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The G-20 Summit at Five

The G-20 Summit at Five: Time for Strategic Leadership

Copyright Date: 2014
Pages: 302
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  • Book Info
    The G-20 Summit at Five
    Book Description:

    Can the G-20 become a steering committee for the world's economy? Launched at a moment of panic triggered by the financial crisis in late 2008, the leaders' level G-20 is trying to evolve from crisis committee for the world economy to a real steering group facilitating international economic cooperation.

    What can and should such a "steering committee" focus on? How important could the concrete gains from cooperation be? How much faster could world growth be? Is there sufficient legitimacy in the G-20 process? How does the G-20 relate to the IMF and the World Bank? How can Australia in 2015, and then Turkey in 2016, chair the process so as to encourage strategic leadership?

    The East Asian Bureau of Economic Research in the Crawford School of Public Policy at the Australian National University and the Global Economy and Development program at the Brookings Institution joined forces in putting together this volume and asked opinion leaders and policymakers from G-20 countries to provide their independent perspectives.

    Contributors include Colin Bradford (Brookings), Peter Drysdale (Australian National University), Kemal Dervis (Brookings), Andrew Elek (Australian National University), Ross Garnaut (University of Melbourne), Huang Yiping (China Center for Economic Research), Bruce Jones (Brookings), Muneesh Kapur (IMF), Homi Kharas (Brookings), Wonhyuk Lim (Korea Development Institute), Rakesh Mohan (IMF), David Nellor (consultant, Indonesia), Yoshio Okubo (Japan Securities Dealers Association), Mari Pangestu (Republic of Indonesia), Changyong Rhee (former Asian Development Bank), Alok Sheel (Government of India), Mahendra Siregar (Republic of Indonesia), Paola Subacchi (Chatham House, London), Carlos Vegh (Brookings), Guillermo Vuletin (Brookings), and Maria Monica Wihardja (World Bank).

    eISBN: 978-0-8157-2592-3
    Subjects: Economics, Political Science

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Acknowledgments
    (pp. vii-viii)
  4. PART ONE Principles of Global Governance

    • 1 G-20 Summit at Five: Time for Strategic Leadership
      (pp. 3-18)

      The leaders’ level G-20 was born at a time of crisis and panic.¹ In early October 2008, when the United States issued the invitation to the G-20 heads of state or government to assemble in Washington, D.C., on November 15, the world was facing the danger of a total collapse of the financial sector in the United States. With global trade and financial links having grown over the decades, particularly after the fall of the Berlin Wall in 1989, a financial collapse in the largest economy—and the financial center—of the world would have brought down the entire world...

  5. PART TWO Managing the G-20

    • 2 Adapting to the New Normal: The G-20 and the Advanced Economies Five Years after Washington
      (pp. 21-43)

      In September 2008, in the aftermath of the collapse of Lehman Brothers that brought the U.S. banking system to the brink of collapse, and the world with it, the president of France, Nicolas Sarkozy, called for collective action to backstop the crisis: “We must rethink the financial system from scratch, as at Bretton Woods.” This suggestion was echoed by Britain’s Prime Minister Gordon Brown: “We must have a new Bretton Woods, building a new international financial architecture for the years ahead.”¹

      Those were the dramatic days when the crisis was spreading to banks in Europe, affecting credit and confidence. As...

    • 3 The Role of Emerging Economies in Major G-20 Initiatives
      (pp. 44-66)

      In the five-year perspective of the G-20 experience, the decision to include emerging economies in the dialogue to address the global financial crisis proved beneficial for the world economy. Coordinated expansionary policy action by both advanced and emerging economies limited the global repercussions of a financial and economic crisis emanating from advanced economies. Even as the global economy started faltering in late 2007, emerging G-20 economies continued to post strong positive growth. In fact, during the worst of the global crisis in 2009, when the world economy contracted by 4.2 percent, emerging G-20 economies managed to contribute 1.7 percentage points...

    • 4 The G-20 in Crisis? Or the G-20 on Crises?
      (pp. 67-90)

      At the time of writing, we are just over five years past the peak of the global financial crisis. Since 2009, substantial progress has been made toward recovery. Yet it is premature to declare an end to the crisis. Slowing global growth, tough transitions in the emerging powers, and the eurozone crisis are the manifest signs of continuing troubles, while credit risks in China and resurgent protectionist sentiment in the major economies are flashing yellow lights about potential deeper troubles ahead. Moreover, by most accounts the regulatory and preventive steps taken after the global financial crisis were only partial in...

  6. PART THREE The Core G-20 Economic Agenda

    • 5 Monetary Policy Coordination: The Role of Central Banks
      (pp. 93-118)

      Since the onset of the North Atlantic financial crisis in 2008, central banks in the United States and the other major advanced economies have pursued extraordinarily accommodative monetary policies through unconventional policy actions. Accordingly, policy rates have been near zero in these economies for almost five years, and both short-term and long-term interest rates have touched historic lows. These low interest rates encouraged the search for yield, and consequently, large amounts of capital flowed out from these reserve-currency economies to the still relatively fast-growing emerging market economies (EMEs), complicating their macroeconomic management.

