutions, see, for example: CRS Report R42019, International
Monetary Fund: Background and Issues for Congress, by Martin A. Weiss and CRS Report RL32060, World Trade
Organization Negotiations: The Doha Development Agenda, by Ian F. Fergusson.
4
The Paris Club is an informal group of developed countries. It negotiates financial services such as debt restructuring
and debt relief to indebted developing countries. For more information, see CRS Report RS21482, The Paris Club and
International Debt Relief, by Martin A. Weiss.
5
While the EU is not an official member of the G-7 or G-8, the EU has participated in meetings since 1977. The EU is
represented by the president of the European Commission and the president of the European Council. The EU does not
hold leadership positions within the G-8 or host summits.
6
For more about emerging economies, see CRS Report R41969, Rising Economic Powers and the Global Economy:
Trends and Issues for Congress, by Raymond J. Ahearn.
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effects on financial markets in developed countries, making emerging markets too important to
exclude from discussions on economic and financial issues. The G-20 was established in late
1999 as a permanent international economic forum for encouraging coordination between
advanced and emerging economies. However, the G-20 was a secondary forum to the G-7 and G8; the G-20 convened finance ministers and central bank governors, while the G-8 also convened
meetings among leaders, in addition to finance ministers.
Emerging markets were also granted more sway in international economic discussions when the
G-8 partly opened its door to them in 2005.7 The United Kingdom’s Prime Minister Tony Blair
invited five emerging economies—China, Brazil, India, Mexico, and South Africa—to participate
in its discussions but not as full participants (the “G-8 +5”). The presence of emerging-market
countries gave them some input in the meetings but they were clearly not treated as full G-8
members. Brazil’s finance minister is reported to have complained that developing nations were
invited to G-8 meetings “only to take part in the coffee breaks.”8
2008–Present: Emerging Economies Get a Seat at the Table
It is only with the outbreak of the global financial crisis in fall 2008 that emerging markets have
been invited as full participants to international economic discussions at the highest (leader) level.
There are different explanations for why the shift from the G-7 to the G-20 occurred. Some
emphasize recognition by the leaders of developed countries that emerging markets have become
sizable players in the international economy and are simply “too important to bar from the
room.”9
Others suggest that the transition from the G-7 to the G-20 was driven by the negotiating
strategies of European and U.S. leaders. It is reported that France’s president, Nicolas Sarkozy,
and Britain’s prime minister, Gordon Brown, pushed for a G-20 summit, rather than a G-8
summit, to discuss the economic crisis in order to dilute perceived U.S. dominance over the
forum, as well as to “show up America and strut their stuff on the international stage.”10 Likewise,
it is reported that President George W. Bush also preferred a G-20 summit in order to balance the
strong European presence in the G-8 meetings.11 Some attribute the G-20’s staying power to the
political difficulties of reverting back to the G-7 after having convened the G-20 leaders.
7
Emerging markets had been sporadically invited to a few G-8 summit dinners and events as early as 1989, but their
participation was very minor compared to 2005 onwards. See Peter I. Hajnal, The G8 System and the G20 (Ashgate,
2007), pp. 47-49.
8
Jonathan Wheatley, “G20 Calls for Expanded Role to Combat Economic Turmoil,” Financial Times, November 10,
2009.
9
“After the Fall,” The Economist, November 15, 2009.
10
“Not a Bad Weekend’s Work,” The Economist, November 16, 2008.
11
Ibid.
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Figure 1. Expansion of the G-7 to the G-20
Source: G-20 website, http://www.g20.org.
Notes: The European Union (EU) is a member of the G-20. Pink (for color copies) or medium gray (for blackand-white copies) indicate members of the European Union (EU) that are not individually represented in the
G-20.
