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The future of development at the G20: towards the St Petersburg Development Principles

Written by Dirk Willem te Velde

When Mexico hands the G20 presidency to Russia on 1 December 2012, it will bequeath a G20 that is still doing some soul-searching on how to lead the world economy. Recent news suggests there is plenty to do. The global economy is in the doldrums, with growth forecasts for the BRICS and the Euro area dropping steeply. Climate change is increasingly visible, and increasingly costly. Food and energy prices are still high and volatile. The Mexicans will also pass on the Seoul multi-year action plan which will end under the Russian watch. So, what is the future for development at the G20?

First we must look at what the G20 has achieved for development to date. ODI hosted a workshop with leading development experts on the G20’s effectiveness and accountability. Building on this, my take on the development record is as follows:

  •  The G20 has mobilised $ 1.1 trillion to withstand the global financial crisis, with $50 billion directly for low-income countries (LICs) directly, both of which supported development.
  • The G20 has stimulated bigger quotas for lending to LICs, and voting quota reform for the International Financial Institutions, although this has yet to be implemented in full.
  • The G20 has improved on the G8 by integrating emerging powers into the development process.
  • The G20’s work on AgResults is a shining example of how to coordinate the work of various international organisations, although there are also questions on the G20’s added-value on food security.
  • The G20 has set up the high level panel on infrastructure investment, bringing stakeholders together to unlock binding constraints to infrastructure finance.
  • Under the Mexican’s presidency, the G20 has put the spotlight on inclusive green growth, although there is work to be done to develop a shared G20 agenda on this issue.
  • The G20 has set numerical targets to reduce the costs of remittances; although there has been less progress in other areas such as Duty-Free, Quota-Free.

At the same time, there is concern that the G20 is not reaching its potential on development, spending too much time discussing individual and even marginal aid projects.

What is next for the G20 and development? There are two immediate issues for the G20’s development agenda: (1) develop an accountability report required by the next G20 summit in St Petersburg under the Los Cabos statement; and (2) develop a set of development principles.

On the first item, there are fundamental issues on the accountability of the G20’s development work. Who in the G20 development agenda is accountable to whom, what needs to happen to make them accountable and how can this be done? This was the subject of the ODI workshop, a paper, and my presentation to the G20 Development Working Group workshop in early October. Mutual accountability (in the words of the OECD) will increase the legitimacy of the G20 actions. This, in turn, will improve cooperation and trust among G20 and non-G20 countries, and that will improve the effectiveness of the G20 actions to support better economic performance in non-G20 countries.

The G20 accountability report on development needs to include three areas.

  1. The G20 has designed a multi-year action plan (MYAP) for 2010 to 2012. A technocratic report could include self-reporting on each action by each G20 country, e.g. using a scorecard methodology.
  2. The G20 needs to go beyond a technical assessments to explain how it works and adds value (e.g. identifying governance gaps, providing policy direction, putting a spotlight on issues, knowledge sharing, trust building and developing standards).
  3. The report should outline how the G20 development’s agenda is to be held accountable in the future (e.g. links to the core agenda such as finance).

Second, whilst the St Petersburg summit of early September 2013 will mark the (hopefully successful) end of the MYAP, it might be too ambitious too herald a successor DWG action plan. However, it could be the perfect time to review the effectiveness of the DWG, re-assess the G20’s wider engagement as part of the its development agenda, and revisit the G20 development principles to create a set of St Petersburg Development Principles that could lead to a new multi-year action plan.

This is my own list for the St Petersburg Development Principles.

  • Foster accountability and legitimacy: the G20 should aim for maximum engagement with LICs and Small and Vulnerable Economies and recognise country-specific challenges and vulnerabilities; one of the next DWG meetings should be in a LIC.
  • Promote policy coherence for development: assess and improve the development dimension of the G20 core agenda e.g. on financial regulation, global imbalances, climate change, energy subsidies and natural resource management .
  • Promote a beyond aid agenda:  the G8, OECD DAC and the UN led post-2015 debate already address aid questions, so let the G20 focus on and leverage in other flows (e.g. private finance).
  • Smart involvement of non-state actors: the G20 is a network of networks. It needs non-state actors such as institutional investors, private companies and civil society; the smart involvement of change makers will help bring the desired effect.
  • Build on the G20’s comparative advantage: there are several processes to address poverty and environment (e.g. the UN-led post-2015 agenda looks to Sustainable Development Goals and the future of the Millennium Development Goals), but let the G20 focus on underlying drivers and think more carefully how poor and vulnerable economies are part of the G20 framework for strong, sustainable and balanced growth. This requires a stronger focus on infrastructure, skills and narrowing the productivity gap between rich and poor countries.
  • Knowledge sharing and trust building: the G20 is not an executive body, so it needs to share knowledge and build trust through its networks.
  • Innovation: the G20 is more flexible than many international organisations and can continue to shine a spotlight on new issues.
  • Policy direction: as long as the G20 maintains its legitimacy, it can provide policy direction to other organisation and processes.
  • Identifying global and regional governance gaps: as a leading and flexible network, the G20 is well placed to highlight and address existing governance gaps in development (and gaps in existing accountability frameworks).

These principles could help to design an effective and accountable G20 development agenda. But what is on your G20 ‘to do list’?