Posted: July 13th, 2022

Causes of the Development of the G20

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What are the primary political and economic dynamics that have influenced the development of the G20?

Well. Before starting to analyse the reasons that have mainly led to the success of the GLOBAL 20 countries forum, it becomes of high importance to understand what necessarily this forum is all about. What we need to understand at this point of time is that we are considering a global open macro-economic model and in doing so what guides us is the backdrop that all economies in the world are dependent on others being interlinked by a common factor/policy: TRADE. Thus, over the past few decades after WWII , when trade started to foster in nations which were run by an urge to prosper and develop its standard of living, various nations having common trade requirements initialised in engaging themselves to form sects of trading partners. As this gradually conceptualised, the partners of these forums evolved themselves in aiding the growth of their member states and developed a global platform for discussing various shortfalls of the backward economies improvising ways to boost them. One such forum was the G-20 forum.

The Group of Twenty (also known as the G-20 or G20) is an international forum for all the governments and all central bank governors from 20 major economies. The members include 19 individual countries—China, Australia, Japan, Canada, Argentina, South Africa, Germany, India, Indonesia,Italy, Brazil,Turkey, Russia, Saudi Arabia, France, South Korea, China, the United Kingdom and the United States-along with the European Union (EU). The EU is represented by the European Commission and by the European Central Bank.

Altogether, the G-20 economies account for around 85% of the gross world product (GWP), 80% of world trade (or, if excluding EU intra-trade, 75%), and two-thirds of the world population.

HISTORY- (Unsupported source type (InternetSite) for source www151.)

Political reasons:

Every nation that is etched to the atlas has a history. It is often said that if one were to judge the present, the analysis of the past becomes mandatory. So we go about in analysing the history that lead to the formation of the G-20 forum. It can be accounted that G-20 forum succeeded the well known G-33 forum and presently this body having heads of states and central bank governors plans to be given away to a more formalised forum, the G-8.

The G-20 was founded in 1999 with the aim of studying, reviewing, and promoting high-level discussion of policy issues pertaining to the promotion of international financial stability. It seeks to address issues that go beyond the responsibilities of any one organization. The G-20 is the latest in a series of post-World War II initiatives aimed at international coordination of economic policy, which include institutions such as the “Breton twins”, the International Monetary Fund and the World Bank, and what is now the World Trade Organization. The G-20 superseded the G33 (which had itself superseded the G22), and was foreshadowed at the Cologne Summit of theG7in June 1999, but was only formally established at the G7 FinanceMinisters’ meeting on 26 September 1999. The inaugural meeting took place on 15–16 December 1999 in Berlin. Canadian Financeminister Paul Martin was chosen to be the first chairman and German Finance minister Hans Eichel hosted the inaugural meeting.

According to researchers at the Brookings Institution, the group was founded primarily at the initiative of Eichel, who was also concurrently chair of the G7. However, some sources identify the G-20 as a joint creation of Germany and the United States.According to University of Toronto professor, John Kirton,

“the membership of the G-20 was decided by Eichel’s deputy Caio Koch-Weser and then US Treasury Secretary Larry Summers‘ deputy Timothy Geithner.”

In Kirton’s book G20 Governance for a Globalised World, he claims that:

“Geithner and Koch-Weser went down the list of countries saying, Canada in, Spain out, South Africa in, Nigeria and Egypt out, and so on; they sent their list to the other G7 FINANCE ministries; and the invitations to the first meeting went out.”

Economic dynamism

The G-20’s primary focus is global economic governance. However, the themes of its summits vary from year to year. The issues discussed included domestic reforms to achieve “sustained growth”, global energy and resource, commodity markets, reform of the World Bank and IMF, and the impact of demographic changes due to an aging world population. Despite lacking any formal ability to enforce rules, the G-20’s prominent membership gives it a strong input on global policy. However, there remain disputes over the legitimacy of the G-20,and criticisms of its organisation and the efficacy of its declarations. Its purpose mainly remains to bring together systemically important, industrialized and developing economies to discuss key issues in the global economy.

Over the various G20 summits which have been held in different regions, the objective to gain economic mileage has remained constant. Noting in this context, the following are few of G20 forum’s economic goal (Unsupported source type (InternetSite) for source Placeholder1.) (Unsupported source type (InternetSite) for source htt152.)s that led to its development over the years ahead:

• Strengthening development is central to the G20’s objective of achieving strong, sustainable and balanced growth and ensuring a more robust and resilient global economy.
• Encouraging the right conditions to attract private sector investment in order to increase financingfor infrastructure investment
• Ensuring that developing countries can reap the benefits of the G20’s efforts to improve the international tax system, including in combating base erosion and profit shifting and increasing the information shared between tax authorities
• Assisting developing countries to expand the use of formal financial services through the Global Partnership for Financial Inclusion and taking action to reduce the cost of transferring remittances into developing economies
• Setting long term priority objectives so that the G20 can make a real impact on the underlying causes of food insecurity and malnutrition, and
• Strengthening the G20’s contribution to human resource development in developing countries.

Success Stories of G-20- (Unsupported source type (InternetSite) for source htt152.)

