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Maintaining momentum towards growth

Lee Myung-bak, president, Korea

From "The G20 Mexico Summit 2012: The Quest for Growth and Stability,"
edited by John Kirton and Madeline Koch, published by Newsdesk Media Group and the G20 Research Group, 2012
To download a low-resolution pdf, click here.

With its experience of chairing the G20 summit in Seoul, Korea is well placed to help unite countries in a mission to create harmony between a sustainable environment and a healthy economy

In my time in office I have dealt with a series of economic challenges, beginning with the global financial crisis in 2008 and, more recently, the European sovereign debt crisis in 2011. In our increasingly interconnected global economy, risks were felt throughout the world; difficulties within advanced economies were acutely felt in many emerging and developing economies. We lost more than 20 million jobs and youth unemployment is now a global concern. In such a world, the role of the G20 remains crucial. Although some say the eurozone may have avoided the worst and that the United States is showing signs of an economic recovery, we must maintain our sense of urgency. Uncertainty persists and the situation could deteriorate quickly if confidence in the market wanes. Subdued growth in advanced and emerging economies is raising concerns about a prolonged recession. We must stay vigilant because challenges, including high and volatile oil prices, deleveraging by multinational banks and increasing geopolitical risks, have yet to be resolved. The G20 must remain committed to achieving sustainable and balanced growth.

The collective leadership of the G20 helped the global economy step away from the brink of a depression by fostering effective policy coordination through fiscal expansionary measures and a standstill on protectionist measures and by urging financial regulatory reforms. Now the G20 is helping Europe overcome its sovereign debt crisis. At the 2011 Cannes Summit, all the G20 members agreed to work together to prevent contagion of the eurozone crisis and support global recovery. Subsequent agreements to strengthen the firewalls of the European Stability Mechanism and International Monetary Fund show strong commitments. Building on these achievements, G20 leaders will be able to deliver meaningful outcomes at the Los Cabos Summit in Mexico.

The key role of the G20 is to lead international collaboration to promote sustainable growth, prevent crises and strengthen global economic resilience. In the short term, and in this still-fragile global economy, we must maintain the recovery momentum and secure strong growth engines. In the long term, the G20 must go from being a 'crisis manager' to a 'global economic architect'.

At the Los Cabos Summit, I look forward to the G20 members reaching a consensus on four fronts. First, we must identify appropriate policy responses to set in motion a virtuous cycle of growth and fiscal health. Advanced countries must step up growth-enhancing investment expenditures and make bold reforms in pension and social security systems. Emerging countries must devise sustainable growth strategies that contribute to global rebalancing. More secure social safety nets along with investments in human capital, public goods and innovative industries would boost domestic demand. Advanced, emerging and developing countries should embrace free trade as a driver of growth and prosperity. Protectionism must not deter our efforts.

Next, the G20 should continue addressing commodity price volatility. High and volatile commodity prices over the past decade had a harmful impact on the world economy, especially on low-income commodity-importing countries. The elevation and uncertain prospects of oil prices are threatening global economic recovery. Building on our previous commitments, the G20 leaders must devise credible measures to enhance oil market stability. Producing countries must continue ensuring adequate oil supply. With the G20 leaders having committed to enhancing the function and transparency of both physical and financial commodity markets, we should more quickly develop measures to prevent market-disturbing speculation. In this context, the G20 must move towards the swift implementation of the recommendations of the International Organization of Securities Commissions to improve the regulation and supervision of commodity derivatives markets.

Effective policy coordination

In addition, the development agenda must gain traction to enhance the growth capacities of the developing world. In November 2010, G20 leaders agreed on the Seoul Development Consensus and its Multi-Year Action Plan to pursue shared growth. Last year, achievements were made in many areas including infrastructure, food security and human resource development. The success of the G20 development agenda is instrumental for not only sustainable growth, but also global rebalancing. By fully implementing agreements on development, the G20 must reap tangible outcomes to boost growth in developing countries, which will contribute to narrowing the development gap and creating additional global demand.

Last but not least, we must move towards sustainable development via green growth. Achieving harmony between a sustainable environment and economic growth is our shared mission. I have been fully committed to promoting low-carbon green growth as part of a new vision to guide Korea's development. With new technologies for clean and renewable energy and energy efficiency, and by promoting related industries, green growth can lead to new sources of growth and job creation, as well as solutions for climate change and energy crises. It is highly encouraging that the G20 has been strengthening its discussions on green growth, which is now a priority agenda item. In this context, I hope the G20 will devise a concrete plan for green structural reforms and identify and implement adequate support programmes for developing countries to pursue green growth policies.

As the chair of the G20 Seoul Summit, Korea learned at first hand that successful international cooperation requires tremendous effort from everyone involved. The G20 has achieved much, precisely because its members have understood that serving the global common good also best serves individual purposes, especially in this closely interconnected global economy. As a member of this premier forum for effective policy coordination, Korea will continue to cooperate in the pursuit of strong, sustainable and balanced global growth.

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