G20 as a guardian of global wel­fare

China Daily (Hong Kong) - - COMMENT -

Vow­ing to push for “in­ter­con­nected” growth, lead­ers at the July 7-8 G20 sum­mit in Ham­burg, Ger­many, de­cided to take con­crete ac­tions to build eco­nomic re­silience, im­prove sus­tain­abil­ity, and as­sume global re­spon­si­bil­ity. They also re­solved to tackle com­mon chal­lenges fac­ing the in­ter­na­tional com­mu­nity, in­clud­ing ter­ror­ism, peo­ple’s dis­place­ment, poverty, hunger, health prob­lems, un­em­ploy­ment, cli­mate change, en­ergy se­cu­rity and in­equal­ity to en­sure sus­tain­able de­vel­op­ment.

The G20, which ac­counts for 85 per­cent of the world econ­omy and 80 per­cent of global trade, used macro-level eco­nomic pol­icy co­or­di­na­tion to con­trol the dam­age caused by the 2008 global fi­nan­cial cri­sis. The co­or­di­nated ac­tions of the G20 mem­bers from 2009 to 2012 helped in­ject liq­uid­ity into mar­kets, re­cap­i­tal­ize in­ter­na­tional fi­nan­cial in­sti­tu­tions, as well as pro­vide a for­mula for global eco­nomic re­cov­ery and avoid crises.

Its ef­forts are also an ex­em­plar of co­op­er­a­tion be­tween de­vel­oped and emerg­ing economies. The ro­tat­ing G20 chair al­lowed de­vel­op­ing coun­tries to help im­prove glob- al eco­nomic gov­er­nance. For coun­tries such as China, In­dia, Brazil and South Africa, which for decades have been at the re­ceiv­ing end of global eco­nomic poli­cies set by in­sti­tu­tions such as the In­ter­na­tional Mon­e­tary Fund and the World Bank, this op­por­tu­nity has been in­valu­able. As the G20 chair last year, China brought is­sues that are vi­tal to de­vel­op­ing coun­tries, such as trade in ser­vices, cli­mate change and in­no­va­tion, into the global eco­nomic gov­er­nance frame­work.

Some doubt whether the G20 should have ven­tured be­yond its orig­i­nal man­date of fix­ing the global fi­nan­cial ar­chi­tec­ture to take up noneco­nomic is­sues such as cli­mate change, health­care, mi­gra­tion and ter­ror­ism. But un­der pres­sure to ad­dress the larger so­cio-eco­nomic needs of its mem­bers, the G20 be­gan to also fo­cus on is­sues such as eco­nomic in­equal­ity, job­less growth and sus­tain­able de­vel­op­ment chal­lenges. As such, the G20’s role has evolved log­i­cally.

Look­ing at the G20 from the per­spec­tive of ef­fec­tive global eco­nomic gov­er­nance, one is tempted to ask: Do the G20 mem­bers see the group­ing as a con­stel­la­tion of great eco­nomic pow­ers or are they ready to act as guardians of global wel­fare? The G20 can achieve both ob­jec­tives.

First, due to the G20’s unique eco­nomic and po­lit­i­cal weight, its mem­bers have the spe­cial re­spon­si­bil­ity to fa­cil­i­tate free trade and take anti-pro­tec­tion­ist mea­sures. Sus­tain­able eco­nomic growth can­not be achieved glob­ally un­til ev­ery G20 mem­ber re­al­izes it within its econ­omy. To demon­strate sin­cer­ity to­ward their com­mit­ments, the G20 mem­bers should take mea­sures to en­sure free trade, in­vest­ment and fi­nanc­ing to also help im­prove the well-be­ing of peo­ple across the world. This will boost do­mes­tic em­ploy­ment while help­ing cor­rect global im­bal­ances.

Sec­ond, the G20 mem­bers should work to­gether to help the world econ­omy to adopt low-car­bon and re­source-ef­fi­cient growth mod­els. They also need to es­tab­lish co­her­ent pol­icy frame­works for in­clu­sive growth an­chored on the 2030 Agenda for Sus­tain­able De­vel­op­ment and the Paris cli­mate agree­ment, and urge mul­ti­lat­eral de­vel­op­ment banks and other in­ter­na­tional fi­nan­cial in­sti­tu­tions to fol­low so­cial and en­vi­ron­men­tal stan­dards set by the in­ter- na­tional com­mu­nity.

Third, the G20 economies should work out new in­sti­tu­tional ar­range­ments for North-South and South-South knowl­edge shar­ing to ad­dress global eco­nomic and so­cial chal­lenges, as well as to break the hold of ma­jor Or­ga­ni­za­tion for Eco­nomic Co­op­er­a­tion De­vel­op­ment mem­ber coun­tries on in­ter­na­tional knowl­edge net­works. In­no­va­tive knowl­edge so­lu­tions can be­come ef­fec­tive on a global scale only if they are co-cre­ated by par­tic­i­pants from dif­fer­ent re­gions and re­flect plu­ral­is­tic ideas and ap­proaches. The G20 should, there­fore, es­tab­lish an in­clu­sive knowl­edge net­work to sup­port its fu­ture ac­tions and to in­ter­act with pol­i­cy­mak­ers, as well as busi­nesses and civil so­ci­ety across the world.

The G20 has gath­ered enough ex­pe­ri­ence in global eco­nomic gov­er­nance. As well as ex­pand­ing its eco­nomic role, now it should also make ef­forts to trans­form it­self from a club of eco­nomic pow­ers to a gen­uine guardian of global wel­fare.

The au­thor is a se­nior econ­o­mist, Eco­nomic Re­search In­sti­tute for ASEAN and East Asia.

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