Global Governance: Economic Flashcards
What is the Bretton Woods conference?
-Conceived at a UN conference in Bretton Woods, New Hampshire, in July 1944
-The 44 countries at that conference sought to build a framework for economic cooperation to avoid a repetition of the competitive devaluations that had contributed to the Great Depression of the 1930s.
What is the IMF’s role in global governance?
Membership- Monaco, Cuba and North Korea are UN states that don’t belong to the IMF. Lichtenstein became the 191st member on 21st October 2024. IMF is an organisation of 191 countries.
Key functions- They work to:
-foster global monetary cooperation
-secure financial stability
-facilitate international trade
-promote high employment and sustainable economic growth
-reduce poverty around the world
What does it do today?- The IMF’s primary purpose is to ensure the stability of the international monetary system- the system of exchange rates and international payments that enable countries (and their citizens) to transact with each other
What are the criticisms of the IMF?
-Structural Adjustment Programmes (SAPs) benefit USA not the developing countries
-The Executive Board of directors gives excessive powers to the 8 (Russian shares with Syria) countries that appoint their own director
-The IMF supports military dictatorships and human rights abusers
-The IMF failed to prevent and remedy the 2008 global financial crisis
How does structural power work in the IMF?
The USA has an effective veto as it has 16.49% of the votes and 85% consensus is needed for a decision.
BRIC- 14%
UK- 4%
Japan- 6%
other G20- 12%
UK’s likely to cooperate with USA’s neoliberal objectives. Japan’s likely to challenge them.
How does the IMF support dictatorships?
-Support given by the IMF and World Bank to the Somora dictatorship in Nicaragua (1950s, ’60s and ’70s)
Support for the military dictatorship in Guatemalo in 1954
-Support of the Marcos dictatorship in the Philippines from 1971/72 up to 1986
-IMF and World Bank’s support of the Idriss Deby regime in Chad 2006
-IMF and World Bank support of the Musharraf dictatorship in Pakistan 2001-08
-IMF support for Egyptian military leader Abdel Fattah el-Sisi (2019)
-The IMF DID NOT support al-Assad in Syria and has said it will work with the new Syrian government to reconstruct the country (Dec 2024)
What are Structural Adjustment Programmes (SAPs)?
-These are fiscal, monetary and structural policy changes promoted by the IMF and World Bank in developing countries
-These started in the 1980s-1990s
-These policy changes would form conditions upon which any developing country would get a loan
In the early 1980s they were ‘free market’ programmes which required governments to:
-loosen regulations to facilitate foreign investments
-boost export production
-abolish food and agricultural subsidies to reduce government expenditure
-devalue currency
-reduce public sector spending
Is the IMF a tool of USA foreign policy?
US Secretary of State, James Barker on Oct 8, 1985, declared that developing countries could only achieve growth by adopting market-oriented policies
Bakers Speech Outline of the Three Things that US would like to see:
-Increased reliance on the private sector with a reduction in the role of governments in the economy, to help increase employment, production and efficiency
-More supply-side actions to mobilise domestic savings and facilitate efficient investment, by means of tax reform, labour market reform and the development of financial markets
-Greater emphasis on market-opening measures to encourage FDI and capital inflows, as well as to liberalise trade
What is the Washington Consensus?
A term coined by economist John Williamson (1989) and refers to a set of 10 specific economic policy prescriptions that were typically promoted by the IMF as the conditions which developing countries had to meet in order to receive loans.
WC:
-Fiscal discipline
-A redirection of public expenditure priorities towards fields like primary healthcare, primary education and infrastructure
-Tax reform (reducing rates and broadening tax base)
-Interest rates liberalisation
-A competitive exchange rate
-Trade liberalisation
-Liberalisation of inflows of FDI
-Privatisation
-Deregulation (to abolish trade barriers to entry and exit)
-Secure property rights
What are criticisms of SAPs?
-Economic reforms like privatisation see an increase in corporate profits that aren’t necessarily shared with wider society
-Some developing countries see increasing prosperity but also an increase in inequality and child poverty, suggesting that the programmes disproportionately benefit the richest
-Tax rises can sometimes hit the poorest the hardest, especially indirect taxation like sales tax, which poor people can’t avoid if they’re going to continue to buy goods
-Reform of the formal sector has little impact on improving their lives as many of poorest work in subsistence activities/ informal sector (eg. family-based farming for survival)
-Opening markets to foreign investors clearly aids in boosting FDI, but can also expose fragile economies to the effects of foreign economic crises
-There’s a fundamental clash with state sovereignty, especially if an SAP is at odds with the policies that a democratic government has been elected to implement
What’s the difference between the IMF and World Bank?
IMF- loans which you have to pay back with interest
WB- grants which you don’t have to pay back (can also give 0% interest loans)
How is Greece an IMF SAP case study?
