The G-20 summit and poor countries
Sunday, 5 April 2009
The leaders of the Group of 20 (G20), a club of the world's largest economies, ended their London meeting last Thursday agreeing on a set of measures which, if implemented, would set a new era of international cooperation. The leaders pledged more than $1.0 trillion to the International Monetary Fund (IMF) and other international bodies to 'help the poor developing countries counter the effects of the ongoing global economic crisis', and decided to extend financial regulations and oversight to all financial institutions and instruments and markets, set international accounting standards and curb opaque tax havens. The summit, which at one stage had entered a tense phase following disagreement over priorities, was saved due to the apt handling by British Prime Minister Gordon Brown, also promised to help the countries counteract the contraction of world trade and fight protectionism.
The London summit is unique in the sense it has recognized the rising economic powers such as China, India, Brazil and few others, who represent the developing world. However, such recognition or eagerness on the part of the members of the elite club of G-8 to involve the emerging economies in the recovery bid might have taken some more time had not the world economy been thrust into a very difficult situation. Actually, the urgent need for protecting mutual as well as individual interests during one of the most trying times in human history has brought these countries together notwithstanding their deep differences on many issues. But many tend to believe that the deal agreed in the summit would not help much in reversing the current recessionary phase.
However, it might, at least, save the world from entering the worst--depression. The measures agreed upon at the summit, in addition to tackling the global financial crisis, are aimed at addressing some factors that have led to the current crisis. But how far the measures identified by the summiteers are, finally, put in place to streamline the global financial system are yet to be seen. However, the proposed tough reforms would be important only for staving off future crises, not the current one that is taking a heavy toll on the global economy. Besides, not much has been said in the summit meeting about getting right the banking and accounting systems in the USA, the origin of the financial tsunami. There are still substantial toxic assets in the US banking system.
The G-20 leaders were all smiles when they posed for the press photographers at the end of the summit. But how far will the London summit benefit the poor developing countries like Bangladesh? Millions of people who could come out of the poverty trap because of an impressive growth trend in recent years are now running the risk of sliding again into the same trap because of meltdown effects. The leaders of the emerging economies who are now rubbing shoulders with their counterparts of the world's richest and strongest economies would try to protect their individual as well as group interests first and the interests of the poor developing countries would come only next in order of priority.
For instance, from the $250 billion free money that the IMF would receive from the G-20 members, only $19 billion would be made available to the poorest countries. Similarly, much of the $250 billion to be made available as trade finance would come from the existing guarantees in rich countries and the poor countries will be entitled to only $50 billion. The London G-20 summit though likely to produce a minimum effect on the ongoing global downturn, has set a new global trend, multilateralism or pluralism, in the effort to address the global economic issues. The emerging developing economies are expected to assume an assertive role in international institutions soon. The poor developing countries would hope the relatively affluent members of their group would try hard to help them in a meaningful manner.
The London summit is unique in the sense it has recognized the rising economic powers such as China, India, Brazil and few others, who represent the developing world. However, such recognition or eagerness on the part of the members of the elite club of G-8 to involve the emerging economies in the recovery bid might have taken some more time had not the world economy been thrust into a very difficult situation. Actually, the urgent need for protecting mutual as well as individual interests during one of the most trying times in human history has brought these countries together notwithstanding their deep differences on many issues. But many tend to believe that the deal agreed in the summit would not help much in reversing the current recessionary phase.
However, it might, at least, save the world from entering the worst--depression. The measures agreed upon at the summit, in addition to tackling the global financial crisis, are aimed at addressing some factors that have led to the current crisis. But how far the measures identified by the summiteers are, finally, put in place to streamline the global financial system are yet to be seen. However, the proposed tough reforms would be important only for staving off future crises, not the current one that is taking a heavy toll on the global economy. Besides, not much has been said in the summit meeting about getting right the banking and accounting systems in the USA, the origin of the financial tsunami. There are still substantial toxic assets in the US banking system.
The G-20 leaders were all smiles when they posed for the press photographers at the end of the summit. But how far will the London summit benefit the poor developing countries like Bangladesh? Millions of people who could come out of the poverty trap because of an impressive growth trend in recent years are now running the risk of sliding again into the same trap because of meltdown effects. The leaders of the emerging economies who are now rubbing shoulders with their counterparts of the world's richest and strongest economies would try to protect their individual as well as group interests first and the interests of the poor developing countries would come only next in order of priority.
For instance, from the $250 billion free money that the IMF would receive from the G-20 members, only $19 billion would be made available to the poorest countries. Similarly, much of the $250 billion to be made available as trade finance would come from the existing guarantees in rich countries and the poor countries will be entitled to only $50 billion. The London G-20 summit though likely to produce a minimum effect on the ongoing global downturn, has set a new global trend, multilateralism or pluralism, in the effort to address the global economic issues. The emerging developing economies are expected to assume an assertive role in international institutions soon. The poor developing countries would hope the relatively affluent members of their group would try hard to help them in a meaningful manner.