In 1999, the G20 was created in response to the world economic crisis of the late 1990s. It was also influenced by emerging market economies in the global economy and their disproportionately modest participation in decision-making processes. Since its inception, the G20 summit has become the premier platform for global economic governance, representing 80% of the world’s gross domestic product (GDP) and two-thirds of its population.
Objectives of the G20 Summit
Wondering, what is the G20 summit? It can be better understood by learning its objectives. The summit happens annually, where 20 of the largest economies in the world participate. The current members of G20 include Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom and the United States, plus the European Union. Each summit’s agenda is dominated by economic and financial coordination. The objectives of the G20 are:
- To achieve global economic integration, stability, and sustainable growth, its members need to coordinate their policies.
- Providing financial regulations that reduce risks and prevent future financial crises.
- Establishing a new international financial architecture.
Tracks of G20 Summit
The G20 summit is conducted via two tracks – the Sherpa track and the Finance track.
Sherpa Track
The Sherpa track focuses on the development, anti-corruption, and other non-economic and financial issues. This track also identifies potential areas of collaboration to help each country with its economic recovery plans while also monitoring progress towards achieving sustainable development goals. The Sherpa team consists of representatives from each member country who have been appointed as negotiators on behalf of their respective governments at the summit.
Finance Track
The finance track focuses on facilitating international financing for countries in need, as well as providing technical support in areas such as taxation, public debt management and financial regulation.
Impact of the G20 Summit on the Global Economy
The G20 summit is a groundbreaking emergence benefiting the economy globally. It has influenced the finances around the world at varied levels.Â
- Together, the G20 accounts for more than 80% of global economic output, 75% of global trade, and 60% of the world’s population.Â
- With the G20, you have leaders from both developed and emerging economies together on the same platform, representing a vastly broader range of viewpoints. The G20 has emerged as one of the most important mechanisms for international economic cooperation.
- Sometimes, however, achieving consensus has proven difficult for countries with such diverse backgrounds. A hope that the G20 agenda would broaden beyond economics to include political issues, such as security and climate change, didn’t materialise.
- In the 2008 G20 Summit, the leaders met in Washington, D.C. During that time, the G20 played a pivotal role in addressing the global economic and financial crisis arising from subprime mortgages. The G20 countries came together, putting 44 trillion dollars in economic stimulus along with a higher level of coordinated financial and economic policies to deal with the 2008 financial crisis. As a result of this process, global governance was reformed, and sustainable economic growth was ensured. Since it consists of 80% of the world’s GDP, it restored the financial crisis.
- Again the Second G20 Summit, held in London in April 2009, came up with 1.1 trillion dollars to restore credit and growth and expansion of the Financial Stability Board. In turn, FSB coordinates national financial authorities and international standard-setting bodies to work towards strong regulatory, supervisory and other financial sector policies. This promotes international financial stability.
- The G20 has achieved several major achievements, including strengthening emerging economies like the BRICS, reforming international financial institutions, improving discipline and tightening oversight of national financial institutions, strengthening financial regulations in economies whose regulatory problems led to the crisis, and creating financial and organisational safety nets to prevent future economic slumps.
The G20 summit plays an essential role in the global economy, and its outcomes can have lasting effects. It is evident that strong leadership and the willingness to upskill individuals and businesses are essential in order to ensure a prosperous future. With the ongoing changes in the global economic landscape, it is important that everyone is armed with the right skills and knowledge to navigate these changes and shape the future.