-Greek debt was becoming out of control with G7 revenue, IMF worried it could spread to rest of eurozone which led to £110bn loan approval, in 2015 failed to make a payment from IMF so banks closed, cash withdrawals limited to 6o euros a day due to lack of liquidity
-SAP support started in 2010, ended in 2018 with many economic reforms and austerity measures, including less regulations on corporations, more taxes and VAT, IMF offered loans that totalled over 420bn euros (Washington Consensus)
-IMF provided debt relief in a package of 110bn euros with the Troiks negotiating a 50% reduction in Greek debt to private banks in return for Greece implementing austerity measures (less public services)
-Anti-austerity party Syriza won a snap election, referendum where 61% said they didn’t support conditions of bailout, Greece left eurozone but a new bailout deal was agreed, 2014- 2 bailouts and deepening recession and more unemployment
How is Cote d’Ivoire an IMF SAP case study?
Economic difficulties in late 1970s and early 1980s so SAP included devaluation of currency, fiscal austerity (less government spending), privatisation of state-owned enterprises and trade liberalisation (less tariffs, opening economy to international competitiveness). Engaged with SAPs in 1980s and 90s.
Put in place because of falling commodity prices like cocoa and coffee (heavily dependent on exports) so less revenue, debt, high inflation and unemployment so wanted to reduce social unrest.
SAPs caused economic stabilisation as reduced budget deficits by reducing government spending, IMF and WB helped manage debt, devaluation helped increase export competitiveness. But also increased poverty and inequality as inflation after devaluation, removal of subsidies so essential goods more expensive, elite benefited from liberalisation. Reduced government spending led to reduced public services and more unemployment as less public sector employment.
How is Ghana an IMF SAP case study?
-1983 then again in 2022
-SAP support had to be put in place across 2 Economic Recovery Programmes (ERP1 1983 and ERP2 1987) due to a chronic economic crisis which led to issues like hyperinflation, severe budget deficits, large fiscal debt
-specific to ERP1: support had to be given due to decline in cocoa price and agricultural sector challenges.
specific to ERP2: the support was put in place to address continuing economic challenges and structural weakness.
-SAP support like economic growth, debt restructuring (Eurobond exchange), social programmes (Living Empowerment Against Poverty programme) and economic reforms (improved public finances and more inclusive economy)
-SAP outcomes of GDP growth- average annual GDP growth rate of around 5% after 1983, inflation reduced from 75% in 1983 to 20% in 1985, around 200,000 workers lost their jobs during the first decade of SAP implementation, The introduction of user fees under the “Cash and Carry” system reduced access to health services for low-income individuals, adversely affecting health outcomes. Increased poverty rates, particularly in urban areas
How is Argentina an IMF SAP case study?
-SAPs put into place because primary expenditure fell 10.7% one year in real terms, received loans as struggling with emerging market economy, had to put more tax, less government spending for IMF loan, then received largest loan in IMF’s history of $56bn with aim to lower inflation and inequality and restore economy
-Government continued to raise taxes but defaulted on its debt again for 9th time in its history, the value of the peso stabilised against the dollar. But it owes billions of dollars to the IMF and the Covid-19 pandemic has further reduced economic growth
-current President Milei now has to cut taxes so they can’t pay back loans to IMF so devalued currency and slashed state subsidies for fuel by 50%
-The reduction in public spending has helped Argentina swing from a fiscal deficit - from 2 trillion to 264 billion pesos
How is Kenya an IMF SAP case study?
-1990s and 2010s, needed as Kenya faced debt, budget deficits and economic stagnation in 1980s, IMF programme approved in 2021 to support response to Covid and global inflation as well as devastating cycles of droughts and floods so $606.1m loan
-Austerity measures to reduce public spending and control inflation, privatisation of state-owned enterprises to improve efficiency, trade liberalisation to open markets and boost exports, currency devaluation to make exports more competitive, debt restructuring to ease repayment burdens
-Debt repayments started to slowly match the interest payments but brain drain where middle class and medical workers left to UK, many protests but government didn’t respond, they undertook a massive campaign of privatisation, selling all the shares for 139/250 businesses they had shares in.
In 2nd SAP in 2010s, they also sold off their shares in national oil companies.
What are the 5 points Kristalina Georgieva makes in her article ‘A Low-Growth World is an Unequal, Unstable World’?