Turkey is one of the recent member nations of the G-20 forum of developing and developed economies and is being regarded as one of the mystic stories of development. Its story may be gauged as below-

• Turkey has a huge and growing market with a population of 73.7 million and a strategic geographical location as a gateway to European, Middle Eastern, North African and Central Asian markets. It has a competitive industry and the Customs Union with the EU for 16 years. According to IMF and OECD reports, Turkey has been one of the most rapidly growing economies in 2010 and 2011. Recently, Turkey’s GDP recorded an 11% year-on-year rise in the first quarter of 2011, which makes it one of the fastest growing economies among G20 countries.
• Besides being one of the 20 largest economies, Turkey is an important regional power. Compared to other G20 members, Turkey can be seen as a “middle power” that “cannot act alone effectively, but may be able to have a systemic impact in a small group or through an international institution.” Turkey has been one of the most important economies of the Muslim world. In addition to this, Turkey is a member of NATO and OECD, and acceding member state to the EU. Among the G20 members, Turkey is the only country which has been carrying on accession negotiations with the EU since October 2005. So far, only one chapter (science and research) has been provisionally closed. Twelve more chapters have been opened

The magnitude of such operations, claims Hüseyin Bagci, made David Cameroon call Turkey, as the

“BRIC of EUROPE”

• Although Turkey has been a member of G-groupings from the very beginning of 1999, the global financial crisis led to Turkey’s membership in the G20 and increased the confidence and assertiveness of Turkish policy-makers. Furthermore, it provided Turkey an opportunity to actively participate in the process of shaping the new rules and institutions of the post-crisis global economy, as opposed to its previous standing as a peripheral partner and the passive complier of rules imposed from above by the powerful core.
• Turkey has become an “order-creator” country in the new juncture in the post-crisis global economy. In other words, G20 membership enabled Turkey to play a prominent role in global governance reform by throwing its weight behind the G20 as the new top global steering committee. As a response to global recession, Turkey has been adapting itself to the new global context by means of diversification of economic relations and the opening of new markets, especially at a time when Europe has fallen into deep stagnation and the global economic axis has been shifting from west to east with the global financial crisis. This raises the question of whether Turkey is moving in the direction of the BRIC’s nations.
• Contrary to other emerging markets, Turkish economy was not hit hard by the recent global economic crisis, which created an incentive towards the broadening of global economic governance structures. Turkey did not receive the IMF Fund with a much better regulated banking and financial system in the aftermath of the 2001 crisis. Consequently, Turkey was able to avoid the typical financial and balance of payments crisis which it had frequently experienced in the past. It can be argued that a more independent and IMF-free path in national economy complements and leads to a more independent and assertive style of foreign policy
• G20 membership is closely related to Turkey’s pro-active foreign policy strategy during the Justice and Development Part era. In recent years, Turkish foreign policy has become more independent and assertive. Turkey adopted “360 degrees foreign policy”, which means that Turkey should establish relations with states all around the world and intensify its visibility and presence in various multilateral platforms. Turkey has broadened its engagement with other partners in its wider neighbourhood, including Central Asia, North Africa and the Arab World. Thus, Turkey aspires to establish relationship with all countries outside the EU, which makes Turkey an even more attractive partner for the EU.

Thus, concluding the example we have to say,

The G20 Summits offer Turkey an important opportunity for increasing its international standing. In the G20 system, Turkey is recognized as a prominent global player. Turkey plays a leading role in areas of special interest to it, such as energy security, Middle East peace, global financial stability and reform of the international financial institution. In these and other areas of national interest, Turkey can form coalitions with other like-minded G20 members in the quest for broad agreements, compromise solutions and coordinated responses to urgent global issues.15 In the G20, Turkey can play a unique and persuasive role in representing the aspirations of the non-Western world to play responsible roles in what has been until now a predominantly Western approach to addressing serious global challenges. In the resolution of the current financial crisis, the leadership of Turkey and other key emerging market members of the G20 is very critical, because without their leadership, the G20 itself may just be an episode rather than becoming the transformative mechanism for global leadership in a new era of international cooperation, which the world requires very much at the moment.

Hence, we have analysed the success story of TURKEY, a nation that was recently propelled into the G-20 forum and has used the Dias to exemplify its existence to the world. Thus, political and economic dynamism, for instance, like that of TURKEY, has led to the development of the G-20 forum.

CRITICISMS-

No policy or forum developed so far has been without criticism. Such is the case of the G-20 forum too. The common criticisms against this global forum are:

1. 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,”its legitimacy has been challenged.

2. Norwegian perspective-

Although Norway is a major developed economy and the seventh-largest contributor to UN international development programs,it is not a member of the EU, and thus is not represented in the G-20 even indirectly.Norway, like the other 173 nations not among the G-20, has little or no voice within the group. It characterizes the G-20 as a “self-appointed group”, arguing that it undermines the legitimacy of international organizations set up in the aftermath of World War II, such as the IMF, World Bank and United Nations

3. Global Governance Group (3G) response-

June 2010, Singapore’s representative to the United Nations warned the G-20 that its decisions would affect “all countries, big and small”, and asserted that prominent non-G-20 members should be included in financial reform discussions.[69]Singapore thereafter took a leading role in organizing the Global Governance Group (3G), an informal grouping of 28 non-G-20 countries with the aim of collectively channelling their views into the G-20 process more effectively

4. Foreign Policycritiques-

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.

5. 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.

Thus, having analysed the forum of G-20 NATIONS, its economic and political dynamisms that led to its development, we now stand to understand the INTERNATIONAL TRADE AND FINANCE positions of various global players. The criticisms discussed further lead us to develop a forum that would be more coherent and efficient in parting out its objectives.

Bibliography

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