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How the G-20 Operates
Frequency of Meetings
The G-20 meetings among heads of state, or “summits,” are the focal points of the G-20
discussions. Starting in 2011, the G-20 leaders began convening annually, although various lowerlevel officials meet frequently before the summits to begin negotiations and after the summits to
discuss the logistical and technical details of implementing the agreements announced at the
summits. Specifically, the G-20 finance ministers and central bank governors meet several times a
year, and other ministers may also be called to meet at the request of the G-20 leaders. For
example, the G-20 leaders called on the G-20 employment and labor ministers to meet in 2010 to
discuss the problem of unemployment. Also, there are meetings among the leaders’ personal
representatives, known as “sherpas.”12
Overall, the G-20 process has led to the creation of a complex set of interactions among many
different levels of G-20 government officials. Some argue that the high frequency of interactions
is conducive to forming open communication channels, while others argue that the G-20 process
has created undue administrative burden on the national agencies tasked with implanting and
managing their countries’ participation in the G-20 process.
U.S. Representation
Within the U.S. government, the Treasury Department is the lead agency in coordinating U.S.
participation in the G-20 process. However, the G-20 works on a variety of issues, and the
Treasury Department works closely with other U.S. agencies in their G-20 work, including the
Federal Reserve, the State Department, the U.S. Agency for International Development, and the
Department of Energy. The White House, particularly through the National Security Council and
the U.S. Trade Representative, is also heavily involved in the G-20 planning process. The U.S.
sherpa is the Deputy National Security Advisor for International Economic Affairs, a position
currently held by Caroline Atkinson.
Location of Meetings and Attendees
Unlike formal international institutions, such as the United Nations and the World Bank, the G-20
does not have a permanent headquarters or staff. Instead, each year, a G-20 member country
serves as the chair of the G-20. The chair hosts many of the meetings, and is able to shape the
year’s focus or agenda. The chair also establishes a temporary office that is responsible for the
group’s secretarial, clerical, and administrative affairs, known as the temporary “secretariat.” The
secretariat also coordinates the G-20’s various meetings for the duration of its term as chair and
typically posts details of the G-20’s meetings and work program on the G-20’s website.13
12
The term “sherpa” is a play on words. Typically, sherpas refer to local people, typically men, in Nepal who are
employed as guides for mountaineering expeditions in the Himalayas. Recall that meetings held among leaders are
called “summits,” which also refers to the highest point of a mountain.
13
http://www.g20.org
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The chair rotates among members and is selected from a different region each year. Table 1 lists
the G-20 chairs since 1999, as well as the countries scheduled to chair the G-20 through 2015.
The United States has never officially chaired the G-20, although the United States did host G-20
summits in 2008 and 2009 during the height of the global financial crisis.
Table 1. Chairs of the G-20
Year
Country
Year
Country
1999-2001
Canada
2009
United Kingdom
2002
India
2010
South Korea
2003
Mexico
2011
France
2004
Germany
2012
Mexico
2005
China
2013
Russia
2006
Australia
2014
Australia
2007
South Africa
2015
Turkey
2008
Brazil
Source: G-20 website, http://www.g20.org.
In addition to the G-20 members, some countries attended the G-20 summits at the invitation of
the country chairing the G-20. In 2010, the G-20 formalized the participation of five non-G-20
members at the leader’sleaders’ summit, of which at least two would be African countries.14 Several
regional organizations and international organizations also attend G-20 summits. For example,
official participants typically have included representatives from the European Commission; the
European Council; the International Labour Organization (ILO); the International Monetary Fund
(IMF); the Organization for Economic Co-operation and Development (OECD); the United
Nations (UN); the World Bank; and the World Trade Organization (WTO).
Agreements
All agreements, comments, recommendations, and policy reforms reached by the G-20 finance
ministers, central bankers, and leaders are done so by consensus. There is no formal voting
system as in some formal international economic institutions, like the IMF. Participation in the G20 meetings is restricted to members and invited participants and is not open to the public. After
each meeting, however, the G-20 publishes online the agreements reached among members,
typically as communiqués or declarations.15 The G-20 does not have a way to enforce
implementation of the agreements reached by the G-20 at the national level beyond moral
suasion; the G-20 has no formal enforcement mechanism and the commitments are non-binding.
