answer questions such as what the country expects from the G20, the strategies adopted to achieve its ends, the extent to which it sees itself as a representative of developing countries in its region and how does it seek to represent them. Aparajita Gangopadhyay (AG) discusses Argentina. According to AG, Argentina has not been a valuable member of the G20 and there have been attempts to expel it. It had one of the worst records between 2008 and 2013 in fulfilling its commitments. Because of this, it is often seen as an outsider. Argentina sees its presidency as a way to bolster its credentials. It seeks to represent the interests of the region, trade liberalisation, agricultural growth and food security and inclusive and sustained growth. These match its own interests. It seeks to coordinate its positions with the other two Latin American members, Mexico and Brazil. Its interests align more closely with those of Brazil.
Indonesian conditions changed significantly after the ouster of Suharto and the subsequent switch to democracy, claims Shankari Sundararaman (SS). Internally, it has sought to undertake reforms which essentially underpin the new regime structure, and a key aspect of this is decentralisation. This has increased the number of stakeholders in the system. The regime switch has also resulted in an acceleration of growth. Indonesia seeks to become a pivotal country in ASEAN, but the regional integration is not proceeding as rapidly as the government desires. Thus, it is expanding its activities in the international arena. In particular, it seeks to advance reform of the international financial structure, one that would provide better support to growth in developing countries. It seeks to represent ASEAN interests at the G20.
Saudi Arabia was a very backward country as far as social development was concerned. But, according to Kumaraswamy and Quamar, the accrual of revenues after the increase in oil prices in 1973–1974 changed the situation dramatically. A substantial portion of the increased revenues were spent on providing social services. As a consequence, Saudi Arabia was able to meet almost all of the MDGs ahead of the scheduled end date of 2015. However, there are two major problems. One is gender inequality. The other is that the economy is entirely dependent on oil and the attempts to diversify the economy have not been successful. Saudi Arabia is committed to the SDGs and would like the G20 to act to ensure the fulfilment of the SDGs.
Anwar Alam (AA) argues that Turkey had very successfully integrated its economy into the world economy through liberalisation of both its trade and capital flow regimes. Its rapid growth went hand in hand with a very prosperous small and medium enterprise sector. It is following a reformist-cum-revisionist agenda. It seeks reform of the international financial institutions, particularly the IMF. The reforms should enhance the growth prospects of the developing countries.
A common theme in the country chapters is that the countries seek to accelerate growth. They expect the G20 to establish an international economic governance structure that would assist in development. The main changes they seek are reforms in the WTO and IMF. They find, in particular, the international financial structure as not conducive to rapid growth. In this they supplement the chapters in the first part that had found that the 2008 crisis had a profound, deep and lasting deleterious effect on the growth of developing countries, particularly the low-income countries and their prospects.
1It is important to remember that after the Asian crisis of 1997, a Financial Sector Assessment Program (FSAP) run jointly by the IMF and the World Bank was started. Under the program, the working of the financial sector was studied to see whether companies were following the rules recommended by the relevant international body. Furthermore, stress tests were conducted. Countries were subjected to such analysis. But the US refused to participate in any analysis of its financial system and we know that the 2008 crisis originated in the US financial system.
2Even at the height of the recession, the Bank of International Settlements (BIS) was calling for an increase in the rate of interest, and as the reason they gave was seen to be irrelevant, they gave new reasons. It is perhaps because they believed that it was impossible to change the mindset of central bankers and their prejudices would be strengthened if there was a body such as the BIS that both Keynes and White had wanted the BIS abolished.
3Even now the threats to multilateralism seem to be coming from the US. Earlier, the US had withdrawn from or not signed such multilateral initiatives as the Law of the Sea, the International Court of Justice or the Paris accord on climate change.
4Egypt and Russia follow a somewhat similar pattern. Russia is different because of the massive upheaval in the 1990s associated with its transformation from a planned economy. It follows the same pattern if the pre-crisis period is taken as 2000–2007.
Chapter 1
G20 and International Economic Coordination: Lessons from the Inter-War Years
Manmohan Agarwal
Centre for Development Studies Thiruvananthapuram, India [email protected]
Abstract
The inter-war years were a period of considerable turbulence. To tackle the problems left over from the war, governments tried to cooperate at various levels through the establishment of central banks in the countries formed after the breakup of the Austro-Hungarian Empire, negotiations about reparations and achieving monetary stability in order to help the recovery of the world economy. The more technical the problem, the greater the chance of reaching an agreement. But where power relations were involved, agreement could not be always reached. Germany being on the gold exchange standard, namely the sterling standard, was not acceptable to the US as Germany was an important economy, though smaller countries in East Europe being on the gold exchange standard was acceptable.
Today a host of international institutions with a history of cooperative behaviour make cooperation easier. The World Trade Organization (WTO) and financing from the International Monetary Fund (IMF) reduce the need for protectionist policies. Also, agreement was soon reached on additional funds for the IMF. However, agreement has not been so easy to reach in the Doha Round of multilateral trade negotiations or for additional funds and reform at the World Bank. The older powers are not so ready to cede power to the rising powers unless forced by circumstances, as the IMF had needed additional funds which initially have been used for loans to European countries.
Introduction
Leaders of major economies get together whenever the international economic system suffers a major shock. The stagflation in the developed countries following the oil price increases in 1973–1974 resulted in the convening of a meeting in 1976 among the leaders of the seven major economies of the time, Canada, France, Germany, Italy, Japan, UK and the US. Thereafter, summits were regularly held among the leaders of these seven countries to discuss the state of the world economy and what policies may be appropriate in the circumstances. After the Asian Financial Crisis of 1997, a group of 20 leading economies represented by their finance ministers and central bank governors was formed to discuss the steps needed to be taken to avoid such crises in the future. After the 2008 financial crisis, the G20 was raised to the level of leaders. At the subsequent Pittsburgh summit, it was announced that this group had the responsibility to manage the world economy to provide strong, sustainable and balanced (SSB) development.
In this chapter, we seek to assess how successful the G20 has been in achieving SSB. We also discuss whether the G20 meetings can help governments to coordinate monetary and fiscal policies so that SSB is achieved. We study the experience of the inter-war years, another period of economic turbulence, to see what the prospects for economic coordination are.
