Can the G20 Decide the World’s Future?

The G20 needs to take a proactive role in including the needs of the developing world.

The final communiqué of the recently concluded G20 summit in Osaka, Japan, was a departure from previous years’ statements. Instead of asserting the grouping’s supposed mission of “strong, sustainable, and balanced growth,” the 2019 communiqué failed to condone protectionist trade policies which have been practised by the United States (US). While the summit halted the US–China trade war, US resistance to the Paris Agreement meant no commitment was made towards its enforcement. 

Since the G20’s first official summit in 2008, which was held to form a global response to the financial crisis, this grouping of the world’s 20 largest economies has since set itself the task to promote sustainable economic development, and reduce poverty. However, the gouping’s approach to tackle these issues has been criticised. It does not represent most of the developing world, and thus lacks international legitimacy. This exclusionary nature resulted in Norway labelling it “the greatest setback” for the world since World War II. Resolutions passed at these summits cannot be enforced on member countries, and the grouping has been rebuked for failing to adhere to its own climate change resolutions. 

Reaching consensus at these summits is difficult. Interests of individual nations block/hinder joint resolutions meant to focus on the health of the world economy. This reading list looks at measures that can be implemented to achieve the G20’s mission statement of sustainable growth.

1) How Can Employment be Generated?

The global accumulation of wealth has its own set of problems: rising unemployment, unsustainable development, large-scale tax evasion, and unfair trade practices. Writing ahead of the 2013 G20 summit in Russia, Mazher Hussain argues that current technological innovations will result in fewer people being employed. To create enough employment, Hussain argues in favour of encouraging “micro entrepreneurs,” instead of following the formal corporate model.

There seem to be just three simple requirements that could enable the emergence of successful micro-entrepreneurs. First, identification of candidates from the skill–training programmes with potential for entrepreneurship and orienting them to basic principles of business management through supplementary courses. Enabling their access to bank loans to start business and finally establish joint mechanisms using internet and modern technology to facilitate in marketing and delivery of their products to a larger, and possibly, global clientele at very low costs … All of this could be easily possible for all the G20 countries with appropriate changes in the prevailing international business practices and appropriate financial-inclusion initiatives.

Further, Hussain writes that greater global financial exclusion can be overcome only if banks give up their “pro-rich” attitude. Loans need to be provided to poorer sections of society without bias.

The entire banking system seems to be structured to serve big business and corporate sector that prefer monthly or quarterly repayment schedules. However petty and small businesses with small margins operate on a daily basis and for them payments of monthly instalments become difficult and could lead to defaults. Hence, new financial products suitable to small entrepreneur, based on daily recovery rather than monthly payments will have to be explored and introduced.  

2) Can the G20 Be More Inclusive?
Suman Bery writes that if the G20 is serious about global inequality, then it needs to do more to channel savings from countries with surplus wealth to poorer nations. To do this, Bery argues in favour of multilateral development banks, who can help channel funds for development finance. 

The rising influence of the NGO lobbies, not to mention staff constraints in the World Bank have conspired to keep the volume of lending much below need. As India is one of the most interested countries, and stands to make a big contribution to global growth were its infrastructure programme to be unaffected, or even accelerated, by the current crisis, it should offer to take the lead in identifying those policies and practices which currently impede growth in lending to the productive sectors, and develop proposals that could lead to a doubling or quadrupling of funds actually spent (not just approved) on, say, infrastructure. 

3) How Does Climate Policy Feature at the G20?
The final communiqué from the Hamburg summit in 2017 confirmed the US’ withdrawal from the Paris Agreement on climate change. While the Hamburg summit concluded with an agreed climate and energy plan to uphold the Paris Agreement, Mukul Sanwal writes that a political consensus between G20 members needs to be achieved to ensure a sustainable future. 

The challenge is to shift the focus of global climate policy to the political consensus in the G-20 agreement on “shaping an affordable, reliable, sustainable and low greenhouse gas (GHG) emissions energy future while utilising energy sources and technologies.” Its three key elements are universal energy access; significant improvement to energy efficiency, and energy conservation through appropriate lifestyle changes … with national energy and other policies becoming increasingly aligned with global objectives worldwide, the global consensus recognises the distinct needs of countries whose emissions have yet to peak—energy access—and rapid decline in countries whose emissions have peaked—changes in lifestyles. A framework that maintains this distinction will be the key in securing “climate justice.”  

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