This contrasts with the World Trade Organization (WTO), for example, which does have formal
enforcement mechanisms in place.16
14
G-20, “Invitees and International Organizations,” http://www.g20.org/docs/about/international_guests.html.
The G-20 communiqués are posted online at http://www.g20.org/pub_communiques.aspx.
16
See, e.g., CRS Report RS20088, Dispute Settlement in the World Trade Organization (WTO): An Overview, by
Daniel T. Shedd, Brandon J. Murrill, and Jane M. Smith.
15
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Overview of the G-20 Summits
Highlights from Previous Summits
The G-20 summits are the key meetings where major G-20 policy announcements tend to be
made. The G-20 has held six summits to date: Washington, DC, in November 2008; London in
April 2009; Pittsburgh in September 2009; Toronto (Canada) in June 2010; Seoul (South Korea)
in November 2011; Cannes (France) in November 2011; and Los Cabos (Mexico) in June 2012.
The types of agreements reached at the G-20 summits have evolved as global economic
conditions have changed, from the pressing height of the global financial crisis, to signs of
recovery amidst high unemployment in some advanced economies, to concerns about the
Eurozone crisis. In addition, as the pressing nature of the global financial crisis has abated, the
scope of issues covered by the G-20 has expanded to other issues, such as development and the
environment. Table 2 presents information about major highlights from the summits.
Table 2. G-20 Summits: Context and Major Highlights
Location
1.
2.
3.
Washington, DC,
United States
London, UK
Pittsburgh, United
States
Date
November 2008
April 2009
September 2009
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Major Highlights (Selected)
•
Focused on immediate management of the global financial
crisis.
•
Pledges to coordinate financial regulatory reform; focus on
expansionary macroeconomic policies, both fiscal and
monetary, to support aggregate demand; and refrain from
protectionist trade policies.
•
Focus continued to be on immediate management of the
financial crisis, reiterating many of the commitments from
the 2008 summit in Washington, DC regarding crisis
management.
•
Pledges to increase funding for the IMF and the MDBs by
$1.1 trillion, including a tripling of the IMF’s lending
capacity; commitments to coordinate fiscal stimulus; create
the Financial Stability Board (FSB) to coordinate and
monitor progress on regulatory reforms.
•
Summit occurred as the financial crisis was bottoming out,
although unemployment was generally still rising in some
advanced economies.
•
Announcement that, henceforth, the G-20 would be the
“premier” forum for international economic cooperation.
•
Announced the creation of a new framework for
addressing global imbalances and promoting growth, the
“G-20 Framework for Strong, Sustainable, and Balanced
Growth.”
•
Pledges to increase the voting power of emerging
economies at the international financial institutions, in
addition to reiterating pledges made at previous summits,
as well as specific development and environmental goals.
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The G-20 and International Economic Cooperation
Location
4.
5.
6.
7.
8.
Toronto, Canada
Seoul, South Korea
Cannes, France
Los Cabos, Mexico
St. Petersburg, Russia
Date
June 2010
November 2010
November 2011
June 2012
September 2013
Major Highlights (Selected)
•
Summit was held against a backdrop of growing
uncertainty about the Eurozone, and was viewed as a
foundational summit for more ambitious announcements
at the South Korean summit later in 2010.
•
Summit broadly addressed five areas: growth; correcting
global imbalances; financial sector reform; international
financial institutions and development; and fighting
protectionism while promoting trade and investment.
•
Advanced economies announced targets for fiscal
consolidation.
•
First summit hosted by a country that is not a member of
the G-7.
•
Announced a “Seoul Development Consensus,” which
emphasized, among other things, that governments can
play a positive role in development and the importance of
infrastructure in development.
•
Endorsed tougher capital standards for banks, discussed
global safety nets and the need for further studies on
capital controls, and called for a doubling of IMF quotas
(the core source of financing for IMF loans).
•
Summit was held during heightened concerns about
Eurozone debt crisis, and persisting concerns about high
unemployment in some advanced economies.
•
Discussions focused on reforming the international
monetary system; fostering employment; food price
volatility; functioning of energy markets; the environment;
development; and anti-corruption.
