The heads of state and government of the world’s top 20 leading economies, the Group of 20 or G20, will meet in the Chinese coastal city of Hangzhou on September 4-5.
The G20 proved its importance during the financial and economic crisis from 2008 to 2011. Today, the global economy is still facing huge challenges: terrorist attacks, violent political conflicts, the refugee crisis, the consequences of the British referendum, the further stabilization of the euro zone, climate change and volatility in emerging countries and economies, to name just a few of the challenges.
On December 1, Germany will be assuming the presidency of the G20 for the first time. This is the chance to further develop the G20 from being a crisis management group to a player in global economic policy acting strategically with long-term goals. At a time when more and more countries are turning inward and nationalist tendencies are gaining ground, the G20 must counter such developments.
The G20 can and should do more to promote sustainable growth through coordinated and joint action.
The G20 doesn’t always take full advantage of its potential.
In Brisbane in 2014, the group had set a goal of raising the global gross domestic product (GDP) by 2 percent above the then-projected growth path to be reached by 2018. Instead, the GDP is now expected to be more than 3 percent below the projections. Just this July, the International Monetary Fund once again revised its growth forecast downward for 2016, to 3.1 percent. Currently, the growth of world trade is even below that, at 2.8 percent. And the lack of global infrastructure investments needed to maintain at least the current growth trends now amounts to a good $1 trillion annually.
Of course, these developments cannot be blamed on the G20. Nevertheless, it can and should do more to promote sustainable growth through coordinated and joint action. No other forum offers a greater potential for doing this than the G20: Its members represent all regions of the world as well as different social systems and diverse levels of development.
The example of sustainability: The climate change-related goals of the Paris agreement can be achieved only through global market-based mechanisms. And resource efficiency is indispensable not only because of finite resources and environmental impact. Such efficiencies also offer outstanding opportunities for innovation, growth and employment if a comprehensive global approach succeeds.
The example of digitalization: Clear and definite rules are necessary for digital commerce and a fair competition policy. The potential for digitalization can be fully exploited only when we guarantee a responsible and cooperative handling of worldwide cyber security, creation of a framework for cross-border flow of data and a market-based standardization.
The G20 must accept these tasks. That won’t always be easy because, in contrast to the IMF and World Trade Organization, the G20 isn’t an organization that by itself can set rules. The decisions forged are not internationally binding. Some of them would have to be adopted and implemented by other organizations in the world economy. But the G20 is in a position to provide the necessary impetus.
What poses even more of a problem is that many good decisions aren’t being implemented. Particularly deplorable, given the less than dynamic world trade, is that individual G20 members have steadily introduced new trade-restrictive measures. That’s contrary to the repeatedly reaffirmed halt to protectionism agreed upon seven years ago. The participation of the private sector and civil society in the decision-making is indispensable to increase the clout of the G20’s decisions. A crucial contribution can be made by focusing on the right areas and shaping concrete measures and implementing them.
On the eve of the G20 summit in Hangzhou, Germany’s top business associations – the Federation of German Industries (BDI), Association of German Chambers of Commerce and Industry (DIHK) and Confederation of German Employers’ Associations (BDA) – will be assuming the rotating presidency of the largest official forum for business federations among G20 members: The Business 20 coalition, or B20.
As an integral part of the G20 process, the B20 speaks with one voice for the entire G20 business community. The B20 will support the G20 substantially through a consolidated representation of interests, expertise, concrete proposals for action that cover the whole G20 agenda, and the implementation of decisions.
To reach the author: email@example.com