The G-20 and International
Economic Cooperation:
Background and Implications for Congress

Rebecca M. Nelson
Analyst in International Trade and Finance
November 5, 2014
Congressional Research Service
7-5700
www.crs.gov
R40977


The G-20 and International Economic Cooperation

Summary
The Group of Twenty (G-20) is a forum for advancing international cooperation and coordination
among 20 major advanced and emerging-market economies. 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).
Originally established in 1999, the G-20 rose to prominence during the global financial crisis of
2008-2009 and is now the premier forum for international economic cooperation. Since the crisis,
the G-20 leaders typically meet annually (at “summits”). Meetings among lower-level officials,
including finance ministers and central bank governors, are scheduled throughout the year. G-20
meetings primarily focus on international economic and financial issues, although related topics
are also discussed, including development, food security, and the environment, among others.
The G-20 in 2014
Australia holds the rotating presidency of the G-20 in 2014 and is hosting the 2014 leaders’
summit on November 15 and 16 in Brisbane, Australia. Australia is focusing the agenda on global
economic growth. In February 2014, the G-20 finance ministers and central bank governors
pledged to develop policies that would boost the G-20’s collective GDP by more than two
percentage points over the coming five years. The summit is expected to stress strategies to boost
growth and reach the goal, including increasing investment in infrastructure; reducing barriers to
trade; promoting competition; and creating jobs. The G-20 summit will also continue previous
work in a number of issue areas, including financial regulatory reforms; reforming the
international tax system; increasing the representation of emerging markets at global institutions;
building energy market resilience; and strengthening the global trading system.
One of the most controversial issues in the lead-up to the summit has been the question of
Russia’s participation. In response to Russia’s annexation of Crimea, Russia was effectively
banned from participating in the G-8, a small forum for advanced economies. Although there was
some debate about banning Russia from the G-20 summit, Russia is expected to attend and
participate. Analysts are wondering how Russia’s attendance will shape the discussions. Some
analysts also believe that Russia’s participation will set a precedent that members are not
excluded from G-20 discussions.
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, such as responding to the Eurozone crisis or forging a conclusion to the World Trade
Organization (WTO) Doha Round of trade negotiations. They also maintain that the G-20 as a
group is too heterogeneous and its agenda is too ambitious. Others 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 steering committee the international economy and that having the G-20 policy-making
infrastructure in place is important for timely international responses to future crises.

Congressional Research Service

The G-20 and International Economic Cooperation

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
Australian Presidency in 2014 ................................................................................................... 9
Debating the G-20’s Effectiveness ................................................................................................. 11
Scenario 1: Effective ............................................................................................................... 11
Scenario 2: Ineffective ............................................................................................................. 11
Scenario 3: Effective in Some Instances, but Not Others ........................................................ 12

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 ........................................................................ 14

Appendixes
Appendix. World’s Largest Countries and Entities ........................................................................ 14

Contacts
Author Contact Information........................................................................................................... 14
Acknowledgments ......................................................................................................................... 14

Congressional Research Service

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 premier 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 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, the environment, and
foreign policy issues, among others.
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.
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
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.

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.
Congressional Research Service
1

The G-20 and International Economic Cooperation

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
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 G-

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.
Congressional Research Service
2

The G-20 and International Economic Cooperation

8; 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.
Congressional Research Service
3



The G-20 and International Economic Cooperation

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 black-
and-white copies) indicate members of the European Union (EU) that are not individually represented in the
G-20.

