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Wednesday, September 17, 2014


G20 & Global Governance

In the wake of the 2008 global financial and economic crisis, a new global governance structure emerged: the Group of Twenty (G20). During and subsequent to the global crisis, the G20 emerged as a new coordinating body among international governance institutions. The international institutions created after the World War II and their governance structures are no longer able to reflect the economic and political realities of today’s world. As the first decade of the 21st century sketched to a close, policy-makers, the media and academic research have been increasingly discussing the new role of the G20 in the world economy and in global governance. To begin with, does the informal G20 process and mechanism offer legitimacy to overcome the growing challenges of the globalization? Would G20’s enlarged leadership club be able to overcome the inherent problems of the decision making process at the international arena? How could multipolarity be translated into changes in authority and influence within multilateral organizations like the G20? Last, but not least, what kind of global economic governance is emerging at the beginning of the second decade of the 21st century?

In the aftermath of the 2008-2009 global financial and economic crises, the G20 was elevated to a leaders’ summit forum for international economic cooperation. The rise of the G20 can be seen as an echo of the world’s current multipolarity. The current global order confronts several challenges simultaneously, including tackling numerous and increasingly complex issues such as global financial and macroeconomic instability, climate change, rule of law, public health, food security, sustainable development, trade protectionism and several other issues that have been strengthened through globalization. As global challenges are interconnected, neither G20 leaders are able to discuss only the international financial and economic system without also discussing other issues, such as trade, sustainable development and the reform of international institutions.

In recent decades, far-reaching shifts have transformed the world economy and geo-politics at the global level. Emerging countries have grown faster than developed countries in the last decade. This assumption has as a result a shift in the distribution of the world’s income. Indeed, China is currently the second largest economy in the world, behind the United States. As the relative economic weight of the emerging nations exceed that of the middle-ranking Group of Seven (G7) economies, the world economy has actually shifted from “unipolarity” toward “multipolarity”. The rise of the G20 brings challenges to the global governance system, as it is structurally and procedurally in contrast with the earlier organizations of the post-World War II.

The G20 model is structurally and procedurally in contrast with the earlier organizations of the post-World War II, in particular the World Bank (WB) and the International Monetary Fund (IMF). It is true that the G20 is nothing more than a process and a mechanism for leaders to meet and agree on coordinated policies and to provide guidance on demanding global challenges. The rise of the G20 brings also challenges to the global governance system, as it is a process and a mechanism with structure and procedures completely different from the post-World War II current international institutions. For the G20 to be a sustainable forum of international economic cooperation and balanced growth, it must be legitimate. To be legitimate, it must be effective, efficient and more representative than the G7 and the G8. On the assumption that the world’s economy is in a transitional period, some reforms in the G20 may boost its role and legitimacy in a more multipolar world. It is true that the G20’s coordination of institutions shows innovation and a new form of global governance. In brief, the G20 may represent the new dynamic of global politics. Despite the limitations that the G20 faces, it is currently the best option for convening the challenges of complex global governance issues.

Ligia Maura Costa. Partner at Ligia Maura Costa, Advocacia, full professor at FGV-EAESP and associated professor at Sciences Po. Paris.