The G20 as a lever for global development
By Felipe Calderon Hinojosa, president, Mexico
The Seoul Summit will give G20 leaders the opportunity to move forward and agree on the necessary measures to consolidate economic recovery
To download a low-resolution pdf, click here. (Be patient! It's 50 MB.)The Seoul Summit will give G20 leaders the opportunity to move forward and agree on the necessary measures to consolidate economic recovery
The countries of the G20, through their coordinated actions and resolute response, have been successful in addressing the international financial and economic crisis that began in 2008. Now it is time for the G20 to shift from its ‘crisis mode’ and work
with vision and determination to consolidate itself as the essential institution of the new global economic governance system. A strengthened G20 will allow us to tackle the frail and uneven recovery with its accompanying persistent unemployment and market instability. It can also become a vital forum for building the solid foundations needed to achieve high rates of long-term global growth and dynamic economic development.
The G20, as a broad forum that includes developed and developing countries from all regions of the world, represents an opportunity to foster the level of international coordination needed in an increasingly complex and interconnected global economy.
Current global problems demand creative and innovative solutions. The G20 summit in Seoul, the first to be hosted by an emerging economy, constitutes an excellent occasion to reaffirm the G20’s willingness to build toward these goals.
As a first step, leaders should work together to strengthen the G20 and enhance ownership among all its members by including a greater variety of topics on the agenda. So far, the G20 has focused only on the economic crisis for understandable reasons. However, starting in Seoul, we must ensure that the talks better reflect the concerns and priorities of all members.
The G20 should also redouble its efforts to create positive links with other countries and international organisations. The G20 must not be perceived as a negotiating forum that looks to impose its decisions on the rest of the world. Rather, it should consolidate itself as a constructive player on the global scene, capable of proposing general policy principles and facilitating agreements in wider multilateral forums.
Mexico strongly supported the G20’s decision to include development on its agenda. Promoting worldwide development from a broad and cross-cutting perspective should be the G20’s ultimate goal, given its broad membership. In this sense, Mexico is actively participating in the creation of multiannual action plans for the G20 summits in the areas of infrastructure, private investment and job creation, human resources development, trade, financial inclusion, food security, governance and knowledge sharing.
As a priority, the G20 must learn from past crises and push for a far-reaching overhaul of the global financial architecture. The reform agenda for financial regulation and supervision that we agreed on at our first summit in Washington in 2008, and that we have been perfecting ever since, is a step in the right direction. But we must not lose momentum in this process. We face the challenge of building a more resilient, transparent and stable financial system and, at the same time, ensuring that these measures do not increase the cost of capital or reduce the availability of credit for emerging economies. To this end, for instance, Mexico fully welcomes G20 discussions on ways to strengthen financial safety nets.
Modernising and strengthening international financial institutions should be an issue of major concern to the G20. Mexico has been supportive of initiatives to increase the financial capacity, legitimacy, transparency and accountability of major international financial institutions. In this field, an important governance reform has been agreed upon for the World Bank, and the G20 members should show greater flexibility and work harder to attain a similar reform for the International Monetary Fund (IMF) by the Seoul Summit. This reform would be the complementary piece for the recent substantial increase in the capital base, resources and array of instruments of the IMF.
In the current global economic juncture G20 members must show to the international community leadership and determination to face the short-term global economic challenges related to establishing credible fiscal consolidation plans, implementing far-reaching structural reforms and setting a policy framework for a coordinated approach to exchange rate policies. These elements are essential to consolidate a more even global economic recovery and fulfil the purpose of a strong, sustainable and balanced growth for the short, medium and long terms.
G20 members must also reinforce global coordination in the implementation of the regulatory reform and capital requirements for the financial industry. This financial reform should generate a level playing field in the global financial system and avoid unintended negative effects, particularly in emerging market economies.
G20 countries have generally fulfilled their commitment to keep their markets open to trade and investment, and this has proved to be the right choice to foster recovery. Mexico has consistently supported this objective and taken concrete steps in this sense. However, the G20 must still deliver on its pledge to conclude the Doha Development Round as soon as possible. More flexibility and commitment are needed from the main actors in the process. The G20 must tap its potential to broker a deal among those actors and thus facilitate a historic agreement at the World Trade Organization.
Most importantly, the G20 also has the responsibility of recognising the inextricable relationship between economic development and environmental sustainability. As chair of the forthcoming United Nations Climate Change Conference, to be held in Cancun starting at the end of November, Mexico will call on the G20 leaders to join together to ensure the success of the negotiations. We are certain that the political support of G20 will provide a valuable boost to the negotiations.
Mexico will continue supporting the G20’s efforts to eliminate inefficient fossil fuel subsidies, as well as on new issues such as the fight against corruption and the protection of the global marine environment. We have always contended that the G20 should be flexible regarding its agenda, and must be ready to tackle new issues if the international situation demands it. The G20 must always strive to produce concrete results and to add value to the work already being done by other international institutions.
In short, at the Seoul Summit G20 leaders will have the chance to transcend the immediacy and urgency of the crisis, agree upon the necessary measures to consolidate the economic recovery and look toward a longer time horizon. The goal is ambitious: to set the foundations of a more equitable, transparent and fair international architecture that effectively promotes sustainable development for all the world’s peoples. It is an opportunity we must take.
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