•
First summit hosted by a Latin American country.
•
Attention was focused on the ongoing Eurozone crisis, and
European efforts and policies to respond to the crisis, and
the need for job creation worldwide. A “Los Cabos
Growth and Jobs Action Plan” was announced.
•
Discussions also focused on trade; the international
financial architecture; food security and commodity price
volatility; development; “green” growth,; and anticorruption measures.
•
The formal summit declaration focused on economic
issues: growth, jobs, investment, multilateral trade, tax
avoidance, international financial architecture, financial
regulation, development, climate change, and corruption.
•
News reports indicate that discussions among G-20
leaders focused on potential international responses to
chemical weapons attacks against civilians in Syria.
•
The focus on Syria led some analysts to call for the
creation of a formal foreign policy track in the G-20, to
run parallel to the finance track in the G-20.
Source: G-20 website, http://www.g20.org; CRS analysis.
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Notes: For summit documents (leader statements and declarations), see http://www.g20.org/en/g20/previousleaders-summits.
The policy announcements and commitments that G-20 leaders announce at summits are nonbinding, and the record of implementing these commitments is wide ranging. Examples of major
G-20 initiatives that have been completed include coordination of fiscal policies during the global
financial crisis, a tripling of IMF resources, and strengthening the Financial Stability Board (FSB)
to coordinate and monitor international progress on regulatory reforms, among others. However,
progress on other G-20 commitments has been much slower, such as correcting global
imbalances, concluding the WTO Doha Round of multilateral trade negotiations, increasing the
voting share of emerging economies at the IMF, and eliminating fossil fuel subsidies. Tracking
progress on G-20 commitments can be complicated, as subsequent summits may extend the
timelines for completing policy reforms, reiterate previous commitments, or drop discussion of
prior policy pledges.
Previous G-20 summits have typically attracted protesters from a broad mix of movements,
including environmentalists, trade unions, socialist organizations, faith-based groups, anti-war
camps, and anarchists.17 At the 2009 summit in Pittsburgh, for example, thousands of protestors
gathered in the streets, holding signs with slogans such as “We Say No To Corporate Greed” and
“G20=Death By Capitalism.”18 Protests at G-20 meetings are generally peaceful, although at
times tensions between the police and protesters have escalated. In Pittsburgh, protestors began
throwing rocks,19 police used pepper gas against a group of students,20 and several protestors were
arrested.21
Russian Presidency in 2013
Russia holds the rotating presidency of the G-20 in 2013, for the first time since the G-20 stared
meeting at the leader level. The Russian government identified three overarching priorities,
including (1) growth through quality jobs and investment; (2) growth through trust and
transparency; and (3) growth through effective regulation.22 It has stated that these three priorities
will serve as a lens for considering and discussing items on the 2013 agenda for the G-20. Its
main agenda items for 2013 include the G-20’s “Framework for Strong, Sustainable, and
Balanced Growth,” which aims at correcting global imbalances; jobs and employment;
international financial architecture reform; strengthening financial regulation; energy
sustainability; development for all; enhancing multilateral trade; and fighting corruption.
The 2013 summit was held on September 5-6, 2013, in St. Petersburg, Russia. A number of
meetings among lower level officials, including finance and labor ministers, as well as the G-20
sherpas, were held to prepare for the September summit. The formal summit declaration focused
17
Carl Prine, “An Overview of Protests Expected in Pittsburgh for G-20,” Pittsburgh Tribune-Review, September 20,
2009.
18
Michelle Nichols, “Protesters, Police Clash After G20 in Pittsburgh,” Reuters, September 25, 2009.
19
Daniel Lovering and Michael Rubinkam, “G-20 March Turns Chaotic as Police, Protesters Clash on Streets of
Pittsburgh,” AP Newswire (Government Feed), September 24, 2009.
20
Michelle Nichols, “Protesters, Police Clash After G20 in Pittsburgh,” Reuters, September 25, 2009.
