There are open doubts about the G20’s perspective to succeed in a matter in which other global governance organizations and institutions failed. The G20, as a new institutional form of cooperation, accomplished its goal in mitigating effects of the world economic crisis. Its multi-layer response to the challenges consisted of the stabilization of financial markets, coordination of financial regulatory reform and launching a global economic stimulus, was effective. It was proof that G20 activities could have a positive outcome in managing the global economy that is more than ever exposed to spillover effects. In that respect, the G20 should be far-sighted to recognize an early spark of a new crisis that could burst out and dismantle the financial system.
Although at this moment there is not any indication that such scenario will happen soon, the G20 leadership has various and important tasks to fulfill such as “to promote greater inclusiveness, fairness and equality in pursuit of economic growth and job creation”. G20 finance ministries are aware that differences among countries regarding development, trade and budget imbalances are significant. Also, they are aware that they have great potential for generating new disturbances. Not only that the world would be faced with economic consequences, it would be challenged by ordinary people provoked by inequality and unfairness that they perceive as a direct product of globalization. Since two-thirds of the world's population create 85 percent of global economic output and 75 percent of international trade live in G20 member states, it is understandable why the G20 has set sustainable development as one of its goals and defined its mission as advancing “strong, balanced, sustainable and inclusive economic growth”.
So far G20 countries have undertaken efforts in that direction, but there is a requirement for deep transformation. Obviously governments are the key players, but the role of business and civil society also is very important. Coordination between them is necessary in order to create strategy and to plan activities that would be effective. In other words, there is a necessity of shared accountability in diminishing discrepancy between developing and developed countries.
In order to create a broader strategy that will advance international cooperation in economic and financial policies various efforts have been taken. Some countries even institutionalized sustainable development action plans, strategies and coordination units. On the other hand, high-income countries still are far from that, considering competitiveness as unaltered, they put its narrow goals above sustainable growth. Such position implies a rigid neglect of the existence and impact even of the most challenging global trends such as climate change, aging populations and effective use of resources. Special attention should be paid towards a widespread populism. This trend is not potentially dangerous because of its stands on world trade and globalization, but because of its neo-nationalist position. An effective response can be given only through the network of the international political and economic agreements that would offer opportunities to construct systemic outcomes.
Being one of the main inter-governmental platforms capable to address economic challenges, the G20 has taken actions in order to overcome policy and market-driven barriers, to close financing gaps, to innovate financing mechanisms and to improve financial integrity. All these actions equally took into account public and private financing. Along with that, obstacles that could disrupt it’s securing are identified. In the area of public financing it is very likely that growing and competing demands will appear as one of possible constraints. Special attention should be paid to signals of high indebtedness, corruption, money laundering and tax evasion. Constraints differ when it comes to private financing. In that case they arose from below market expectations and an ineffective assessment of related risks and opportunities.
All constraints mentioned above should be equally treated and systematically taken into account that strong, inclusive long-term growth and sustainability, and a well-balanced financial system are top priorities. Preconditions for such action is the decisiveness of the G20 to advocate a more systematic approach of all actors involved including more collaboration. Collaboration on both policy and operational levels could be that particular driven force necessary for successful and transformative change of the financial system. An effective collaboration model should be based on a governance framework established on common principles and a transparent operational system. Apart from that is a necessity to involve all countries. That is the only way to consider the interest and situation of all developing countries. That is the only way that will make possible creating effective policies and implementation modalities.
In a long run such policies and modalities will affect the existing inclusion gap and introduce new mechanisms of debt resolution. Parallel with that are financial flows that should be followed in order to stop all inadequate or inappropriate transactions that could easily create either fragile or conflict situation.
To summarize, sustainable growth requires explicit measures taken at national, regional and international levels in the areas of economic, industrial, environmental and social policies. At the same time, it requires deploying of both private and public finances. Overcoming barriers across the global financial system and securing stable growth are the G20’s top priorities that are going to be addressed in the forthcoming period.
Ivona Ladjevac is head of the regional center Belt and Road, Institute of International Politics and Economics, Belgrade. The author contributed this article to China Watch exclusively. The views expressed do not necessarily reflect those of China Watch.
All rights reserved. Copying or sharing of any content for other than personal use is prohibited without prior written permission.