1) IMF’s latest World Economic Outlook update shows global growth expected to reach 0.2% in 2024 and 3.3% in 2025 (well below 3.8% average from the turn of the century until pandemic), lowest in decades
2) Periods of stagnation lasting 4 or more years increase income inequality within countries by almost 20% as sluggish job creation and wage growth leads to more structural unemployment and less share of income to workers
3) Gearing up inclusive growth- driven by slump in productivity so more competition and access to finance to get resources flowing more efficiently to improve this and bringing more people into labour force, open trade
4) Making fiscal policies more people-focused- suport the vulnerable to alleviate fiscal risks by increasing revenue and governance, protecting social programmes, developing countries can increase revenue through tax reforms as much as 9% of GDP
5) Increase global backstops- IMF is reviewing concessional lending instrument for low-income countries, the Poverty Reduction and Growth Trust
What are the key institutions of the World Bank?
-The International Bank for Reconstruction and Development provides loans for middle-income countries’ development. Eg. World Bank has provided the State Bank of India with a loan of over $700m to develop solar energy projects. Some loans come with conditions which are monitored in partnership with IMF
-The International Development Association- provides loans to the poorest countries. They tend to have very low or sometimes no interest rates.
What is the WB’s wider involvement in MDGs and SDGs?
-It provides loans, technical and financial assistance to support reconstruction and development. The WB deploys around $50bn in various types of financial assistance each year and has supported over 12,000 projects worldwide since it was founded.
-It has a growing emphasis on reducing poverty, linked strongly to MDGs and SDGs. Overarching goal is to end poverty within a generation and boost shared prosperity.
-It funds specific medium to long-term development projects.
-It provides technical assistance to states, with this advice focusing on human and social development (in contrast to IMF, where ta is focused on economic growth and management of public finances)
-It carries out analytical work on development matters, which is made freely available to states and NGOs working on development, adding to global research on the factors that aid and impede development
What are current WB projects?
India (water and sanitation)- WB has provided $3.4bn to improve access to clean drinking water and sanitation. This has been a long-term project in place since 2000 and the bank estimates that it’s helped about 36 million people.
Afghanistan (reconstruction)- Since 2002, WB has invested over $4.7bn for development and reconstruction here. It’s been mostly through grants (over $4bn) and no-interest loans, and Afghanistan’s government has also part-funded many projects,
What’s the structure of the WB and structural power within the WB?
What is the effectiveness of the WB?
Focus changed from SAPs to human and sustainable development so more successful in reducing poverty. The WB acts as a ‘think tank’ on development best practice. It was central to ensuring the success of the Millenium Development Goal I (world poverty was more than halved between 2000 and 2015). It provides grants to the poorest states (rather than loans) which prevents the rising of debt. $15bn was given to South Korea and now they’re a leading donor to WB.
What are criticisms of the WB?
-US hegemony over the bank’s leadership and a lack of transparency
-Brazil, India and China have less than 1/3 of voting power of USA
-Overly committed to deregulation, free trade and privatisation (US economic orthodoxy) to use ‘shock therapy’
-Undemocratic actions dictated- loss of sovereignty?
-Encourages poor countries to develop each crops like cocoa and coffee so continuing cycles of poverty, makes producers vulnerable to TNCs
-Spends too little (2024)- US defence budget was $841.4bn while WB’s budget was $117.5bn
What is the rise of other development banks?
AIIB- Launched in 2016. Members included China, Russia, Canada, India and UK, NOT US. Similar weighting of voting power as WB, China holds most votes with nearly 300,000- India second with nearly 86,000 votes. 103 members. Adds to funds available for global development, but less power from US over where funds are directed. US didn’t want UK to be a member (DC’s policy of engaging with China on economic links). Projects mostly to benefit Asia, mostly given loans (WB grants).
New Development Bank- established by Brazil, SA, China, India and Russia in 2015 with each country holding an equal share and voting power.
Examine the criticisms of the IMF and WB (12)?
1- SAPs
commitment to economic liberalism as part of Washington Consensus, undermines state sovereignty as have to accept loans limiting ability to make own economic policies, eg. Ghana
2- Western/US dominance
HQ of both IMF and WB in Washington DC so structurally dominating. USA spends $841bn on military, values hard power over soft power. Funded $117bn on WB.
3- Primacy of economic reforms
Little attention to human rights or environment, eg. loans to Ghana meant more exploitation of its oil reservoirs so more environmental degradation
What’s some international trade background information?
International trade used to be carried out by force. States aimed to conquer other territories to gain their resources or strategic positions on key transport links. In 18th and 19th century, GB and other powerful states often went to war, colonising to maximise their economic output
What is the primary goal of the WTO?
-Reducing and removing tariffs imposed by states on imports from other states to agreed levels (eg. under WTO rules there’s a 10% tariff levied on imported cars)
-Quotas (or limits) on the amount of imports of particular goods from other states
How does the WTO help regulate trade?
-Checks that states are following trade agreements
-Helps to resolve trade disputes between states, in order to avoid states from engaging in unilateral trade wars with each other
-Producers research on global trade and economic policy
What is WTO membership?