      Capital flows to the EMEs are known for...

    • 6 Global Rebalancing and Systemic Risk Assessment: The G-20 and the International Monetary Fund
      (pp. 119-143)

      The G-20 Framework for Strong, Sustainable, and Balanced Growth was launched at the Pittsburgh G-20 summit in September 2009. “Our Framework for Strong, Sustainable, and Balanced Growth is a compact that commits us to work together to assess how our policies fit together, to evaluate whether they are collectively consistent with more sustainable and balanced growth, and to act as necessary to meet our common objectives.”¹ The International Monetary Fund (IMF) was tasked with contributing the “analysis of how our respective national or regional policy frameworks fit together.”² The focus at the time was principally on the concentration of external...

    • 7 Fiscal Policy Responses during Crises in Latin America and Europe: Implications for the G-20
      (pp. 144-158)

      This chapter summarizes our research on the social implications of fiscal policy responses to crises in Latin America over the last forty years and in the eurozone during the aftermath of the global financial crisis.¹ We focus on the behavior of social indicators such as the poverty rate, income inequality, unemployment rate, and domestic conflict. We find a causal link from countercyclical (and procyclical) fiscal policy responses to better (and worse) social outcomes, both in Latin America and in the eurozone. These results call into question recent claims on expansionary fiscal austerity.

      It is well established by now that developing...

    • 8 The G-20 and Financial Market Regulation
      (pp. 159-177)

      Financial market regulation has been the core agenda of the G-20. In the immediate wake of the global financial crisis, uncertainties were abundant and tremors from the collapse of several major financial institutions were still being tangibly felt around the world. The G-20 leaders’ summit was created during these tumultuous moments. Their first meeting in November 15, 2008, was focused on the glaring inadequacy of the regulations of global financial markets exposed by the crisis. The leaders sent a clear message that their regulators would work together internationally to contain the impact of the crisis and create a better financial...

    • 9 The G-20 and Sustainable Development
      (pp. 178-200)

      The publication “St. Petersburg Development Outlook” is the G-20’s most recent assertion that the group can add value to nonmember countries in general and to low-income countries in particular.¹ It emphasizes the role of the G-20 on measures to promote growth and resilience and adds to the framework of strong, sustainable, and balanced growth by calling for economic growth to be “inclusive and resilient” as well.

      This broader framework for growth helps the G-20 to link development and growth more tightly in a way that is critical to meet the group’s self-stated objectives of “ending poverty and boosting shared prosperity.”...

  7. PART FOUR Other Issues for Reform of Global Governance

    • 10 A G-20 Agenda for the Global Trade Regime
      (pp. 203-222)

      Few propositions in economics are so clear: the global economy would be better off with a more open trading regime supported by an adequate regulatory framework. The payoff from such multilateral liberalization would be significant. One result would be about US$2 trillion that could be committed in the near term. Yet the international community fails to make meaningful progress toward this unambiguous payoff.¹

      The G-20 had a tremendous opportunity to move the trade agenda forward following the global financial crisis. The elevation of the G-20 to the leaders’ level in 2008 strengthened the legitimacy of global economic leadership. But more...

    • 11 The G-20 and International Cooperation on Climate Change
      (pp. 223-245)

      The climate change issue makes exceptional demands on capacity for collective action at home in each country and among states. The free rider problem of collective action is never easy to overcome. Effective collective action within or between countries invariably requires intellectual and institutional innovation and new dimensions of political leadership. The emergence of ideas, institutions, and political leadership and capacity for collective action on particular issues and at particular times can never be taken for granted.

      The G-20 is ideally suited as the main forum for guiding international collective action on climate change. It contains all of the world’s...

    • 12 The Chinese Economy and the Future of the G-20
      (pp. 246-260)

      When President Bush invited leaders of some industrial and developing countries to the first G-20 summit in November 2008 in Washington, many saw it as a historic opportunity for China to play a role in international economic policymaking compatible with its economic weight. Some even perceived the G-20 summit as a turning point in the international economic order. The global financial crisis revealed that the old system, established at the end of World War II by the United States and its allies, no longer worked effectively. Major developing countries like China should naturally be a part of the shaping of...

    • 13 Global Infrastructure Opportunities for the G-20 and Regional Organizations in the Asia Pacific Region
      (pp. 261-284)

      World leaders can use the G-20 to help all economies reach their potential for sustainable development and to deal with threats to the global economy. Unfortunately, five years after its excellent start, the forum’s effectiveness is already in doubt. The G-20 agenda for cooperation has become very broad, but huge threats to the prospects for inclusive and sustainable development are not receiving adequate attention.

      The G-20 needs find a way to restore the momentum of global economic growth after the damage of the 2008 global financial crisis. Until there is confidence in a robust recovery, it will be difficult to...

  8. Contributors
    (pp. 285-286)
  9. Index
    (pp. 287-302)
  10. Back Matter
    (pp. 303-303)