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Growth and Development Nuts and Bolts for the G-20

Shahrokh Fardoust's picture
 Photo: Istcokphoto.com

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-20Moisés 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.

I would counter that the G-20 action plan for development that emerged from the Seoul Summit was well worth the sweat and effort and was a big success. That it reflected national priorities, as well as regional and global exigencies, is to be expected. Part of the dynamic in Seoul was to be informed by national priorities and to then translate them into global action, where there was consensus among the G20 membership.

Take aid for trade as well as infrastructure, which both matter immensely to non–G-20 members, including most low-income African countries. At the book launch, Arvind argued that aid for trade only remotely supported a global public good agenda. I beg to differ. Aid for trade links  trade to  infrastructure, to customs regulations, and connects farmers to markets. It also helps ensure entrepreneurs and farmers have access to power and can sell their wares and crops. And when we envision infrastructure in developing countries, we also must consider innovation and green alternatives that will avoid “locking in” carbon- and emissions-intensive power plants.

Enlightened aid for trade and modern infrastructure should incorporate a green growth agenda that allows countries to adopt low carbon solutions built for the long term. When we talk about infrastructure, we implicitly include the global public good of climate change. Which, as Moisés pointed out, was a global public good that negotiators failed to move forward on in Copenhagen.

At its core, the G-20 mandate centers around international economic and financial cooperation and the need to foster strong, sustainable, and balanced growth. The development-related topics selected for inclusion at the Busan conference, in our book, and ultimately at the Seoul G20 Summit last month, needed to support this mandate and make contributions to economic growth at the national level and be politically and financially feasible at the global level.

The other constraint faced by the G-20 relates to turf and remit. Trade has the World Trade Organization (WTO). Climate change has the United Nations Framework Convention on Climate Change (UNFCCC). There are already established multilateral fora attempting to address these issues. Meanwhile, critical issues such as infrastructure, agricultural productivity and food security, as well as financial inclusion don’t have their own international champions. Thus they were more viable causes to be taken up by the G-20.

The Koreans approached the development agenda with vigor and pragmatism and an eye to initiatives and sector support that would create jobs, connect people to markets and enable new businesses while reducing poverty.  Hopefully, the French will carry  Korea's legacy forward.

To read a related blog by Lawrence MacDonald of the Center for Global Development, who moderated the event, click here. To learn more about Moisés’ views on ‘mini-lateralism’, click here. To access the content of Postcrisis Growth and Development, click here.