Involves both:
-Rights, eg. the right to export to other countries and to expect WTO rules to be followed fairly on these exports, and
-obligations such as the need to limit tariffs on imports and to follow rules on, eg. intellectual property rights, state subsidies, and ‘dumping’ (where exports are sold below the price they’d normally be sold in the state of origin)
What is WTO and decision-making?
The highest decision-making body of the WTO in the Ministerial Conference, which meets every 2 year. Decisions are made by consensus and are binding, so every member has to agree to a trade deal or there’s no trade deal. The need for consensus can make decision making in the WTO very slow.
What are the 6 key principles of the WTO?
-Non discrimination- states should treat their trading partners equally and fairly (though exceptions allow states to form free trade agreements with each other). They shouldn’t discriminate between their own and foreign products once tariffs have been paid.
-More open- there’s a commitment to free trade and to progressively lowering tariff and non-tariff barriers, eg. import bans or quotas where the amount of imports is restricted
-Predictable and transparent- state should not raise trade barriers without warning or arbitrarily. A predictable system of international trade helps with stability and job creation and allows for steady competition and lower prices.
-More competitive- states should not interfere in order to gain themselves an unfair competitive edge, eg. by subsidising exports that would otherwise be uncompetitive/ unsustainable or ‘dumping’ goods at prices below their market value
-More benefits for less developed countries- allows scope for less developed countries to catch up and transition to becoming full participants in international trade
-Protection of the environment- environmental protection must be respected both nationally and internationally
What is the WTO timeline?
What are the differences between WTO and GATT?
-GATT was a multilateral treaty. On the contrary, WTO is a global body, which suspended GATT and duals with the rules of international trade between member nations.
-While GATT had no institutional existence the WTO is a permanent institution with a secretariat.
-WTO covers services and intellectual property as well as goods (covered under GATT)
-Dispute settlement system of GATT was made quicker and more efficient under WTO
Why are some nation-states not members?
-LEDCs tend to want to use more tariffs to protect their domestic industry from competition from the developed world
-Purpose of WTO is often to cut tariffs (barrier to free trade)
Brazil- 8.6% tariff rate
US- 1.7%
China- 3.8%
Australia- 0.9%
EU- 1.8%
What WTO members have been most involved in disputes from 1995-2017?
US- 136 complaints against country, 115 complaints made by country
EU- 84 complaints against, 97 complaints made by EU
China- 39 complaints against, 15 complaints made by them
What are the most frequent bilateral trade disputes?
-EU is the defendant of 72 complaints
-US has made most complaints, most against China at 39, then 28 against Canada, 20 against Korea, 19 against India and 15 against Brazil
How does dispute resolution work?
If 2 members have a dispute there’s a 3 stage process.
1) Consultation
2) Judgement
3) Appeal
The priority in the WTO is to settle disputes, through step 1 if possible. Over 350/631 cases have reached final process of resolution. Most of the rest have either been notified as settled ‘out of court’ or remained in a prolonged consultation phase- some since 1995.
US and EU most active users. US initiated 115 cases, been a respondent in 130. EU initiated 97, respondent in 84.
What are the USA and WTO’s relations?
What are USA and WTO judges?
What is USA vs China in the WTO?
What is the quad?
What would a liberal and realist argue about the WTO?
What is the Doha Development Round?
In 2001, WTO began negotiations to improve developing countries’ access to global markets, especially for agricultural products. Intended to reduce government subsidies on exports that boost prices and domestic subsidies that go directly to farmers. This is because subsidies lead to artificially low prices so hard for developing countries to compete.
Proposals of DDR- to reduce government agricultural subsidies of up to 75% and 66% for the EU and US respectively. Resistance from both developed and developing states- developed seeked to defend their interests, developing rejected compromises they judged to be against their interests.
-Failure of DDR to reach agreement which caused criticism of WTO’s effectiveness. Powerful nations, including EU and US, are blocking less developed nations and trying to preserve status quo for protectionist reasons. WTO gridlocked (since it was created in 1994 so only one major international trade deal).
-Negotiations in the DDR have agreed improvements to customs procedures which reduce costs, but reduction on agricultural subsidies remain a sticking point. Although WTO agreed in 2015 to cut export subsidies, won’t come into force until 2023. Effectively abandoned without agreement in 2015. Until new WTO efforts are made, states must negotiate with each other to agree liberalisation of tariff barriers.
Failure also highlights that WTO is unable to make decisions quickly, its Ministerial Conferences are too infrequent and need for consensus from all members slows down decision-making.
-Doha died when a ministerial meeting failed in 2008, governments pushed ahead with bilateral or regional deals, eg. Trans-Pacific Partnership (free trade agreement, US withdrew in 2017)
Is there a return to trade wars?
