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Group of Twenty Leaders’ Summit – G-20

Recently, the G-20 has become a very important forum of discussion and decision about economic matters in the international community. There are two main topics that are in the center of attention for this forum: the global financial crisis and the global governance. Both are highly interconnected, since it is a consensus that the financial crisis cannot be solved until better governance is achieved. The two topics are presented next.

Topic A – 2010, a year of recovery: Has the world financial crisis been finally overcome?

The year of 2010 represents the end of a decade marked by the deepening of the globalization process and by an era of extraordinary economic growth. However, by the end of the decade the world faced an economic crisis only comparable in proportions to the Great Depression of 1929. Differently from 1929, this crisis has firstly begun in the financial sector and only later on it has expanded to real economy, affecting the whole world in a matter of months. Two years after this crisis has started, a question arises: is the world fully recovered from this drawback? The chiefs of State of the G-20 are strongly suggested to deliberate and decide what is yet to be made in order to restore the strength of the international economy.

It is well known that the crisis began due to the unawareness by bank supervisors of new asymmetries of information and growing risk in lending money with the purpose of speculating in the real estate sector. Thus, markets believed that real estate prices could continue to increase, even though there were clear signs this would not happen. When prices began to fall, the banks, who were not expecting this event, were caught unguarded and suffered badly by its outcomes.

The Group of Twenty is committed to make 2010 the year of recovery. It has already taken many important and necessary measures to achieve this goal, as for example the reform of the Bretton Woods institutions, giving more power of decision to emerging countries. One can say that a new world order was formed as evidenced by the announcement in the Pittsburgh Summit (2009) that the G-20, i.e. the 20 major economies of the world , would become the permanent council in deliberating about economic matters.  However, the G-20 has not yet reached a solution to the matter of banking regulation, especially concerning the capital requirements. The IMF has an optimistic view regarding 2010, stating that the world’s economy will grow faster than the last 2 years. It points out, on the other hand, that there are still many problems to be solved, such as the high unemployment levels and credit availability. Thus, the challenge of G-20 is to settle once and for all the pending questions on this matter so as not to make this perceived recovery in 2010 only an illusion.

Topic B – Rethinking Global Governance: G20's role in the new decade

Why does the world need governance? Is it possible to govern without a central authority? And, if it is, what kind of governance is desirable? Nowadays, the debate over global governance has once again made it into the international agenda, and the reunion of the twenty major economies in the world is greatly responsible for that.Before the G-20, the expectations to tackle globalproblems, to overcome market failures and to provide public goods were up to eight countries, the group known as the G-8. Such kind of governance has been strongly criticized for not being inclusive, democratic, efficient nor representative.

The G-20 represents around two thirds of the world's population and accounts for 90% of the world's gross domestic product. It still may not represent the demands of the whole international community; nevertheless, it is substantially more inclusive than the previous arrangement. Countries, as of now, expect responses from G-20 to global problems, for the group has been increasingly recognized as responsible for providing stability and aggregate welfare.

The material capabilities of G-20, that is to say its political importance, its legitimacy as a new arrangement to lead governance must be discussed profoundly. And, more importantly, how is this new governance configured? What sorts of new demands are at stake? Does G-20 go beyond economy? If so, what issues must be addressed and what can G-20 do about them? Is it necessary to develop new international institutions or reforming the already existing ones enough.

G-20 Board: Dimas Fazio, Carlos André Góes

Attachments:

G20 Provisional Rules

Article - G20

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