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From Seoul to Cannes

Lee Myung-bak, president, Korea

The global economy has continued to face many challenges since the G20 members gathered together in Seoul a year ago, and they must act in concert to steer the world towards sustainable and shared growth

From "The G20 Cannes Summit 2011: A New Way Forward," edited by John Kirton and Madeline Koch,
published by Newsdesk Media Group and the G20 Research Group, 2011
To download a low-resolution pdf, click here.

In a time of economic turbulence and a world of weakened confidence, it is the G20 that must provide leadership. By taking the helm, the G20 must guide the global economy back towards strong and sustainable growth.

Downside risks and structural problems worldwide call for global coordination. Lingering fiscal and financial weakness impedes the economic recovery of advanced countries, while volatile commodity prices and capital flows are attenuating resilient growth in emerging and developing economies. Individual countries must continue to try to solve these problems, but national policies would be more effective if they were pursued in coordination with others. That is why the G20’s collective leadership can salvage the global economy. We helped the world overcome a financial crisis in 2008, and today we can help to avert another one.

The G20, in which advanced and developing countries from five continents work together, was created with urgency at a time when existing approaches to global crises were ineffective. It emphasized the need for new global governance that would guide coordination, agreement and action. It proved greatly influential.

The Cannes Summit in November will follow the course of the 2010 Seoul Summit and previous summits. It will provide an arena for the G20 to respond to problems, strengthen cooperation in a long-term process and solidify its role as a global steering committee.

Arriving at a critical economic juncture, the Cannes Summit must reaffirm our strong commitment to policy actions that will restore confidence and ensure strong, sustainable and balanced global growth.

The Seoul Action Plan adopted at the Seoul Summit brought together policy commitments made by each G20 member. We agreed on the basic principles of exchange-rate policies and capital-flow management to ensure macroeconomic coordination. We also agreed on conducting external imbalance assessments using indicative guidelines to take specific action to reduce those imbalances. In Cannes, we must implement the steps of the agenda of the Framework for Strong, Sustainable and Balanced Growth agreed upon in Seoul.

In fact, it is vital that we push forward with decisive and cooperative policy actions, in differentiated country-specific circumstances, to achieve our shared goal. Advanced countries with large fiscal deficits must make clear commitments to fiscal consolidation without derailing any nascent recovery. Credible fiscal plans should be aligned with actions aimed at rebalancing global demand. Our commitment to strengthening financial systems must translate into actions.

In previous contributions to this publication, I emphasised that the world must take a path towards all-embracing growth that will reduce global disparities. The time to take that path is now. Balanced and sustainable growth must include efforts to close the gap between advanced and developing countries. Despite their weak economic power, low-income countries have great potential to contribute to global growth and prosperity by improving their production capacity. This year, we have diligently followed through on all nine pillars of the multi-year action plan of the Seoul Development Consensus to bring out such potential. These efforts and the development agenda as a whole have received strong support from non-G20 countries as well. A continued commitment to development will reinforce the legitimacy and credibility of the G20 process.

France has displayed strong leadership this year, fully preparing for a successful Cannes Summit. I believe that we will produce concrete outcomes with regard to this year’s priority agendas, which include improving the international monetary system, enhancing food security, reducing the volatility of commodity prices and supporting employment.

Specifically, the G20 must be committed to collective action and restore stability and confidence in the commodity markets. The hike in commodity prices has led to an increase in inflation in many commodity-importing countries, further impeding economic recovery. Downside risks have grown significantly. I look forward to seeing progress in discussions about improving the transparency of food and energy markets and regulations in the commodity derivatives market, which would lessen commodity price volatility. The G20 should also lead the global pursuit of policies to increase energy efficiency and develop clean energy technologies.

In the past four years, the G20 summits have established a unique path to consensus – a gradual, pragmatic and results-oriented approach to problem-solving in the international community. Each summit is built upon the previous one, and each G20 agenda evolves by absorbing new issues into a web of ongoing ones.

In a global economy interrelated through trade and financial markets, we must remember that the pursuit of cooperative benefits will lead to individual country benefits. We must also remember that a global economy rife with risks will tempt a country to pursue its own interests only. But at this time of great interdependence among countries, a country cannot thrive alone. Shortsighted protectionist policies would hurt us all by reducing the volume of world trade.

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