21
Dennis B. Roddy and Michael A. Fuoco, “Protests Lead to 19 Arrests Across City,” Pittsburgh Post-Gazette,
September 25, 2009.
22
http://www.g20.org/docs/g20_russia/priorities.html.
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on economic issues: growth, jobs, investment, multilateral trade, tax avoidance, international
financial architecture, financial regulation, development, climate change, and corruption. News
reports indicate that discussions among G-20 leaders focused on potential international responses
to chemical weapons attacks against civilians in Syria. The focus on Syria led some analysts to
call for the creation of a formal foreign policy track in the G-20, to run parallel to the finance
track in the G-20.
Australia is scheduled to hold the rotating G-20 presidency in 2014, and is planning to host the
next G-20 summit in Brisbane on November 15-16, 2014.
Debating the G-20’s Effectiveness
As the urgency of the global financial crisis of 2008-2009 wanes, there has been speculation
about how effective the G-20 will be moving forward. Three scenarios have been discussed.
Specifically, the G-20 as a coordinating forum will be (1) effective; (2) ineffective; or (3)
effective in some instances but not others. These possible scenarios are discussed in greater detail
below.
Scenario 1: Effective
Some believe that the G-20 will be an effective forum for international economic cooperation
moving forward. The G-20 will be able to play this role, it is argued, for three reasons. First, the
G-20 includes all the major economic players at the table, representing two-thirds of the world’s
population, 90% of world GDP, and 80% of world trade,23 but at the same time is small enough to
facilitate concrete negotiations. Second, the involvement of national heads of state in the
negotiations could serve to facilitate commitments in major policy areas. Third, as the issues
discussed by the G-20 leaders expand, the G-20 may be able to facilitate cooperation by enabling
trade-offs among major concerns, such as climate change and trade, that are not possible in issuespecific forums and institutions.
G-20 optimists typically point to the G-20’s successes at the height of the financial crisis, when
the G-20 played a unique, strong, and central role in steering the recovery efforts. The G-20 was
the source of major decisions regarding fiscal stimulus, regulatory reform, tripling the IMF’s
lending capacity, and other response efforts. The G-20 also tasked other international
organizations, such as the Bank for International Settlements (BIS), the IMF, the World Bank, and
the Financial Stability Board (FSB), with facilitating, monitoring, or implementing various
aspects of the response to the crisis. Finally, G-20 proponents argue that, even if agreement on
policies is not always reached, it is a critical forum for discussing major policy initiatives across
major countries and encouraging greater cooperation.
Scenario 2: Ineffective
Others are skeptical that the G-20 will be an effective forum for international cooperation moving
forward for at least four reasons. First, the G-20 includes a diverse set of countries with different
23
Arvind Panagariya, The G-20 Summit and Global Trade: Restore Credit and Resist Protectionism, Brookings, March
14, 2009. Trade data includes intra-EU trade.
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political and economic philosophies. As economic recovery becomes more secure, it is argued
that this heterogeneous group with divergent interests will have trouble reaching agreements on
global economic issues. Some argue that the G-20 has failed to provide adequate leadership in
responding to the Eurozone crisis or in helping forge a conclusion to the Doha negotiations.
Second, some believe the G-20 does not include the right mix of countries. It is argued that
Europeans are over-represented at the G-20 (with Germany, France, Italy, the United Kingdom,
and the European Union taking up five5 of the 20 slots), while some important emerging-market
countries are excluded. Poland, Thailand, Egypt, and Pakistan are typically cited as examples (see
Appendix).24 By concentrating European interests while excluding important emerging markets
from the negotiating table, it will be difficult, it is argued, to achieve cooperation on economic
issues of global scope.
Third, some experts believe that the G-20 will be ineffective because it has no enforcement
mechanism beyond “naming and shaming” and with little follow-up will not be able to enforce its
commitments. As evidence that the G-20 is an ineffective steering body in the international
economy, G-20 skeptics point to the portions of recent G-20 declarations that merely reiterate
commitments made by countries in other venues and institutions or at previous G-20 summits.
