What is the G20?
The Group of 20 (G20) is the premier forum for international economic cooperation, bringing together 20 of the world’s largest developed and emerging economies. It was created to promote dialogue between national finance ministers and central bank governors in 1999 in the aftermath of the Asian financial crisis. This evolved into a high-level forum of national leaders in 2008 when the G20 countries coordinated the international policy response to the global financial crisis. The forum is informal with no secretariat capabilities, and instead relies on consensus agreement of its membership. Collective G20 decisions are implemented on a country-by-country basis, with national governments taking the lead. Membership of the G20 provides Australia with an opportunity to help shape the global economic environment, and it is therefore important to better understand the forum. The Lowy Institute’s work on the G20 is directed through the G20 Studies Centre.
Five common misconceptions about the G20
- The G20 only acts when there is a financial crisis
The G20 is best known for its cooperation in 2008 and 2009 in providing finances to manage the global financial crisis. However, the mandate of the G20 is broader than responding to crises. The G20 is concerned with inclusive and robust growth, delivering better living standards and quality jobs, and boosting global capacity to address future adverse economic events. International issues with the potential to affect the global economy — from oil prices to climate change to Ebola — can be a part of the G20 agenda.
- The G20 is just a meeting that happens once a year
The G20 operates throughout the year and regular meetings between national finance ministers and central bank governors take place to monitor developments in the international economy and provide appropriate policy responses. Depending on the issue, there are also meetings that involve ministers and ministries of foreign affairs, labour, agriculture, and energy. At the high-profile leaders’ summit, G20 country leaders and the EU Commission President agree on a statement of policy action. In 2014, there were more than 60 G20-related meetings, and nearly 8000 delegates attended the leaders’ summit in Brisbane.
- The G20 only considers the opinions of G20 national leaders
The G20 works closely with major international organisations, including the IMF, World Bank, and WTO, and regularly invites other countries and regional groups to attend summits. While governments are ultimately responsible for undertaking G20 commitments, the G20 has extensive engagement with business, civil society, labour, think tanks, and youth groups (B20, C20, L20, T20, and Y20 respectively). The G20 Studies Centre (mainly through Tristram Sainsbury, G20 Research Fellow) is an active participant in the T20.
- No-one is responsible for leading the G20
Each year the G20 is hosted by a different G20 member country, which takes on the G20 presidency. The G20 president defines the G20 agenda during its host year, organises the yearly leaders’ summit, and coordinates the many G20 meetings. The G20 presidency works on a ‘troika’ basis. This means the current G20 president will have input from the president from the previous year, and the upcoming president. In 2015, Australia, Turkey, and China will be working together to ensure continuity in G20 commitments and aims.
- The G20 is irrelevant
The economies of the G20 countries combined represent 85% of global GDP. G20 commitments involve national government policy decisions, so it is important for the national constituencies of G20 members to be informed of the commitments their governments have made at G20 meetings. The G20’s achievements include mobilising finances, safeguarding the financial system, and preventing trade protectionism. The forum mediated the short-term impacts of the global financial crisis, and commitments to economic growth and employment are assisting countries to manage the ongoing legacy of the crisis.
Australia’s 2014 G20 Presidency
Australia hosted the G20 in 2014 under Prime Minister Tony Abbott, with the leaders’ summit in Brisbane on 15-16 November 2014. Australia narrowed down the G20 agenda with a focus on jobs and growth. G20 countries signed up for the collective growth target of a 2% GDP increase across the G20, to be achieved by 2018. The Australian hosts also made efforts to improve summit procedure, including shortening the leaders’ communiqué to three pages. You can read more about the G20 at the end of 2014 by reading some of our past publications.
Turkey’s 2015 G20 Presidency
Turkey has launched its presidential agenda with a focus on three ‘i’s: inclusiveness, investment, and implementation. Turkey faces the challenges of implementing previous commitments and delivering growth as promised. You can find out more about the G20 during 2015 in the G20 Monitors. Over 2015, the G20 Studies Centre worked closely with the 2015 T20 leader, Turkish think tank TEPAV.
China’s 2016 G20 Presidency
China is the world’s biggest country in terms of purchasing power parity. However, it is under-represented in multilateral economic institutions, like many of the emerging economies. The G20 is an important channel through which China can promote its global interests, alongside the new initiatives of the Asian Infrastructure and Investment Bank (AIIB) and the New Development Bank. The G20 Studies Centre will be closely following China’s presidency and is engaging with China experts including visiting scholar Dr Yu Ye.
What the Lowy Institute Does
The G20 Studies Centre provides updates on the G20 and plays an important role in the G20 process. The Centre produces quarterly G20 Monitors that bring together opinions from Australia and around the world to discuss developments in the G20 and suggest policy. It also provides regular commentary through the Interpreter and hosts events around themes of economic governance. In May 2015, the Centre hosted a conference on the future of international economic governance and the G20. For updates on publications and events, follow us on Twitter at @G20SC.