WTO powerless in avoiding rising tensions between US and China. Revolves around accusations of unfair competition with state-owned and supported industries in China and stealing intellectual property from US companies.
2018-19- Trump administration imposed tariffs on $550bn worth of goods so China put tariffs worth $185bn. In 2020, WTO ruled that US tariffs against China were against international trade agreements. Not possible for US to appeal ruling as WTO’s appeals panel was no longer functioning as member states had failed to agree on appointing new judges.
Who are the current members of the G7 and who was suspended?
Canada
France
Germany
Italy
Japan
UK
US
Russia joined in 1998 and was suspended in 2014 over annexing Crimea.
How is the G7 an informal forum and why would a realist like its structure?
There’s no formal application or criteria for membership- it can invite and expel whom it likes. They meet annually to monitor and address development in the world economy. Different from IGOs as no formal rules (UN Charter).
It can invite any states, IGOs or NGOs to its meetings. No budget or supporting secretariat- if its members want to take action that costs money, the individual member states pay for it.
Decisions aren’t binding- rely on the individual will of participating states to deliver.
No defined objectives- allows it enormous flexibility in tackling any issues that matter to the presidency state and its members.
G7 presidency rotates among members, with presidency state hosting and organising the annual summit.
2012- Obama hosted G8 at Camp David
A realist would like the structure because it’s practical and effective as small group so members can maintain dominance. No rules so states have to uphold sovereignty, only intervene to benefit them.
What happened at the 2002 G7 summit?
Held in Canada
Supporting Africa to be stronger as a continent and other developing countries with struggling economies, eg. India with falling tea exports, but criticised as ineffective.
Building their relationship with Russia- ‘10 plus 10 over 10’ programme agreed under which Russia will get $10bn from US (almost definitely) and $10bn from the other countries (much less definite) over 10 years to help destroy chemical weapons and other nuclear outlets, a large focus on terrorism (after 9/11), Bush called for new Palestinian leadership.
Winners- Russia is being brought fully into G8 and will host a new event to appease Putin, Blair said there’s genuine partnership for renewal of Africa (campaigners said it was ‘peanuts’), Bush got agreements on some measures to tighten up security for land, sea and air travel
Losers- Aid pledges of $6bn to New Partnership for African Development, demanded that Africa take control of their own economies, and reduce reliance on foreign aid- ‘peanuts’
What happened at the 2006 G7 Summit?
Held in Saint Petersburg in Russia from July 15th-17th, first time hosting.
-Crisis in Middle East overshadowed conference. Discussions led to a detailed statement that blamed unnamed extremists for starting the violence called in Hezbollah to stop its rocket attacks and for release of captured Israeli soldiers immediately, only then for Israel to stop bombardment.
-Energy security, more dependence of other G8 members on Russian energy suppliers key focus. Also about Russia becoming member of WTO.
Winners- Africa as G8 joined by 4 key African presidents on the last day where they ratified a deal to forgive debt for 18 of world’s poorest countries (14 in Africa) and to review progress in Africa at next summit. PR success for Russia- gained diplomatic soft power. US pushed for market liberalisation.
Losers- USA unable to lecture Putin about freedom and human rights, Russia criticised Western ‘Colonialist rhetoric’.
What happened at the 2007 G7 Summit?
Held in Germany
Big issues discussed were climate change, nuclear weapons in Europe, poverty in Africa, globalisation and trade and regional security.
Winners- Germany because they wanted proposals to reduce climate change and walked away with members agreeing to half global emissions by 2050. Africa also a winner as a $60bn package was pledged to help them fight AIDS, malaria and tuberculosis. Also US and Israel as summit called for immediate end to violence in Middle East.
Losers- Russia as they discussed imposing limits on nuclear weapons within Europe. Many people in UK didn’t support aid package promised to Africa.
What happened in the 2024 G7 summit?
Held in Italy
Russia-Ukraine war + Gaza conflict
G7 nations have already imposed on Russia the biggest package of sanctions ever imposed on a large economy. They have blocked the country from international commerce and the global financial system. For example, the G7 agreeing to a $50bn loan for Ukraine from Russian assets.
G7 leaders all backed the plan put forward by US President Joe Biden to end the war in Gaza. He has proposed an immediate ceasefire by Israel and Hamas, the release of all hostages, an increase in aid for Gaza and a peace deal which guarantees Israel’s security and the safety of Gazan residents.
