Suppose that on the evening of November 16, the G20 leaders release a 25-page communique with hundreds of recommendations on global health, security, climate change, human rights etc. Would this be regarded as a success?
I would say no. That type of communique would mean the leaders have neglected the only real priority a global economic forum should have today: inclusive economic growth.
Inclusive economic growth is what the G20 leaders should be discussing because, firstly, the G20 is a forum for international economic cooperation and not a surrogate of the UN General Assembly, and, secondly, inclusive economic growth is what the world needs in this post-crisis era.
This doesn’t mean other global issues, from Ebola to terrorism and world peace, are not critically important. It means, however, that they should be specifically addressed via other forums and assemblies.
The single issue of inclusive economic growth is more than enough to keep the leaders busy for the two days of the summit. Overloading the agenda with other items would hurt both the credibility of the G20 and the dialogue on those other global issues.
Something’s missing from the conversation
The Australian chair has made a commendable effort to keep the agenda of the G20 focused on economic growth.
Since the global financial crisis, the world has witnessed increasing unemployment, poverty and inequality. Sustained long-term growth is necessary to address these problems. Hence, setting growth as a priority for the 2014 G20 has been, unquestionably, a good move.
The Australian government also pushed the G20 to commit to raising the level of G20 output by at least 2% above the currently projected level over the next five years. The adoption of a quantitative target for growth has been a welcome innovation as it has helped the world understand what the G20 is about and what it tries to achieve.
There are, however, some important deficiencies in the current G20 conversation on growth.
First of all, the quantitative target set for the next five years is not ambitious enough. A 2% increase above currently projected GDP level might be satisfactory for some stagnating southern European economies. But in the global context, more is needed to end the upward sloping trends in unemployment, poverty and inequality.
Also, the insistence of the Australian chair on infrastructure development as the key strategy to achieve growth is unfitting. For one thing, it presumes a “one-size-fits-all” approach, which experience has shown to be highly inadequate. For another, infrastructure development might be what Australia needs for growth, but certainly it is not the primary way to stimulate growth in many other G20 countries.
Finally, the conversation so far has been primarily concerned with the quantitative aspect of growth. But for growth to have a significant impact on unemployment, poverty and inequality, growth itself must be inclusive.
Inclusiveness in this context means that all individuals, especially those at the bottom end of income distribution, must have access to the wealth produced through growth. If growth is not inclusive, then its impact on unemployment, poverty and inequality will only be marginal.
What success will look like
So, against this background, here’s what I think would constitute a successful outcome of the Brisbane leaders’ summit.
First, the communique should be short and to the point. Experience suggests long communiques mean a lack of agreement among members and, as a result, lack of substantive discussion of the problems at hand.
The Australian chair has indicated this year’s communique will be at most three pages long. This is certainly a good starting point. The hope is that rhetoric will be kept in check.
Second, the communique should reflect a commitment to achieving inclusive economic growth. A declaration on fostering economic growth would not be good enough. There ought to be an explicit recognition of the notion of inclusiveness.
The language might vary depending on the context; words other than inclusiveness might be used. But whatever these words are, they must unambiguously indicate that the G20 as a group is not just concerned with the production of new wealth, but also with its distribution.
Third, in terms of strategies to achieve this growth, leaders should take stock of the preparatory work done before the summit and put an emphasis on policy implementation at a national level.
Leaders should not be expected to agree on a global blueprint for growth. Growth strategies ought to be designed at a national level to account for different circumstances and starting conditions.
No two G20 countries are the same
The role of the G20 summit is to help each leader overcome short-term political constraints and focus on the implementation of reforms and policies needed to achieve inclusive growth.
In a globalised economy, national growth strategies are interdependent. Recognition of these interdependencies and discussion of multilateral actions to support policy implementation at national level is the global public good the G20 can and should produce.
Fourth, the discussion on international issues like international tax, trade and financial regulation (i.e. issues that cannot be solved by countries acting unilaterally) ought to be linked to the achievement of inclusive economic growth.
If the summit were able to deliver on these four points, and I do think it can,
then we would have proof the G20 is transiting from being a “crisis-management” forum to becoming the centrepiece of a new system of global economic governance.
This would be a great success, because, like it or not, a globally integrated world cannot do without some serious global economic governance.
By Fabrizio Carmignani, Griffith University