The G20 seminar begins with the definition of the newly-formed group of nations. The G stands for ‘global’ which is descriptive of the new organization of the leaders from 20 countries who took the lead in helping along global economic development that had been badly needed in 2008. Their combined GDP is reported to total 80% of the world’s overall GDP. The group also accounts for two-thirds of the world’s total population, which also represents 20 of the most influential countries in their region. The G20 is called a crisis baby.
Born from the global economic recession in 2008, it was conceptualized from a meeting of countries after the Lehman Brothers collapsed to prevent the recession from spiraling out of control to other countries. Their main goal was to solve the global economic problem as they represent the different concerns of different countries, shifting the focus internationally, rather than focusing on the Western nations’ interests. The G20 achieved what was called a psychological support, where the people believed that their leaders were actually doing something to solve the problem. The G20 also created a $1.
1 trillion fund to become a shock absorber for the crisis. These, along with other economic policies and funds set-up have been accomplished by the group in order to save, not only their countries from an economic meltdown, but also other countries that their economies are tied to. The current challenge today for the G20 countries is to create a comprehensive exit policy for nations as the world climbs out of recession. These exit policies comprise of policies that counteract the measures that countries have created to protect their own economies and markets from collapsing along with the recession.
These national policies, called special policies, need to change in order to accommodate the global need to be constant across all countries especially since the world is interconnected in every way. In the light of the creation of the G20, the IMF and the WB came under scrutiny. As the economic and financial authorities of the world, they were expected to warn everyone of the economic crisis that was coming, which they didn’t. The problem with these institutions is that they no longer reflect the world today.
Born in a world where the West was the dominant force, they are currently proving to be inefficient in the current world order where the balances of power are shifting. The challenge is to put together a sustainable set of rules for tomorrow. Because of this scrutiny, reforms of International Finance Institutes, such as the two stated are important to become relevant in the new world order emerging. Parallel to this, financial institution reforms are also important and their regulation is needed, so that when one of them encounters a problem, there won’t be a domino effect to other banks and economies.
In the US, when financial institutions failed, the taxpayer’s money was used to revive them. Because of that, they are required to pay back by the government. Other countries, on the other hand, didn’t need government intervention. This difference in handling the economic situation is why coordination among countries is necessary. This is further enhanced by the symbolism of G20’s choice of a non-G8 member to host. This sends a message that the group is set to succeed even though they are all different in ideals, goals and ways of doing things.
An important key is to create a framework for strong, sustainable, balanced growth. One of the causes of current economic problems is the huge macroeconomic imbalances. In response to this, the G20 tasked the IMF to assess the imbalances and try to balance it. Another key is to create a global economic policy approach that offers development policies from country experiences. An example is the Korean experience of emerging to a developed country status, which can be offered to other emerging nations to have a framework of development. This can be used to bridge the gap between the G20 and non-G20 countries.