Ivona Ladjevac
There are open doubts about the G20’s perspective to succeed in a matter in which other global governance organizations and institutions failed. The G20, as a new institutional form of cooperation, accomplished its goal in mitigating effects of the world economic crisis. Its multi-layer response to the challenges consisted of the stabilization of financial markets, coordination of financial regulatory reform and launching a global economic stimulus, was effective. It was proof that G20 activities could have a positive outcome in managing the global economy that is more than ever exposed to spillover effects. In that respect, the G20 should be far-sighted to recognize an early spark of a new crisis that could burst out and dismantle the financial system.
Although at this moment there is not any indication that such scenario will happen soon, the G20 leadership has various and important tasks to fulfill such as “to promote greater inclusiveness, fairness and equality in pursuit of economic growth and job creation”. G20 finance ministries are aware that differences among countries regarding development, trade and budget imbalances are significant. Also, they are aware that they have great potential for generating new disturbances. Not only that the world would be faced with economic consequences, it would be challenged by ordinary people provoked by inequality and unfairness that they perceive as a direct product of globalization. Since two-thirds of the world's population create 85 percent of global economic output and 75 percent of international trade live in G20 member states, it is understandable why the G20 has set sustainable development as one of its goals and defined its mission as advancing “strong, balanced, sustainable and inclusive economic growth”.
So far G20 countries have undertaken efforts in that direction, but there is a requirement for deep transformation. Obviously governments are the key players, but the role of business and civil society also is very important. Coordination between them is necessary in order to create strategy and to plan activities that would be effective. In other words, there is a necessity of shared accountability in diminishing discrepancy between developing and developed countries.
In order to create a broader strategy that will advance international cooperation in economic and financial policies various efforts have been taken. Some countries even institutionalized sustainable development action plans, strategies and coordination units. On the other hand, high-income countries still are far from that, considering competitiveness as unaltered, they put its narrow goals above sustainable growth. Such position implies a rigid neglect of the existence and impact even of the most challenging global trends such as climate change, aging populations and effective use of resources. Special attention should be paid towards a widespread populism. This trend is not potentially dangerous because of its stands on world trade and globalization, but because of its neo-nationalist position. An effective response can be given only through the network of the international political and economic agreements that would offer opportunities to construct systemic outcomes.
Being one of the main inter-governmental platforms capable to address economic challenges, the G20 has taken actions in order to overcome policy and market-driven barriers, to close financing gaps, to innovate financing mechanisms and to improve financial integrity. All these actions equally took into account public and private financing. Along with that, obstacles that could disrupt it’s securing are identified. In the area of public financing it is very likely that growing and competing demands will appear as one of possible constraints. Special attention should be paid to signals of high indebtedness, corruption, money laundering and tax evasion. Constraints differ when it comes to private financing. In that case they arose from below market expectations and an ineffective assessment of related risks and opportunities.
All constraints mentioned above should be equally treated and systematically taken into account that strong, inclusive long-term growth and sustainability, and a well-balanced financial system are top priorities. Preconditions for such action is the decisiveness of the G20 to advocate a more systematic approach of all actors involved including more collaboration. Collaboration on both policy and operational levels could be that particular driven force necessary for successful and transformative change of the financial system. An effective collaboration model should be based on a governance framework established on common principles and a transparent operational system. Apart from that is a necessity to involve all countries. That is the only way to consider the interest and situation of all developing countries. That is the only way that will make possible creating effective policies and implementation modalities.
In a long run such policies and modalities will affect the existing inclusion gap and introduce new mechanisms of debt resolution. Parallel with that are financial flows that should be followed in order to stop all inadequate or inappropriate transactions that could easily create either fragile or conflict situation.
To summarize, sustainable growth requires explicit measures taken at national, regional and international levels in the areas of economic, industrial, environmental and social policies. At the same time, it requires deploying of both private and public finances. Overcoming barriers across the global financial system and securing stable growth are the G20’s top priorities that are going to be addressed in the forthcoming period.
Ivona Ladjevac is head of the regional center Belt and Road, Institute of International Politics and Economics, Belgrade. The author contributed this article to China Watch exclusively. The views expressed do not necessarily reflect those of China Watch.
All rights reserved. Copying or sharing of any content for other than personal use is prohibited without prior written permission.
