The G20 is a Great Idea. Lets Make It Work!

The G20 is a Great Idea. Lets Make It Work!
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This post is joint with Enrique Rueda-Sabater

Moving from the clearly obsolete G7 to a broader group that reflects the reality of today's world makes eminent sense. Doing it on the basis of a grouping improvised during the crisis-before-last (and making sure that it included the then-favorite finance ministers of the US and Canadian sponsors) is squandering the opportunity to move up to a credible, transparent, global governance platform.

Let's call the current group the 'interim G20' (plus hangers-on). Together, they are 30+ players, making the 'interim G20' unwieldy and definitely un-representative. It would not be so difficult to make this right -- permanently -- so why isn't anyone trying? We are still naïve enough to think that logic can prevail over inertia and that comprehensive reform is preferable to comfortable incrementalism.

So, what would make a G20 credible and transparent? Starting with the latter -- it would help to have clear criteria for getting a seat at the table. Sticking with these criteria would also be a good idea. As for credibility, making sure that all the major players are included all the time is important. But some attention must also be paid to the notions of universal representation and minority rights.

Another criterion (forgive us for being practical) is inherent in the label. We like the G20. The size of the group means that it can function effectively -- meaning it could have a coherent conversation, reach conclusions, and agree on steps to implement them. It would also be nice if there were something like 20 seats at the table. In reality, this would be about 10 less seats than has been the practice at recent G20 meetings, which have included the EU Commission in addition to several European countries, the World Bank, IMF and other invitees! Seoul looks to be no different.

We base our proposal for the Real G20, elaborated in a CGD working paper and published in the journal Governance, on two basic dimensions -- people and money. They both matter a lot to outcomes, but often one (or both, as in case of the UN) is left out of the representation formula.

In 2010, there are 9 countries in which at least 2% of the world's population lives. There are 12 countries which account for at least 2% of the global GDP. If we take all the countries that are above one or both of these thresholds, we have 16 clear candidates for a G20 seat. Together they represent 64% of the world's population and 73% of the global GDP. These countries are Bangladesh, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Nigeria, Pakistan, Russia, Spain, United Kingdom and the United States. Many of these countries are members of the 'interim G20' but the list also includes major emerging players like Bangladesh, Nigeria and Pakistan.

What is missing? A chance for the other 160+ countries to be included, many of which are small and relatively poor. Representatives of these countries (many are in sub-Saharan Africa) have repeatedly expressed their displeasure at being left out of the G20.

Keeping in mind the need for an effective mechanism for inclusion, we see rotating regional representation as the answer. Each of five regional groupings (Latin America/Caribbean, Sub-Saharan Africa, Europe, Middle East/North Africa, and Asia) would get to appoint a representative to the G20 on the basis of a rotating formula. It would be best to leave the formula for each regional group to decide but as a default--and a transparent one--we can envisage each country taking a turn, starting with the countries with the highest combined share of global population and GDP.

Change will not happen if the initiative is left to those who run the current clubby arrangement of the G20 and its hangers-on. The potential gain from breaking through the inertia is huge -- in terms of the power of a credible global governance forum or even a platform to discuss views. We believe that this is worth agitating for -- we must give the Real G20 a chance to succeed.

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