Congressional Research Service
4

The G-20 and International Economic Cooperation

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 lower-
level 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
Congressional Research Service
5

The G-20 and International Economic Cooperation

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 leaders’ 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 G-
20 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.
15 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.
Congressional Research Service
6

The G-20 and International Economic Cooperation

Overview of the G-20 Summits
Highlights from Previous Summits
The G-20 summits are the key meetings where major G-20 policy commitments are typically
announced. The types of commitments or 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
Date
Major Highlights (Selected)
1. Washington,
DC,
November 2008
• Focused on immediate management of the global financial
United States
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.
2. London, UK
April 2009
• 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.
3. Pittsburgh,
United
September 2009
• Summit occurred as the financial crisis was bottoming out,
States
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.
Congressional Research Service
7

The G-20 and International Economic Cooperation


Location
Date
Major Highlights (Selected)
4. Toronto,
Canada
June
2010
• 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.
5. Seoul, South Korea
November 2010
• 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).
6. Cannes,
France
November
2011 • 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.
7. Los Cabos, Mexico
June 2012
• 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 anti-
corruption measures.
8. St. Petersburg, Russia
September 2013
• 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.
Notes: For summit documents (leader statements and declarations), see http://www.g20.org/en/g20/previous-
leaders-summits.
Congressional Research Service
8

The G-20 and International Economic Cooperation

The policy announcements and commitments that G-20 leaders announce at summits are non-
binding, and the record of implementing these commitments is wide ranging. Examples of major
G-20 initiatives 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
Australian Presidency in 2014
Australia holds the rotating presidency of the G-20 in 2014 and is hosting the 2014 leaders’
summit on November 15 and 16 in Brisbane, Australia. Australia is focusing the 2014 agenda on
global economic growth. In February 2014, the G-20 finance ministers and central bank
governors pledged to develop policies that would boost the G-20’s collective GDP by more than
two percentage points over the coming five years.22 The summit is expected to stress strategies to
boost growth and to reach the goal, including the following.
Increasing investment in infrastructure: Australia is emphasizing
infrastructure, the first time it has been featured as a key part of the G-20 agenda.
In September 2014, the finance ministers and central bank governors agreed to a
“Global Infrastructure Initiative,” which will seek to implement a multi-year
infrastructure agenda.23 This agenda includes developing a database of
infrastructure projects to help match potential investors with projects; strategies
to improve investment climates; and a set of voluntary lending practices. More
details about the initiative are expected to be announced at the summit.

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 Communiqué, Meeting of G-20 Finance Ministers and Central Bank Governors, Sydney, 22-23 February 2014.
23 Communiqué, Meeting of G-20 Finance Ministers and Central Bank Governors, Cairns, 20-21 September 2014.
Congressional Research Service
9

The G-20 and International Economic Cooperation

Reducing barriers to trade: The G-20 members are discussing removing
obstacles to trade; resist protectionism; strengthen the global trading system,
including the World Trade Organization (WTO); and ensure that bilateral and
regional free trade agreements are contributing to further global trade
liberalization. Members are also considering a G-20 commitment to implement
the WTO Trade Facilitation Agreement concluded in Bali, Indonesia, in
December 2013.
Promoting competition: To help economies become more productive, G-20
members are discussing reforms to promote competition, such as cutting red tape.
These reforms would encourage business efficiency and aim to benefit
consumers.
Creating jobs and lifting participation in the workforce: The International
Labour Organization estimates that 62 million more workers would be employed
if the global economy continued to grow at the rate prior to the global financial
crisis. G-20 members are discussing measures to generate jobs, including
increasing female participation in the workforce, addressing structural
unemployment, and improving labor market outcomes for young people and
vulnerable groups. A new G-20 “Taskforce on Employment,” chaired by
Australia and Turkey, is coordinating member plans to boost employment.
The G-20 summit is also expected to continue previous work on issues including financial
regulatory reforms; reforming the international tax system; increasing the representation of
emerging markets at the IMF; and building energy market resilience. Climate change will also
likely be added to the agenda, despite initial opposition by Australian officials who were
concerned that too many agenda items would dilute discussions.24 Some NGOs are calling for a
G-20 commitment of resources for the international response to the Ebola outbreak.25
Russia’s participation in the 2014 summit has been one of the most controversial issues in the
lead-up to the summit. Several G-20 members, including the United States, the EU, Australia,
Canada, and Japan, have imposed economic sanctions on Russian individuals and entities in
response to Russia’s annexation of the Crimean region of Ukraine and alleged efforts to
destabilize eastern and southern Ukraine.26 In March 2014, the United States and other countries
announced that they were suspending participation in the G-8 and instead would convene as the
G-7 in June, for the first time since the late 1990s.27 Some analysts and policymakers also called
for Russia to be excluded from the G-20 summit in November. Others argued that keeping Russia
engaged in a multilateral forum like the G-20 could provide useful opportunities for diplomatic
discussions. Major emerging-market economies, including Brazil, India, China, and South Africa
(which, together with Russia, make up the BRICS), also supported Russia’s participation in the
G-20.28 In the end, it is expected that Russian President Vladimir Putin will participate in the