Winners- US- their economic influence means that it dominates the G7 because of the role that it plays in economic markets, also has had major technological developments in recent years, especially with the development of AI. Also has been a major player in the Ukraine war with military and major donations
Japan- technological innovation in Japan such as robots and green tech means that it is a major player in the G7, as well as their policies on immigration and automation showing foresight and improvement
Germany: leading in Green energy, huge pioneer in developing cleaner technology in order to reduce the impact of fossil fuels, its EU leadership is also of note as it drives policies on climate change and digital defence
Losers- Russia - Driving Up Costs for the Russian War Machine guided by G7 commitments to intensify the pressure on Russia for its war against Ukraine. Foreign banks now face increased sanctions risk when they deal with Russia’s war economy.This anger Putin who exclaimed that it was ‘theft’ and that he was ‘not going to back down’
Italy has faced tensions over its abortion rights. While it is technically legal in Italy, access to abortion remains patchy due to the high number of medical personnel who identify as “conscientious objectors” and can therefore refuse to perform them. A commitment made last year by G7 nations to address access to “safe and legal abortion” was left out of the final statement at this year’s summit in Italy.
What are critcisms and pressure for reform of G7?
-Its membership reflects an outdated vision of the world’s economic powers. The world’s second (soon to be largest) economic power is excluded. Rising powers like India and Brazil also not included.
-G7 became very divided during Trump’s presidency so became a public demonstration of a clash of world outlook between the US and its traditional allies, which undermined the unity and cohesive vision and image that G7 arguably exists to project. ‘G6+1’
-It’s made up of a group of states that normally agree with each other, confirmed by expelling Russia in 2014. Didn’t try to use G8 as a means of negotiating or persuading Russia to pursue a different course, but rather as punishment.
-The scope to achieve major breakthroughs is limited. Current issues dominate summits, eg. Covid-19 and fair distribution of vaccines dominated UK’s hosting of G7 in 2021. G7 responds to events rather than shaping them.
-G7’s flexibility and informal approach makes it difficult to hold members to account for commitments made at summits.
Why is the G7 more effective than the G20?
A narrower group of like-minded states is better able to come to agreement and make decisions in a way that wouldn’t be possible in G20.
Is there a divided G7?
Divisive summit in Quebec in 2018. The agenda comprised of a series of topics on which Trump and other G7 leaders weren’t in agreement: climate change (US threatened to withdraw from Paris Accord), international trade (‘tit for tat’ tariffs between US and EU and Canada), Iran (US withdrew from so-called Iran nuclear deal agreed by UNSC P5 and Germany) and response to Russia after novichok poisonings in Salisbury earlier that year. Trump left summit early and withdrew support for traditional closing statement (members pledge to act on topics). 1st time in history where a leader was unwilling to support the closing statement.
Disagreement centred on US tariffs of 25% on steel and 10% on aluminium, to which EU and Canada responded with retaliatory tariffs. Trump- US is ‘the piggy bank that everyone keeps robbing’.
Is the G7 an effective forum for debate?
Who are the members of the G20 and which regional body was added in 2023?
Argentina
Australia
Brazil
Canada
China
France
Germany
India
Indonesia
Italy
Japan
Mexico
Russia
Saudi Arabia
South Africa
South Korea
Turkey
UK
US
EU
African Union (2023)
When and why was the G20 founded and how are G20 members different from G7 members?
Created in 1999 as a means of expanding G7 to include a wider group of industrialised states and emerging economic powers. Objective: ‘an informal forum that promotes open and constructive discussion… on issues related to global economic stability’.
G20 has wider membership, reflecting wider range of economic powers (established and emerging). Broader geographically (African, Asian and South American included). Better at and more relevant when dealing with major economic crises, eg. 2008.
G7- alliance of like-minded states, can expel those it disagrees with.
What are the key features of G20 members?
-Its membership represents both established and emerging economies which, together, account for almost 2/3 of world population, over 4/5 of gross world product and 3/4 of world trade.
-G20 has key economic IGOs attending all of its meetings. All of Bretton Woods Institution attend, along with EU and UN.
G7- EU’s only IGO in attendance.
-Meetings usually take place annually, with a rotating presidency, as is the case for G7. Presidency, as is the case for G7. Presidency state has considerable power over which additional states or other international organisations it invites and the agenda for that year’s summit.
-The agenda for G20 meetings has become increasingly broad, extending beyond purely economic matters. Eg. climate change and global terrorism have featured on recent agendas.
How has the G20 taken a changing role?
More influential than G7, led response to 2008 crisis.
-G20 is a balance between traditional, historic economic powers, newly emerging economic powers (China, Brazil and India) and emerging economic powers (Argentina and Indonesia). So it’s neither too exclusive (weakness of G7) nor too comprehensive (weakness of WTO) to be able to make decisions.
-Membership includes more states that don’t always agree with each other so it can be a forum for dispute resolution and problem solving more than G7, whose members usually agree with each other on most matters and has a suspended member with which the majority didn’t agree. It’s a forum for influencing climate change with very different views from members. So G20 more useful as, eg. in 2019 at a G20 summit President Trump and Xi agreed to resume trade talks and de-escalate their trade war (in 2020, the US and China signed a ‘phase one’ trade agreement to take action to resolve trade grievances).