Likewise, some of the declarations identify areas that merit further attention or study, without
including concrete policy commitments.
Fourth, some argue that the G-20’s effectiveness since the crisis has diminished because the
issues covered by the G-20 have broadened, but there is now little follow-through from one
summit to the next. For example, the Toronto summit in June 2010 touted targets for fiscal
consolidation among advanced economies. However, these targets received little attention in the
subsequent G-20 summit in Seoul in November 2010, where the focus shifted to development,
among other issues. Likewise, France’s focus for the November 2011 summit was on reform of
the international monetary system, but it is not clear how much attention will be paid to such
issues in the 2012 summit, hosted by Mexicowas focused on
subsequent summits.
Scenario 3: Effective in Some Instances, but Not Others
A third scenario represents a middle ground between the previous two, namely, that the G-20 will
be effective in some instances but not others. It is argued the G-20 could be an effective body in
times of economic duress, when countries view cooperation as critical, but less effective when the
economy is strong and the need for cooperation feels less pressing. Proponents of this view point
to the strong commitments achieved during the height of the crisis compared to what many view
as the weaker outcomes of subsequent summits, when the economic recovery was underway
(although unemployment remains high in several advanced economies).
Another variant is that the G-20 will prove effective in facilitating cooperation over some issue
areas but not others. For example, the G-20 could be effective in coordinating monetary policy
across the G-20 countries, by providing a formal structure for finance ministers, central bankers,
and leaders to gather and discuss monetary policy issues. In most countries, central banks
exercise largely autonomous control over monetary policy issues and would have the authority to
implement decisions reached in G-20 discussions. Likewise, the G-20 may be effective at tasking
24
“G20 Gains Stature But is Overambitious,” Oxford Analytica, September 28, 2009.
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other international organizations, such as the IMF and the FSB, with various functions to perform
or reports to write. By contrast, it is argued that the G-20 could find coordination of other policies
more difficult. One example may be fiscal policies, because although finance ministers and
national leaders undoubtedly can influence fiscal policies at the national level, control over fiscal
policies in many countries ultimately lies with national legislatures. It is not clear to what extent
national legislatures will feel bound in their policy-making process by decisions reached at the G20 and thus how effective G-20 coordination on these issues will be.
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Appendix. World’s Largest Countries and Entities
Table A-1. World’s Largest Countries and Entities
(2013 GDP in current prices [forecasts], in billions of U.S. dollars)
Rank
G-20 Member
1.
GDP
Rank
G-20
Member
European Union
17,267
18.
Turkey
2.
United States
16,724
19.
3
China
8,939
20.
4.
Japan
5,007
21.
Switzerland
646
5.
Germany
3,593
22.
Sweden
552
6.
France
2,739
23.
Norway
516
7.
United Kingdom
2,490
24.
Poland
514
8.
Brazil
2,190
25.
Belgium
507
9.
Russia
2,118
26.
Taiwan
485
10.
Italy
2,068
27.
11.
Canada
1,825
28.
Austria
418
12.
India
1,758
29.
Thailand
401
13.
Australia
1,488
30.
United Arab
Emirates
390
1,356
31.
Iran
389
14.
Non G-20
Member
Spain
Non G-20
Member
GDP
822
Netherlands
Saudi Arabia
801
718
Argentina
485
15.
Mexico
1,327
32.
Colombia
369
16.
South Korea
1,198
33.
Venezuela
367
17.
Indonesia
867
34.
South Africa
354
Source: International Monetary Fund (IMF), World Economic Outlook, October 2013.
Notes: The European Union (EU) includes 27 countries. Ranking is for illustrative purposes only. Using a
different measure of economic size, such as GDP adjusted for differences in prices levels across countries (GDP
adjusted for purchasing power parity), would produce a different ranking.
Author Contact Information
Rebecca M. Nelson
Analyst in International Trade and Finance
rnelson@crs.loc.gov, 7-6819
Acknowledgments
Susan Chesser, Information Research Specialist, assisted with research on G-20 protests.
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