The G20 is an international group of countries from around the world bound by a focus on economic policies and principles with a goal of achieving global financial stability and sustainable growth (“What is the G20.”). This sample economics essay explains the concept of the Summit and explores the impact on global economics.
Introduction and history of the G20 Summit
The G20 is composed of nineteen countries and the European Union (“About G20”). Member countries include:
- The United States
- The United Kingdom
- South Africa
- Saudi Arabia
- The Republic of Korea
- The European Union
The summit brings together the finance and economic gurus of each member entity, generally comprised of finance ministers and central bank governors (“What is the G20”). Unlike the United Nations and NATO, the “G” has a rotating presidency which is taken on by a different country each year that is responsible for establishing the agenda and hosting the summit (Laub & McBride).
This prevents global giants like the United States and the European Union from dominating the group. Policy initiatives are debated and structured prior to the annual leadership summit by personal representatives of governmental heads of state called Sherpas.
Starting with the smaller “G” groups
The G20 legacy began in 1975 as the G6, composed of the United States, the United Kingdom, Japan, Italy, France, and West Germany (Laub & McBride). The focus of the non-communist membership was to address important considerations such as recession and inflation inspired by the then OPEC oil embargo, and the impact of the Cold War. Canada joined the industrialized democracies the next year creating the G7 (Laub & McBride).
Russia joined the G7 in 1998 at the behest of President Bill Clinton, who believed that inclusion would be a positive move and potentially inspire a lean to Western principles. But the G7 (which became the G8 in 1998) was not happy about this inclusion because the Russian economy was comparatively small and the country had sustained enormous debt (Laub & McBride).
Russia’s membership in the original G7
Russian maneuvers toward authoritarianism and poor foreign policy policies caused the country to fall out of favor with its “G” counterparts (Laub & McBride). In 2013, Russian sponsorship of Bashar al-Assad, President of Syria, during the Syrian civil war was in stark conflict with the views of the other G8 members. The summit called for the deposing of al-Assad, while Russia continued to support his regime.
The Soviet country led the G8 summit in 2006 and again in 2014, but only momentarily (Laub & McBride). The Crimean annexation in 2014 marked a change in Vladimir Putin’s foreign policy and was quickly condemned by the remaining G8 members and the summit, scheduled for Sochi, Russia, was reconvened in Brussels without Russian participation. The ouster of Russia from the G8 aligned with efforts to increase sanctions against Russia which took place in April 2014 (Acosta).
A recession hit Russia, in 2015, and the now G7 tied the removal of sanctions to the signing of the Minsk Agreements. Recent reports by the Russian newspaper Kommersant indicate that the sanctions imposed have had an impact on the country (Kottasova). Exports of Russian vodka has declined by 40%, to the lowest levels in 10 years.
The U. K., one of the biggest importers of Russian vodka, sales declined by 35%, in the U. S. sales were down by 22%, and sales in the Ukraine were down by 70%. Russia has remained a membership outlier, and the G7 nations enjoy more cohesion and political accord as a result (Laub & McBride).
The birth of the new G20
In 2009, the G8 was superseded by the G20, at the suggestion of President Barack Obama (Brusk & Henry). The changing international political and economic face were cited as the reasoning behind the decision to include additional nations. The G20 would now represent 90 percent of the global economy. The focus of the G20 would be on international economic cooperation, while the G8/G7 focus would be on important global security issues, although its prior clout would be substantially diminished (Brusk & Henry).
Two G20 Summits in 2010
The G20 has held summits regularly once or twice a year. In 2009, the summit held in Pittsburg, Pennsylvania was hosted by Obama and announced the G20 standing council for global economic cooperation (Brusk & Henry).
All nations pledged to continue the collective and robust policy response to the economic crisis to ensure and secure a durable fiscal recovery, and make certain that jobs were created when growth returned, and not prematurely stop the stimulus until it was clear that recovery had taken hold (“G20 Leaders’ Statement Pittsburgh”).
Once it was clear that the time was right, to thoughtfully reduce the strong policy support, and take steps to ensure financial responsibility. The nations established a framework for “Strong, Sustainable and Balanced Growth” as the foundation for accomplishing consistent policy actions and enhanced frameworks (“G20 Leaders’ Statement Pittsburgh”).
The next summit, in June of 2010, was hosted in Toronto, Canada, lead by Stephen Harper, it focused on the phasing out of fossil fuel subsidies (Ramos) and recovery for the European financial crisis (“G20 Leaders’ Statement Toronto”). The nations at the summit agreed to continue financial stimulus measures and make growth based plans in the more industrialized nations and ensure sound fiscal decisions to keep the recovery going (“G20 Leaders’ Statement Toronto”). Reduction plans to cut deficits in half by 2013 and to diminish national debt-to-GDP ratios by the year 2016.