-The G20’s inclusion of and partnership with the major Bretton Woods economic IGOs has significant benefits. It provides the most powerful world economies with a dedicated means of influencing these IGOs and coordinating action on economic matters between them and states. It also brings in key regional organisations and other international actors like the UN, EU and ASEAN and is therefore less state-centric than the G7, recognising that states work in partnership with IGOs.
-The widening of the G20 agenda to include non-economic matters provides another international forum for dispute resolution and influencing. It also provides world leaders from a more diverse range of states with a dedicated forum in which to build personal relations and, occasionally, to make joint statements on issues ranging from the plight of refugees to global terrorism, which can set the global agenda.
-G20’s taken decisive action on both economic and non-economic matters. It played a central role in agreeing that states would inject significant amount of government money into banks to ensure they didn’t collapse and could lend to each other again during the global financial crisis. It’s also taken action to ensure that the wealthiest states and IGOs work together, in order to prevent and more tightly regulate those bank accounts and funding terrorists.
What is Argentina like as a G20 nation state?
Major industries and exports- Argentina’s major exports include…
Agricultural products: soybean meal, corn, wheat, pears , lemons
Petroleum
Machinery: delivery trucks, motor vehicles
Chemicals: petroleum and soybean oil derived chemicals
Industries: food processing, chemicals and petroleum products, automotive manufacturing
Recent economic issues- Inflation: In 2023, inflation in Argentina reached 211.4%. In April 2024, inflation peaked near 300%.
Currency devaluation: The Argentine currency has been devalued.
Poverty: The proportion of the population living below the poverty line has been increasing.
Agricultural production: A severe drought in 2023 led to a 26% decline in agricultural production.
Public spending: Public spending has been high and inefficient.
Corruption: Argentina has been plagued by corruption.
G20 resolutions that have impacted the country’s economy?- 2018 G20 Buenos Aires summit:
Protectionist tide dampens Argentina’s globalisation instincts.
Argentina secured a $50 billion IMF loan to address economic challenges, aligning with G20 goals of global financial stability.
2024 G20 Brazil summit:
Argentina signed a preliminary agreement to export natural gas to Brazil, aiming to boost its energy sector and economic growth.
This agreement underscores the role of G20 summits in facilitating bilateral trade discussions.
Has the nation-state done anything controversial that the G20 has tried to address?- Yes, in November 2024 Argentina threatened to obstruct the final communique of the G20 conference in Rio De Janeiro. Macron flew out to speak to Milei to reach a conclusion. This was because of disagreements over issues such as trade, Russia and the war in Ukraine,
In addition to this, Milei has threatened to leave the paris climate agreement, as he has deregulated the Argentine economy and reduced environmental protections, so the next step to maximise ‘economic efficiency’ would be leaving his agreements to help the planet.
What is Japan like as a G20 nation state?
Major industries and exports- Japan’s major industries include manufacturing, petrochemicals, pharmaceuticals, and shipbuilding. Japan’s major exports include cars, electronics, and machinery.
Recent economic issues- The Japanese currency, the Yen, in 2013 before the G20 summit fell to its lowest level against the dollar in an attempt to reduce inflation. (1.5% against the dollar)
The G20 was concerned about a potential ‘currency war’ which could benefit Japanese exporters. This was raised in a meeting between Obama and Abe.
The strong yen had contributed to Japan experiencing a trade deficit - importing more than it exports - since 2011, following decades of surpluses.
There were concerns that criticisms from the G20 may cause Japan to stop reducing the value of the Yen which would have a bad impact on inflation and the economy, however, this did not happen which caused share prices to increase
G20 resolutions that have impacted the country’s economy?- Forex Commitments: The G20 reaffirmed commitments to prevent excessive currency volatility, crucial for Japan in managing yen fluctuations and their economic impact.
International Taxation: The G20 advanced tax reforms to ensure multinational corporations, including digital giants, pay fair taxes, aligning with Japan’s efforts to combat tax avoidance.
Resisting Protectionism: The G20 pledged to resist protectionist trade measures, supporting Japan’s export-driven economy and promoting global trade stability.
Japan Controversies the G20 has tried to address- China refused high level talks with Japan due to both sides claiming Senkaku Islands after the Japanese government bought them from a private Japanese owner, this led to China sailing its ships near the islands - so there was tension between the two countries.
Additionally Japanese failure to send their foreign minister to the 2023 G20 summit only sending their deputy foreign minister has become been controversial due to the rise of China and its threats over territory in the South and East China sea.
What is Saudi Arabia like as a G20 nation state?
