G20: Premier Forum for International Economic Cooperation

G20 2014 © G20 Australia

The G20 is the central global governance format for questions of economic and financial policy. It responds to the insight that national action alone falls short in an increasingly networked world.

Since the 1980s, the emerging economies have become an increasingly important growth engine for the global economy. The financial and currency crises that broke out in the 1990s in Latin America, Russia and Asia consequently threatened the entire global economy. The distortions in global markets left no doubt that the G8 had become too small to address the challenges of financial policy on its own. The Group of 20 (G20) was born in 1999 in Berlin, when the finance ministers and central bank governors of the leading industrial and emerging economies met for the first time. The objective of the G20 was to lastingly stabilize the global financial markets by improved coordination.

Financial challenges can no longer be mastered by the G7 alone

The necessity of such a format was underlined in 2008 when the U.S. subprime crisis proliferated into the greatest global financial and economic crisis in more than 80 years. This led to a first summit of the G20 heads of state and government, to coordinate a joint response. The heads of state and government agreed that the crisis could only be overcome through joint action. This was also a lesson drawn from the crash of 1929, where unilateral national responses led to protectionism, years of depression, massive unemployment, and deflation.

The intense cooperation in the G20 played a considerable role in resolving the crisis. Coordinated action by the G20 states made it possible to stabilize the international financial markets, largely uphold global trade and initiate regulatory reforms. The most important elements of crisis response included coordinating national bank rescue and growth programmes and a common pledge for a protectionism standstill.

Informal forum for inclusive global governance

Since then, the G20 has developed from a crisis mechanism into a long-term global steering committee for financial and economic policy. It possesses the necessary weight and legitimacy for that task: Its member states are not only responsible for 85 percent of global gross domestic product (GDP) and three-quarters of global exports (goods and services), but also represent about two-thirds of the world’s population.

 Unlike the G7, the G20 originally restricted itself to economic and financial issues. However, the G20 agenda is continuously being expanded and in 2015 inter alia also included development, the global health agenda, anti-terrorism cooperation and the refugee crisis. The G20’s guiding principles are set out in the Framework for Strong, Sustainable and Balanced Growth adopted at the Pittsburgh Summit in 2009.

The G20 members and their shares of global GDP, trade and population

Source: World Bank 2014. *EU figures include Germany, France, Italy and the United Kingdom and are the sum of trade shares of the 28 member-states (intra- and extra-EU trade).
GDP (nominal) in % Exports (goods and services) in % Population in %
Argentina 0.69 0.38 0.59
Australia 1.87 1.39 0.32
Brasil 3.01 1.28 2.84
China 13.30 13.21 18.79
Germany 4.95 7.92 1.11
France 3.63 3.33 0.91
India 2.65 1.32 17.84
Indonesia 1.14 1.04 3.50
Italy 2.75 2.80 0.84
Japan 5.91 3.85 1.75
Canada 2.29 2.85 0.49
Mexico 1.65 2.44 1.73
Republic of Korea 1.81 3.20 0.69
Russia 2.39 2.75 1.98
Saudi-Arabia 0.96 1.79 0.43
South Africa 0.45 0.74 0.74
Turkey 1.03 0.74 1.05
United States 22.37 8.39 4.39
United Kingdom 3.78 2.44 0.89
EU* 23.7 32.10 7.00
G20 85.24 77.57 64.14

How the G20 functions

The G20 possesses no permanent secretariat. Instead, a rotating presidency is responsible for organizing the G20 summit and preparing the topics for discussion. In 2016, the G20 Summit will be held under Chinese presidency on 4 and 5 September in Hangzhou. In 2017, Germany will take over the G20 presidency. In addition to the yearly G20 summits, several meetings take place on the ministerial and senior official level each year. The G20 cooperates closely with international institutions, and the respective G20 presidency pursues an ongoing exchange with civil society (see B20).

As an informal forum, the G20 possesses no executive powers, nor are its decisions binding. Therefore, whether G20 decisions are implemented depends on its members’ willingness to compromise. This apparent weakness is at the same time one of its great strengths. Only thanks to its informal character does the G20 acquire the flexibility required to generate effective compromises between member-states with diverging interests.

Business in the G20 process

The B20 and the B20 Coalition support the G20 process through consolidated representation and concrete economic recommendations.

B20

Since 2011, the B20 has supplied the G20 agenda with recommendations for action. Both businesses and business associations are represented in the B20. BDI is also actively engaged in the B20 process.

Like the G20, the B20 also operates without a permanent secretariat. The B20 presidency rotates in step with the G20’s. Each year a B20 summit is held in connection with the G20 presidency, to discuss the G20 topics most important to business. The recommendations of the 2015 B20 Turkey can be accessed here.

Next to its business outreach process (B20), the G20 also conducts civil society dialogues with representatives of trade unions (L20), think tanks and academics (T20), youth (Y20), women’s organisations (W20), and NGOs (C20).

B20 Coalition

The B20 Coalition is a permanent alliance of leading national business associations from the G20 states. It ensures a continuous exchange between business, the G20 and national governments independently of the rotating presidencies of G20 and B20. In this way, the B20 Coalition augments and supports the B20 process.

With member organizations representing more than 6.7 million businesses, the B20 Coalition is also characterized by a strong anchoring in national politics. Accordingly, the B20 Coalition is an important link that not only participates in international coordination but also, through its members, tracks implementation at the national level.

B20 Coalition members:

  •  Australian Industry Group (Ai Group), Australia
  • Federation of German industries (BDI), Germany
  • Business Unity South Africa (BUSA), South Africa
  • BUSINESSEUROPE, Europe
  • Confederation of British Industry (CBI), United Kingdom
  • Canadian Chamber of Commerce (CCC), Canada
  • Confederation of Employers and Industries of Spain (CEOE), Spain (Spain is no formal G20 member, but regularly participates in G20 meetings)
  • Confederation of Indian Industry (CII), India
  • National Confederation of Industry Brazil (CNI), Brasilia
  • General Confederation of Italian Industry (Confindustria), Italy
  • Federation of Korean Industries (FKI), Republic of Korea
  • Movement of the Enterprises of France (MEDEF), France
  • Turkish Industry and Business Association (TÜSİAD), Turkey
  • Argentine Industrial Union (UIA), Argentina
  • United States Chamber of Commerce (USCC), United States