Valdai Club

The G20 summit in Indonesia will need to keep its focus on the key imperatives and exigencies of today’s world economy, most notably the rising risks of a global recession. Indeed, there do appear to be crucial items on the economic agenda that are awaiting decisions from the largest economies of the globe during the period of unprecedented risks and volatility in the markets. Among the possible venues for discussion are the need to introduce greater inclusivity into the G20 forum itself, with due representation accorded to developing economies. There is also the rising exigency to develop a coordinated anti-crisis mechanism in the face of growing recessionary fears for the global economy. 

Perhaps the most consistent call for changes in the G20 framework throughout this year was directed at bringing the African Union into the circle of full-fledged members of “Group of 20”. Such calls came from both the academic community (Jeffrey Sachs being a case in point) as well as the African economies themselves. Indeed, at this stage the only regional organization that is accorded full-fledged membership in the G20 is the European Union and there should be no reason why it should exercise exclusive representation of all the regional organizations in the global economy. In fact, the African Union attained crucial advances in regional economic integration in the past several years and can represent the Global South as a regional forum in the G20 just like the EU may be the regional representative of the Global North. 

In the longer term, the issue of the inclusivity of the G20 grouping could be addressed by the member developing economies that will chair the G20 in the coming 3 years. In fact, in the course of 2023-2025 three BRICS economies will chair the G20 grouping: India in 2023, South Africa in 2024 and Brazil in 2025. This mission of rendering the Group of 20 more inclusive could be undertaken via the creation of a platform that would bring together the regional organizations of G20 nations – thus widening the circle of countries participating in the anti-crisis efforts and other coordination initiatives. Such an initiative could go along the lines of the Valdai club proposal from 2017-2018 that called for the creation of a platform of regional integration arrangements, regional development banks and regional financing arrangements in which G20 countries are members.

The unique opportunity for greater G20 inclusivity in the 2023-2025 period for developing countries should not be wasted. Membership of the African Union in the G20 will be important, but it will be insufficient in qualitatively addressing the issue of inclusiveness in global governance. Within the G20 there needs to be an “outreach platform” for the rest of the global economy, with individual small countries, regional organizations and integration groups having the possibility to contribute to the improvement in global governance. 

While the macro-level governance platforms within the G20 may harbor significant potential, there may also be a need to look at the micro-level platforms that target sectoral cooperation as well as greater economic efficiency among enterprises. One such proposal already entertained by India for its G20 chairmanship is the creation of a Start-Up 20 – a platform to facilitate the creation of start-ups across the global economy. This could be a great venue for replicating best international practice among the G20 economies as well as their regional partners. 

With the IMF warning about the rising risks of recession perhaps the most important economic issue to discuss at the G20 summit will be the coordination of an anti-crisis response across the global economy. The process of such coordination is arguably improving with each global crisis – most recently during the 2020 downturn the G20 provided for a more effective use of the Global Financial Safety Net via the greater employment of the resources of the multilateral development banks in the overall G20 anti-crisis package. 

Within the new round of a coordinated anti-crisis response there may be further scope to make use of the resources accumulated in the regional development institutions. Prior coordination of priority areas of investment among these development agencies (both national and regional) could deliver a more targeted response to the global slowdown. At the same time, regional integration organizations/arrangements could also provide their anti-crisis contribution via refraining from protectionist measures and coordinating liberalization initiatives with the WTO. The developing countries in the coming years could make a lasting and crucial contribution to making the G20 a more effective and inclusive global anti-crisis mechanism.