Major industries and exports- Its stature is built on its prestige as the custodian of the birthplace of Islam, and its status as an one of the world’s largest oil producers.
Its importance as an oil exporter has made economic interdependence with the West - where the main consumer demand is found - a necessity.
This, in turn, has led to strong political and military relationships that at times have been a source of tension for both sides.
In recent years, there has been a growing regional rivalry with Iran.
Recent economic issues- Saudi state oil company Aramco cut production and oil prices fell sharply in 2023
profit fell 25% to £91bn profit
Reliance on oil
in 2022 oil prices reached $130 a barrel but now only $85.
in 2020 Saudi Arabia announced that after years of being tax free, they are tripling it’s VAT from 5% to 15%% and cancelling the monthly living subsidy.
comes as global oil prices crashed. Down to less than half what they were in 2019, slashing government revenues by 22%
Impact on the economy- Private sector participation of nationals is at an all-time high
Gross domestic product has exceeded $1 trillion for the first time
Was Fastest growing G20 economy in 2022
Fiscal position is the envy of many advanced economies
Its presidency focused on
enhancing investment policy cooperation to build investment capacity in developing and least developed countries
promote the sharing of best practices on economic diversification, particularly on the contribution that services trade can offer to achieve this goal
Controversy- Amnesty International wrote to Boris Johnson to ask him to use the G20 to demand the release of female activists who were jailed in 2018 for campaigning for the right to drive and opposing Saudi Arabia’s male guardian program.
Similarly, The UN special rapporteur who investigated the murder of a journalist inside the Saudi consulate in Istanbul in 2018 has called on G20 countries to take a moral stand. Jamal Khashoggi was suffocated and then dismembered by a Saudi hit squad.
Eight men were sentenced for the murder, after a trial that was widely condemned for failing to hold the masterminds of the killing to account.
Human Rights Watch also wanted G20 countries to urge Saudi Arabia to allow the UN team access to Yemen, as well as to the Riyadh-based headquarters of the coalition. As well as a host of aid agencies and human rights groups have called for an end to arms sales to Saudi Arabia by G20 countries.
The five-year-long conflict involving Saudi Arabia and rebels in Yemen created what the UN called the world’s worst humanitarian crisis with both sides being accused of potential war crimes.
What is Russia like as a G20 nation state?
What is Norway like as not in the G20?
What are the criticisms of the G20?
-Its meetings have often been a focal point for anti-capitalist protests and it’s been criticised for prioritising the needs of its member states and defending the interests of global capitalism. Protests esp. in early 2000s. Protestors regularly targeted summits for large-scale demonstrations including violent protests in London during the 2009 summit.
-Divisions in the G20, especially between the US and its allies and Russia and China, have become more tense in recent years. Also criticised as a slightly less exclusive version of the G7 with no transparent criteria for membership.
-G20 summits conclude with a communique agreed by each state in attendance. Sometimes criticism that G20 outcomes are ‘watered down’ or ‘lowest common denominator’- the most that each state could agree upon rather than necessarily the most decisive agreement. Also states can’t be held accountable for the decisions or actions they agree at G20 summits.
What is income poverty?
Not earning an income at all or earning an income that’s not enough for living safely.
What is a lack of social needs?
Eg. access to shelter, healthcare, education or human rights
What is extreme poverty?
A person earns less than US $1.90 per day. UN currently estimates that over 700 million people are living in this, 80% live in South Asia and sub-Saharran Africa.
What is relative poverty?
Compares poverty with other people who live in the same society/state. It judges whether people have the minimum income needed to access the average living standard of people in that country- often based around those who live in households earning below 60% of middle or median income.
What is multidimensional poverty?
Considers indicators of living standards like access to drinking water, sanitation and electricity, and health and education indicators of child mortality, nutrition, years of schooling and attendance. HDI
What is poverty reduction and the UN?
It’s the first and main objectives of Millennium Development Goals and Sustainable Development Goals. The % of world population living in poverty reduced rapidly between 2010-2015 from 15.7% to 10%. But slowed between 2015 to 2020 with a fall to 8%. Covid put an additional 77 million people in extreme poverty (expected). First rise in poverty since 1998.
What is development?
The idea that societies can improve socially and economically to reduce poverty and improve living standards.
What are orthodox and alternative views of development?
Orthodox- Purely in terms of advancing economic growth. Critics say it fails to consider the share of wealth across society, eg. richest may be getting even richer and economy can be booming, but large sections remain in poverty. GDP measure. Related to neoliberalism and classical and neo-classical development theory. Favoured by IMF in its SAPs- ‘trickle down’ as a result of international trade. ‘Modernisation’
Alternative- Focus on human development and wellbeing. Considers life expectancy, education and income. HDI and Multi-Dimensional Poverty Index. Amartya Sen-
