G7: World Economic Summit and Community of Values

© Bundesregierung/Widmann

The G7 promotes close cooperation between the leading industrialized countries. It is more than a club of leading economic powers: the G7 states also share interests and values. The G7 will remain an important format for shaping globalization.

The end of the Second World War marked the beginning of a new phase of globalization, one of whose manifestations was rapidly expanding trade and financial flows. Especially for the young Federal Republic of Germany, this was one of the central foundations of the German economic miracle of the 1950s and 1960s. At the same time, increasing globalization also meant that a country’s prosperity could no longer be governed at the national level alone. Dependency on the global economy has increased steadily.

This was seen especially clearly in 1973, when the Bretton Woods system of fixed exchange rates collapsed. That arrangement had formed one of the central pillars of global financial stability and growing international trade for almost three decades. In the same year, the first oil shock led to a global economic slump.

The origins of global governance

It was in order to tackle these challenges that the heads of state and government of the six leading industrial nations met for the first world economic summit in 1975 at the initiative of Helmut Schmidt and Valéry Giscard d’Estaing. Canada joined in 1976 to form the Group of 7 (G7). Since then, a summit has been held at least once every year under a rotating presidency.

Coordination in the G7 contributed to successful crisis resolution in the 1970s. In the following years, it contributed substantially to developing the global financial architecture and effectively coordinating the national economic policies of its members. Examples include the Louvre Agreement of 1987 to reduce global imbalances, and the establishment of the Financial Stability Forum in 1999 (since 2009 Financial Stability Board), to promote uniform financial market regulation.

In 1998, Russia joined the G7 to create the G8. Russia’s membership was suspended in 2014 after its illegal annexation of Crimea.

The G7 states and their shares of global population, GDP and trade

Source: World Bank 2014. *EU has observer status since 1981. *EU figures include Germany, France, Italy and the United Kingdom. Sum of export shares of member-states (intra- and extra-EU trade).
GDP (nominal) in % Exports (goods and services) in % Population in %
Germany 4.95 7.92 1.11
France 3.63 3.33 0.91
Italy 2.75 2.80 0.84
Japan 5.91 3.85 1.75
Canada 2.29 2.85 0.49
United States 22.37 8.39 4.39
United Kingdom 3.78 2.44 0.89
EU* 23.7 32.10 7.00
G7-Members (without the EU) 45.69 31.58 10.39

How the G7 functions

The G7 is an informal forum where national policies and joint action are coordinated. Because the G7 is not an international organization and possesses no administrative apparatus of its own, the agenda is determined largely by the respective presidency. In addition to the yearly G7 summit, ministerial meetings occur several times a year. The German G7 presidency in 2015 held meetings of the foreign, finance, energy, science and health ministers. This underlines the breadth of issues coordinated in the G7.

Today, the G7 addresses practically all important global questions. The 2015 summit at Elmau, Germany, adopted decisions on not only financial and economic issues, but also questions of foreign and security policy, development, health, climate protection and marine conservation. 

G7-presidency

  • Germany
  • Japan
  • Italy
  • Canada
  • France
  • United States

The future of the G7

The rise of the emerging economies and developing countries since the 1990s has significantly shifted the centre of gravity of the global economy. This led to the founding of the G20, which includes the most important emerging economies and other industrialized countries in addition to the G7 states. However, the G7 retains decisive qualities that continue to make it an important forum of global governance.

While the relative global weight of the G7 economies has declined, they still represent a good half of global GDP and one-third of world exports (goods and services). Accordingly, the G7 remains influential in setting the political framework for the global economy.

The G7 is also a community of values that stands for democracy, rule of law, respect for human rights and the free market. Close cooperation between like-minded states is essential if they are to continue to represent shared interests and values effectively in global governance contexts.

G7 dialogue with civil society

Under the German presidency in 2007, the G8 initiated an outreach process to promote exchange between the G8 and civil society. In this framework, the German government met with representatives of academia, business, trade unions, NGOs and youth organizations from the G8 states. Since then, the dialogue with civil society has been a firm fixture in the G8/G7 process, conducted each year by the respective G8/G7 presidency.

In order to coordinate the positioning of business in this outreach process, the G8 Business Summit (B8) was created in 2007 at the initiative of the BDI. Since Russia’s exclusion from the G8 in 2014, the business outreach likewise functions as the B7.

B7 supports G7 process

The B7 is composed of the leading business associations of the G7 states. In the B7, they come together to discuss the topics of the G7 agenda and to prepare concrete proposals for action for the G7. Once each year in the scope of the B7 summit, the members of the B7 meet the respective G7 presidency to present their recommendations.

By consolidating business positions, the B7 functions as a central G7-discussion partner for an effective dialogue. It also makes a significant contribution to the G7 process with precise analyses and concrete proposals. In an important link, the B7 not only contributes to international coordination processes, but through its members tracks how they are implemented at the national level.

B7-Members

  • Federation of German Industries (BDI), Germany
  • Confederation of British Industry (CBI), United Kingdom
  • Canadian Chamber of Commerce (CCC), Canada
  • General Confederation of Italian Industry (Confindustria), Italy
  • Japan Business Federation (Keidanren), Japan
  • Movement of the Enterprises of France (MEDEF), France
  • United States Chamber of Commerce (USCC), United States
  • BUSINESSEUROPE, European Union