24 Peter Hartcher, “Climate Change to be Discussed at G20 Summit,” The Sydney Morning Herald, October 31, 2014.
25 For example, see the Oxfam petition to the G-20 on Ebola: http://www.oxfam.org.uk/get-involved/campaign-with-
us/find-an-action/ebola-g20-petition.
26 See CRS Report IN10048, U.S. Sanctions on Russia in Response to Events in Ukraine, coordinated by Dianne E.
Rennack.
27 White House Office of the Press Secretary, “The Hague Declaration,” March 24, 2014,
http://www.whitehouse.gov/the-press-office/2014/03/24/hague-declaration.
28 For example, see South Africa Department of International Relations and Cooperation, “Chairperson’s Statement on
the BRICS Foreign Ministers Meeting held on 24 March 2014 in the Hague, Netherlands,”
(continued...)
Congressional Research Service
10

The G-20 and International Economic Cooperation

G-20 summit. Russia’s participation may set a precedent that members are not excluded from G-
20 discussions.29
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,30 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 issue-
specific 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
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

(...continued)
http://www.dfa.gov.za/docs/2014/brics0324.html.
29 Peter Drysdale, “When the Carnival is Over: Australia’s Surprising G20 Legacy,” East Asia Forum, October 6, 2014.
30 Arvind Panagariya, The G-20 Summit and Global Trade: Restore Credit and Resist Protectionism, Brookings, March
14, 2009. Trade data includes intra-EU trade.
Congressional Research Service
11

The G-20 and International Economic Cooperation

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 5 of the 20 slots), while some important emerging-market
countries are excluded. Poland, Thailand, Egypt, and Pakistan are typically cited as examples (see
Appendix).31 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 was 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
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

31 “G20 Gains Stature But is Overambitious,” Oxford Analytica, September 28, 2009.
Congressional Research Service
12

The G-20 and International Economic Cooperation

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 G-
20 and thus how effective G-20 coordination on these issues will be.
Congressional Research Service
13

The G-20 and International Economic Cooperation

Appendix. World’s Largest Countries and Entities
Table A-1. World’s Largest Countries and Entities
(2014 GDP in current prices [forecasts], in bil ions of U.S. dollars)
Rank G-20 Member
Non G-20
GDP Rank
G-20
Non G-20
GDP
Member
Member
Member
1. European
Union

18,399
19. Turkey

813
2.
United States

17,416
20.
Saudi Arabia

778
3 China

10,355
21.

Switzerland 679
4. Japan

4,770
22.
Nigeria
594
5. Germany

3,820
23.
Sweden
559
6. France

2,902
24.
Poland
552
7. United
Kingdom

2,848
25. Argentina
536
8. Brazil

2,244
26.
Belgium
528
9. Italy

2,129
27.
Norway
512
10. Russia

2,057

28.
Taiwan
505
11. India

2,048

29.
Austria
436
12. Canada

30.
United Arab
1,794

Emirates 416
13. Australia

1,483

31.
Iran
403
14. South
Korea
1,449

32.
Colombia
400
15.
Spain
1,400

33.
Thailand
380
16. Mexico

1,296

34.
Denmark
347
17.
Netherlands 800

35. South
Africa
341
18. Indonesia

856

36.
Malaysia
337
Source: International Monetary Fund (IMF), World Economic Outlook, October 2014.
Notes: The European Union (EU) includes 28 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), could 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.

Congressional Research Service
14