The Group of 20 leaders met for an intense 24-hour period over two days, discussing the situation in Syria and the global economy. Watch this video blog to hear what World Bank Group President Jim Yong Kim thought shouldn't be forgotten in these important discussions.
During my trip to Russia — I'm here to talk to government officials, civil society leaders, students, and attend the Group of 20 meetings — one of the major themes has been how an upper middle income country can boost shared prosperity among its citizens. How can Russia make sure that its growth includes women, young people and others, and how can it benefit future generations? Watch the video for more.
As Russia begins hosting the G20, I thought readers might be interested in my Reuters interview earlier this week making the case for proactive monetary and fiscal policy coordination. There has been a lot of talk of currency wars. I believe that what we are witnessing now are best described as currency skirmishes. The trouble is that a skirmish can easily segue into a war. That is what makes it imperative for nations to have conversations and coordination on monetary and fiscal policies. Skilled interventions are needed on multiple fronts, from managing government debt levels to financing long-term investment in developing countries. My hope is that leaders in Moscow will be attentive to these and might also turn their minds to interventions for the poor, whether they live in far corners of Russia’s great expanse, the townships of South Africa, the favelas of Brazil or the rural hinterlands of China and India.
This is the central message of a report World Bank staff prepared as an input to the G20 Los Cabos summit held from June 18-19. The summit comes at a precarious time for the world economy. The Euro Area is facing a relapse into recession, with potentially large losses of output with global repercussions if current risks to stability and growth are not addressed forcefully. Recovery in other advanced economies is weak and faltering. Growth is also slowing in emerging economies that have been the drivers of global growth in recent years. Against this background, the Bank report, entitled Restoring and Sustaining Growth, conveys the following main messages:
These are some of the views and reports relevant to our readers that caught our attention this week.
“In less than three decades, the mobile phone has gone from being a status symbol to being a ubiquitous technology that facilitates almost every interaction in our daily lives. One month after the world’s population topped 7 billion in October 2011, the GSM Association announced that mobile SIM cards had reached 6 billion. A 2009 study in India illustrated that every 10 percent increase in mobile penetration leads to a 1.2 percent increase in GDP.
Yet patterns of mobile phone use in developing countries are vastly different from what you see on the streets of New York, San Francisco, and Berlin. This is a market underserved by technologists and startups. This is where the majority of future growth lies, and Silicon Valley has yet to realize the huge economic opportunities for network operators, handset developers, and mobile startups. Where are these opportunities?” READ MORE
In the wake of the 2008 global financial crisis, many observers thought that the G-20 had a chance to succeed in the development arena where the G-8 foundered. Expectations were high that the G-20’s wider legitimacy and fresh remit would result in breakthrough solutions to knotty problems, from health pandemics to global warming. Yet the reality was that the G-20 Working Group on Development was pragmatic and selected a somewhat narrower range of priorities to focus on and many of the issues were ones that grew out of regional or national priorities. That is how the real world works—by consensus and stakeholder collaboration.
At the book launch for Postcrisis Growth and Development: A Development Agenda for the G-20, Moisés Naím and Arvind Subramanian, both astute observers of trends in globalization, expressed disappointment that the G-20 development agenda didn't devote more energy to big ‘global public goods’ issues. Moreover, they noted a failure to grapple with the biggest risks facing the development community, such as illicit financial flows or climate change.
The Seoul G20 summit in November ended with some homework for the World Bank. We were asked to work with the ILO, OECD and UNESCO to develop internationally comparable indicators of skills that can help countries in their efforts to better match education and job training to market needs. The G20 was right to make this a priority.
In this post-financial crisis period, jobs play an important role in recovery. Making sure that people have the right skills to get these jobs is the other side. Developing countries, especially, know that skills development is necessary if they are going to attract investment that will create decent jobs and raise productivity.
Muchos observadores predicen que la cumbre del Grupo de los Veinte (G-20) que se lleva a cabo esta semana en Seúl será recordada principalmente como un baile de alta diplomacia destinado a persuadir a sus miembros para que se abstengan de una devaluación competitiva de sus monedas y regulen los desequilibrios excesivos en cuenta corriente.
Si la mayoría de los titulares de Seúl se refieren a disputas sobre divisas y a quién pertenece el déficit o superávit más perjudicial, entonces los líderes se habrán malgastado la oportunidad de llegar al fondo de la cuestión.
En efecto, ese resultado sería un revés para los países en desarrollo y afectaría posiblemente la legitimidad del G-20 como agente de inclusión de la cooperación económica y financiera en la economía mundial.
(Also available in Spanish)
Many observers predict that this week’s G-20 Summit in Seoul will be remembered mainly as a dance of high diplomacy aimed at persuading members to refrain from competitive devaluation of currencies and to reign in excessive current account imbalances.
If most headlines from Seoul are about spats over currencies and whose deficit or surplus is most harmful, then leaders will have missed the Seoul of the Matter.
Indeed, such an outcome would be a setback for developing countries and could potentially erode the legitimacy of the G-20 as an inclusive broker of financial and economic cooperation in the global economy.
Editor's Note: Professor Franklin Allen came to the World Bank on October 27 to give an FPD Chief Economist Talk on the topic of Reforming Global Finance: What is the G20 Missing? Please see the FPD Chief Economist Talk page to download a copy of his presentation and watch a video of his Talk.
The recent financial crisis clearly had more than one cause. My view is that the most important one was a bubble in real estate prices, not only in the US but also in a number of other countries such as Spain and Ireland. It was the bursting of this bubble that has led to so many problems in the world economy. A significant part of this is a direct effect on the real economy rather than an effect transmitted through the financial system. For example, Spain had one of the best regulated banking systems and its banks did much better than in other countries. Yet with a doubling of its unemployment rate to 20 percent, its real economy has been devastated. In contrast countries like Germany that did not have a real estate bubble but had much larger drops in GDP have not suffered nearly as much. Germany's unemployment rate is now lower than at the start of the crisis.