G20 sets new economic agenda for the world
Updated
The leaders of the world's 20 most influential economies - better known a G20 - are being hailed as the new peak grouping to set global economic policy, after its gathering in Pittsburgh last week. China and India were recently brought into the club that was previously mostly restricted to the US and leading European economies.
Presenter: Sen Lam
Speaker: John Williamson, senior fellow, Peterson Institute for International Economics, Washington state
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WILLIAMSON: Well, I think by far the most important was the agreement to perpetuate itself as the new peak body, to take over from the Group of Eight peak body for the world economy. I think that's the most important concrete outcome. A second one which has attracted a lot of attention is that at long last the Europeans seem to have agreed to downstep their influence in the IMF and to give the extra weighting votes to er ...China in particular, but all I think the countries which really lacked proper influence were mainly Brazil, Russia, China, the so-called __ countries.
LAM: And at the moment, I understand that the richer countries control almost 60 per cent of the votes on IMF decisions, decisions made at the International Monetary Fund, but now G20 proposes a 50-50 split with developing countries, including China and India getting a bigger say. How significant is this proposed change?
WILLIAMSON: Well, I think this is quite significant. As I say, it has been a lot of pressure point over the years for change of this type, to really redistribute the influence, in line with the changes in the world economy in recent years, so that Asia gets a much bigger weighting and Europe gets a smaller weighting - that is the essential change which is going to take place and this is now appears to have been agreed.
LAM: The G20 of course, is a flexible forum compared to the World Trade Organisation, the WTO which has rules and regulations. Is this flexibility a strength, or a weakness do you think?
WILLIAMSON: Eh, I suppose the issue can go be argued either way. I would think it on the whole, a strength, but the fact that it lacks a full time Secretariat, I think is a weakness. There is therefore, a difficulty in getting staff working on the particular problems that the G20 regards as important and I think that's a major problem. But apart from that, I think on the whole I would tend to regard it as a strength, ja.
LAM: And yet despite that flexibility, I understand that the IMF wants something of a more transparent oversight role to be tied directly to the G20, making sure that its members are following policy commitments. How will this work?
WILLIAMSON: Well, I don't think that the G20 can expect to direct the IMF directly. It's going to operate in the same way that the G8 operated by a virtue of having a majority in the fund. It thereby would expect that when it can agree to a point of view to that that will prevail in the Fund. But I don't think this means that the Fund will be taking orders in the future, from the G20.
LAM: And just very briefly, John Williamson, what did China and India get out of this meeting at Pittsburg?
WILLIAMSON: I think the big thing that they have got is the increase of influence in the world economy, that's a big thing they were looking for. We will have to see whether this is going to be complimented by changes in the influence or the extent to which countries regard China and India as really paving the future path of the world economy, rather than always looking to America as the leader. I think there will be a tendency now to regard the leadership as much more diverse and I think that is all to the good.