The nations at the summit agreed to continue financial stimulus measures and make growth based plans in the more industrialized nations and ensure sound fiscal decisions to keep the recovery going (“G20 Leaders’ Statement Toronto”). Reduction plans to cut deficits in half by 2013 and to diminish national debt-to-GDP ratios by the year 2016.
Further, the countries agreed to enhance social safety nets, governance reform for corporations, strengthening money markets, ensure spending on infrastructure, and create a more flexible exchange rate (“G20 Leaders’ Statement Toronto”). The acknowledgment was made that consideration needed to be given to the impact that policies made by the larger wealthier countries would have on the smaller, lower income countries.
Seoul, South Korea
The G20 met again in 2010 in Seoul, South Korea, was hosted by Lee Myung-bak, and the main topic was shared global economic recovery (Jaewon, Laurence & Trevelyan). The nations resolved to create and develop:
- Macroeconomic policies and fiscal consolidation for growth and market stability
- More market friendly exchange rates
- A flexible exchange rate
- Not engaging in competitive devaluation of currencies
- Focusing on not engaging in excess volatility in exchange rates
- Reforms to encourage global demand
- Enhance the establishment of jobs and foster growth
All nations will promote sustainability and follow the expanse of policies geared to the reduction of imbalances.
G20 enters agriculture and food security
In November 2011, hosted in Cannes, France, the G20, led by Nicolas Sarkozy, addressed agriculture and food security and reinvigoration of economic growth in the face of a global economy that had weakened since the previous G20 meeting (“G20 Leaders’ Statement Cannes”). Also, the members refocused on:
- Strategic worldwide growth and job invigoration
- Stabilizing the International Monetary System
- Dealing with the volatility in commodity pricing and efforts to promote agriculture
- Strengthening energy markets and aggressively combating climate change
- Fighting against protectionist actions and enhancing trade
- Proactively undertaking the difficulties related to development
- Combating corruption and addressing global governance reform
In June 2012, the summit was held in Los Cabos, Mexico, hosted by Felipe Calderón, and leaders turned their attention to funding of the International Monetary Fund and resolving the European debt crisis (“G20 Leaders’ Statement Los Cabos”). Further, adopting policies to enhance world demand, encourage growth and reinvigorate confidence, confront economic risks, promote job creation and fight back unemployment were essential multilateral aims.
The European Union member nations promised to take actions to safeguard regional stability and to support Spain’s fiscal restructuring (“G20 Leaders’ Statement Los Cabos”). The creation of a European Stability Mechanism was forthcoming with the goal of strengthening Europe in times of financial difficulties.
Economic structural reforms were encouraged and efforts were taken to ensure positive outcomes. Combating unemployment was recognized as a priority to encourage financial well-being and curtail poverty, including creating access to quality jobs for teens to set them on the right track early (“G20 Leaders’ Statement Los Cabos”). The members recognized the importance of establishing social protection floors which would aid
The members recognized the importance of establishing social protection floors which would aid low-income countries to enhance the well-being of their citizens and stimulate their economies. Barriers created that hindered women from achieving full social and economic participation were viewed as a high priority goal to overcome. Encouraging open trade, bolstering markets, and preventing protectionism were a crucial objective for the Los Cabos Summit members (“G20 Leaders’ Statement Los Cabos”).
Russia’s last G20 Summit
The 2013 summit was held in St. Petersburg, Russia, hosted by Vladimir Putin, and one of the main topics was ensuring that there would be no currency wars (“G20 Leaders’ Statement Russia”). There was acknowledgment that previous summit efforts taken were having a positive impact on the United States, the United Kingdom Japan, the Euro area and emerging market countries. A St. Petersburg Action Plan was established to:
- Spur economic activity
- Create jobs
- Sustain the recovery
- Act on risks
- Reinforce the framework for growth through reforms
- Implement actions and utilize monitoring to ensure goals were achieved
Recent G20 Initiative
November 2014, in Brisbane, Australia, Tony Abbott served as summit host, the central objective for the members was increased global economic growth, job creation, making trade a priority, and reduction of poverty (“G20 Leaders’ Statement Brisbane”).
On November 2015, in Antalya , Turkey, Recep Tayyip Erdoğan hosted the leaders, and members attended to world politics and terrorism, due to the recent attacks in Paris (“G20 Leaders’ Statement Antalya”). The next G20 summit will meet in Hangzhou, China, in September 2016, hosted by Xi Jinping (G20 2016 China).
The first Sherpa Meeting under the Chinese leadership took place on January 14, 2016. There were over 400 delegates from member countries, many guest countries, and numerous international organizations (“2016 First G20 Sherpa Meeting Opens in Beijing”). Chinese State Councilor Yang Jiechi declared that the theme for the 2016 Summit would be focused:
“Towards an Innovative, Invigorated, Interconnected and Inclusive World Economy.”
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