at the international level they can ensure coherence among the policies being espoused and implemented by the different agencies, as lack of coherence can lead to inefficiencies and waste of resources. For instance, the international community has funded special facilities to deal with HIV/AIDS. Sometimes, there has been a surplus of such facilities, while there has been a shortage of facilities to deal with the other health needs. Tackling the question of food security, a priority area for the G20, may require action by the agriculture ministries to implement programmes to raise production and productivity, action by the education ministry to increase the number of agricultural scientists, action by the transportation ministry to improve the ability to shift food supplies from surplus to deficit areas and actions by other ministers as well. Also, the G20 has asked many international agencies to develop an Action Plan for agricultural development. FAO, World Bank, IFAD, WFP, IFPRI, UNHLTF, IMF, WTO, UNCTAD and the OECD cooperated to produce the Plan since action was required in many different areas. Only heads of state are able to deal with so many different levels of engagement and to focus and motivate.
A further concern that has been raised concerning the appropriateness of a G20 involvement with development is that the G20 does not have the expertise needed to deal with specific issues as it has no research body of its own. There is a limited secretariat in the form of a troika of previous, current and future hosts of meetings. But all the leaders have their own domestic resources to draw on and have also drawn on the expertise of the relevant international bodies. Not having its own body may be an advantage as it is free to approach the body or bodies best suited to tackle a particular problem. Furthermore, involving the relevant bodies from the beginning may prevent emergence of conflicts at the stage of implementation. If the recommendation of the separate bodies requires action by an international body or by a domestic ministry, they may resist as they were not involved in the decisionmaking process. A further point is that if the weakness of the secretariat proves to be a handicap, then the G20 can strengthen it. In brief, it is unclear as yet that lack of an extensive secretariat has hindered the work of the G20 in this area given its ability to mobilise relevant international bodies to develop solutions.
The G20 can also provide legitimacy to other international bodies, at a time when many other international agencies seemingly have weakened legitimacy. Few countries were borrowing from the IMF before the crisis. The IMF and the World Bank today face a challenge to their legitimacy partly because of their unequal voting rights, the composition of their Executive Boards and the method of selecting their heads. The G20 has moved to change all these aspects to enhance the legitimacy of these organisations. But as aforementioned, these recommended changes have not occurred. This does not augur well for the future of the G20 as a leading body.
More fundamentally, the rules of operation of autonomous organisations may need to be changed. For instance, under the fixed exchange rate system prevalent until 1971 the IMF was expected to be consulted before a country could change its exchange rate in order to prevent competitive devaluations. Once many countries moved to a flexible exchange rate system, the mandate of the IMF changed to reflect this — it was to keep track of a country’s exchange rate to ensure it was not manipulating it to gain a competitive edge. This required a change in its articles of agreement and governments had to agree to that. Further changes may be required in the working rules of institutions and the G20 leaders could be the entity to negotiate these changes or to mandate the relevant ministries to negotiate changes. If there are issues with the operations of many of the related UN bodies that deal with specific issues such as, say, the FAO, again the G20 is well placed to request changes.
In brief, the G20 is an appropriate body to deal with development issues, but, for now, as an addition to rather than replacement for existing entities. The lack of representation of small developing countries who are the majority of developing countries could prove to be a handicap. But steps have been taken to hold consultations between countries who are members of the G20 and other non-members, although it is to be seen how efficiently this works. The G20 also has the flexibility to change its working arrangements. It has sought the assistance of other more technical international bodies and seems to be developing a good working relation with them.
Development Considerations and the Core G20 Work Stream
The G20 has been moving towards paying greater attention to development in its work programme, despite issues of financial reform and stability and those of appropriate fiscal and monetary policies to deal with these continue to preoccupy the G20 leaders because of the ongoing macro and financial problems in the Eurozone and elsewhere. They have reiterated their commitment to delivering on all three aspects of the SSBG and that balance implies not only balance in the external accounts but also narrowing the income gap between the developed and developing economies. They have also stated that the Framework includes raising income levels in developing countries. In these ways, development is already incorporated into the work stream of the G20.
The FBSSG is accompanied by a mutual assessment mechanism that allows the leaders to examine the impact of national policies on imbalances and to ensure that countries deliver on their promises for the monetary and fiscal policies they intend to adopt. The Mutual Assessment Process (MAP) does not, however, include any assessment of national policies from the viewpoint of how they affect development in developing countries and modification for this effect would raise the profile of development in the G20.
The leaders have also tried to move beyond mere statements of intent on development and this implies incorporation of development in their work plan. The Working Group on Development has been given the mandate to develop a process by which the impact of national policies on development could be analysed and assess how to make governments accountable for their policies. At any summit, members provided details of their proposed policy changes and at subsequent summits they provide information on the actions that have been taken. But by and large, the information provided by developed countries dealt with their fiscal and monetary policies and changes in the financial sector rules and procedures. A number of developing countries also dealt with actions with a predominantly development aspect. For instance, the Argentine government mentioned the implementation of its water and sanitation programme, Australia and Brazil mentioned their infrastructure investment, South Africa reported on its actions to reform health financing to improve access to health facilities and Indonesia reported on the introduction of a community-based programme to help poor communities.
In the medium to longer term, there are varying options for the G20 which depend on the degree of activism they choose to adopt. The incremental approach is to concentrate efforts on coordination between international agencies with overall direction through studies and broad frameworks. However, such a minimalist approach runs the risk of the G20 and particularly its developing country members losing legitimacy in the eyes of other developing countries. Some analysts argue that taking development on board was itself an attempt to silence criticism particularly by the group of 23 smaller countries from both the North and the South of the summit architecture (Fues and Wolff, 2010a).10 A more activist approach would be to move in the direction of strengthening the two weaknesses of the G20, i.e. lack of resources and legal structure, as these apply to development.
Generating new resource commitments from members at a time of global economic weakness may be difficult, if not infeasible. But growth has slowed in developing countries with a decline in the share of exports to GDP in these countries and some declines in the share of investment in GDP and of FDI inflows and a worsening current account position. This worsening is more pronounced in the least developed countries where the growth rate has halved from that achieved in the pre-crisis years. Investment and government expenditures in these economies tend to be procyclical. The activities of the MDBs need to be more anti-cyclical (UN, 2009). But for this, MDBs need more resources and the World Bank is reaching the limit of its lending capacity without additional capital subscription.11 The G20 could contemplate, in the first instance, redeploying current arrangements to move resources more firmly under G20 direction and incrementally increase their size. An example might be
