ARTICLES Evolution of G20 Process: From Priyadarshi Dash* Crisis Management Prativa Shaw** *** to Development Akansh Khandelwal Cooperation Abstract: With two decades of functioning, G20 Process seems to be maturing with much wider scope of engagement among the member states. G20 Summit Agenda has diversified from a finance focus to hard-core development issues. While it is being viewed as a welcome step by the global community from the perspective of an alternative forum for deliberations on common issues affecting the world, there is suspicion over the legitimacy, ownership and effectiveness of G20 commitments by the member states and the third countries. The article discusses the evolution of G20 Agenda in that spirit. Introduction Nations (UN), International Monetary Fund Inter-country groupings and regional (IMF), World Bank, etc. or demanded special economic communities (RECs) have been attention. A wild retrospective assessment integral parts of global governance in the post- would rather suggest that country groupings war period. The critical areas of contributions like G7, G20, G77, Non-Aligned Movement of these entities were often manifested in (NAM), G77, BRICS, IORA, NAFTA, ASEAN, building coalitions among the like-minded EU and similar organisations have contributed countries or countries of similar development to global governance in manifold ways along characteristics on regional and global issues with establishing their unique positions on particularly trade and investment promotion, certain issues. poverty alleviation, job creation, heath and In that parlance, G20 seems to have gathered education, environment protection, climate more attention in recent years than any other change, social inclusion and other mutually- inter-country organisations in the world even beneficial development concerns. Most of though it does not have any legal status yet these multilateral and regional platforms despite being active for the last two decades. have attempted to articulate aspirations of Having a unique membership composition the regions or country groupings which were involving both developed economies and either not effectively addressed in existing emerging markets, G20 appears to be quite institutions of global governance like the United ambitious in its mandate and coverage of * Assistant Professor, RIS; Email: [email protected] ** Research Assistant, RIS; Email: [email protected] *** Research Assistant, RIS; Email: [email protected] G 20 DIGEST| 5 issues. It, therefore, requires a systematic global challenges of economic and financial understanding of the evolution, genesis, stability in the major industrial countries. mandate, agenda setting and expected The objective of this informal minilateralism outcomes of the G20 process. was to improve the mechanism of global In this context, it is interesting to recall the economic collaboration to effectively address emergence of minilateralism in the 1960s. The macroeconomic instability. The expansion of impression of minilateralism1 had emerged in G7 to G8 including Russia became the global the early 1960s when a group of administrative steering committee through the 1990s when a officials and ministers gathered to address the series of market crises hit the global economy. most urgent needs of global economy in those In September 1999, the Finance Ministers and days, based on informal relationship rather the Central Bank Governors of G7 announced than on a formal set-up for rule-making. After the broadening of G7 mandate for preventing the World War II, policy coordination, global future financial crises. Seven countries (G7) economic governance and regulations were announced their intention to “broaden the controlled by a number of small networks dialogue on key economic and financial outside the ambit of formal global governance policy issues among systemically significant institutions. In the 1970s, after the breakdown economies and promote cooperation to achieve of the Bretton Woods exchange rate system, stable and sustainable world economic growth global stagflation and subsequent oil crisis in that benefits all.” This announcement marked 1973, major industrialised economies started the official birth of the Group of Twenty (G- 3 meeting at the level of Heads of States for 20). Argentina, Australia, Brazil, Canada, discussion of economic and financial issues China, France, Germany, India, Indonesia, among the major industrial countries. The Italy, Japan, South Korea, Mexico, Russia, lack of coordination mechanism in the formal Saudi Arabia, South Africa, Turkey, United governance system—the UN Security Council, Kingdom, the United States and European 4 the International Monetary Fund (IMF) and Union are currently the members of G20. the World Bank caused the emergence of such G20 hosts 20 leading economies of the small groupings. The first in this series was world accounting for 85 per cent of the world’s Group of Ten (G10)2 that was established in economy and over two-thirds of the world 1962 by Belgium, Canada, France, Germany, population. It periodically holds summits, Italy, Japan, Netherlands, Sweden, the meetings and deliberations involving the United Kingdom and the United States with Heads of the member states, Finance Ministers Switzerland as an associating country (Shome, and the Central Bank Governors including 2014). This group of countries participated in the G7 and the European Union which is the General Agreements to Borrow (GAB), a represented by the rotating Council Presidency supplementary borrowing arrangement of the and the European Central Bank. The Managing IMF. Director of the IMF, President of the World The Group of 7 (G7) was established in Bank, and the Chairs of the IMFC and the 1975 by Canada, France, Germany, Italy, Development Committee also participate Japan, United Kingdom and the United States in G20 meetings on an ex-officio basis. The 5 at the level of Finance Ministers and Central G20 ‘Sherpa’ meets once a year to discuss Bank Governors. The Finance Ministers and macroeconomic policy, financial regulation, Governors met semi-annually to monitor trade, development and environmental issues, developments in the world economy. These regional security and governance matters, and groups had emerged to cope up with the new reform of international financial institutions and other multilateral institutions. 6 | G20 DIGEST Since G20 asserts influence in global policy- Finance making and mobilise public opinion on The major task before the G20 in the first three various facets of global economic governance, Leaders’ Summits (2008 to 2010) was to identify this article attempts to review the evolution suitable monetary and fiscal policy responses of G20 as an international institution in terms to the global economic recession 2008-2009 and of coverage of sectors, issues, approaches ensure macroeconomic coordination among to agenda setting and the role of different the advanced economies and the emerging presidencies. It also tries to assess the markets to restore global growth and stability. functioning of G20 in terms of finance track The Summit Declarations during 2008-2010 and development track drawing inputs from lists the measures that were suggested to 6 the last three Leaders’ Summit Declarations . prevent persistence of the downturn and announced fiscal stimulus packages to boost Agenda Setting and Sectoral aggregate demand. The 2008 Washington Coverage in G20 Summit called forth mechanisms to stimulate G20 agenda has broadened and deepened the economy, provide liquidity, reforming the over the years. While the first decade of its financial institutions for strengthening market existence was at the level of Finance Ministers, transparency and reinforcing international the issues covered in the G20 meetings cooperation. In addition, certain reform- were essentially related to finance and oriented actions were undertaken to enhance macroeconomic stability. Unlike that phase, adherence to sound financial regulation. the G20 agenda has diversified significantly Global credit rating agencies took adequate in the second decade at the leaders’ summit steps to improve accounting standards in level. Although financial crisis-related the affected economies. Proper guidelines issues continues to occupy maximum were formulated for banks and financial space in G20 leaders’ summits held during institutions for reassessing risk management 2008-2018, a good number of development practices. This phase marked the prioritisation issues gradually assumed attention in of immediate short-term and medium-term successive summits. The widening of G20 remedial actions in the areas of finance, trade agenda provides mixed signals about G20 and investment. and its global relevance. While passionate The financial crisis led to severe collapse coverage of development issues like food of economic activity and job losses. security, women empowerment, migration, Hence, massive fiscal expansion was urbanisation, etc might situate G20 as a warranted as an immediate macroeconomic responsible global institution in the realm of policy intervention. This typical Keynesian global governance, sceptics might interpret solution reflects the fiscal policies of the it as ‘no man’s organisation’ due to lack of inter-war period aiming to restore economic focus. In fact, many studies view that G20 stability in the world. communiqués were dominated by the G7 G20 also called forth for immediate reforms preference and other non-G7 countries were of International