Selling the G-20 short?
At least one sharp observer of the G-20, David Shorr of the Stanley Foundation, thinks my gloom is premature, at the very least: The G-20 summits have launched or sponsored initiatives in other areas, but they have really put their stamp on financial stability and reaching better balance between export- and consumption-oriented economies. If one ...
The G-20 summits have launched or sponsored initiatives in other areas, but they have really put their stamp on financial stability and reaching better balance between export- and consumption-oriented economies. If one accepts that these are worthwhile subjects for high-level international cooperation, then they constitute the fairest tests of G-20 effectiveness. Fair and, at this point, far from conclusive.
On financial stability, the G-20 mandated the tightened Basel III standards for banks’ capital requirements, drove IMF governance reform across the finish line, and set up a new Financial Stability Board (which is still finding its legs). Hardly a disastrous record. Clearly the G-20 has been wrestling with how to spur export-led economies to boost domestic consumption. The first hurdle was to gain China’s acknowledgment that rebalancing was even a fit topic for multilateral discussion (they relented in September 2009 in Pittsburgh). Now G-20 governments are trying to decide what metrics should be used to measure — and thereby spur — rebalancing. That’s what the Seoul summit mandate for finance ministers to draw up "indicative guidelines" was about. If the question of how to quantify imbalances becomes another of those round-and-around debates, that would be a strike against the G-20, but as I say, it’s far too early to reach a verdict.
This is fair. The group has some modest accomplishments on its record, and it’s at least possible that it could rack up more. As Shorr says, the evidence is "far from conclusive." My gloom is based more on the group’s architecture: As I argued in my initial piece, twenty is a large number for what is designed to be effectively a world economic steering committee. The vast economic, social, and political differences between the members reduce further the chances of it operating coherently. I also don’t have the sense that either Washington or Beijing remains very sanguine or enthusiastic about the G-20. And without their engagement, the project is in trouble.
None of this means of course that international economic cooperation is doomed. The G-whatever phenomenon has evolved over time, and I would expect it to evolve again.