The growth framework aims to encourage G-20 countries to implement coherent medium-term p olicy frameworks to attain a mutually beneficial growth path and avoid future crises. The position of low-income countries (LICs) in the growth framework is not well defined, but these essays show that their economic growth depends on G-20 policies. The G-20 welfare also depends on growth prospects in LICs and the legitimacy of the G-20 framework is greatly enhanced by including LICs.
The paper includes pieces by Jane Kennan, Isabella Massa and Massimiliano Calì on the global economy, emerging markets and LICs. Together, they document very clearly how emerging markets have recently increased their links (trade, bank lending, Foreign Direct Investment (FDI) and remittances) with low income countries at a fast rate, while international links by developed countries have been under pressure. Ray Barrell, Dirk Willem te Velde, Isabella Massa and Nicola Cantore examine the effects of G-20 economic policies on LICs, including the effects of global rebalancing, smart exist from stimulus packages, financial regulation, thoughtful trade preferences, and removal of energy subsidies. The essays also combine national perspectives by country experts Luis Jemio, Isaac Anthony, Mustafizur Rahman, Tong Kimsun and Ali Mansoor on the implications of the G-20 growth framework and how LIC national governments can address medium term growth constraints themselves.
The paper also contains regional and group perspectives on the G-20. Ali Mansoor gives an example of how Africa could set investment and growth targets and implement these with support from the G-20; Derek Brien and Nikunji Soni discuss the importance of not neglecting the Pacific, and Debapriya Bhattacharya argues for a link between the least-developed country group (represented by Nepal in the United Nations at present) and the G-20. Pradumna Rana considers three ways in which Asia can be more effective in the G-20.
I conclude this volume of essays by suggesting a new global compact for crisis-resilient and transformative growth, with the LICs committing to a transformative growth charter and the G-20 committing to a stronger focus on the development impact of their core economic policies.
Taken together, the essays provide a G-20-LIC 20 point charter for crisis-resilient and transformative growth:
The G-20 to recommit to the framework of strong, sustainable and balanced growth and follow core policies in order to achieve this, including:
• Deficit countries to increase savings (US);
• Europe to consolidate its budgets and engage in structural reforms to boost growth;
• Emerging economies to revalue the exchange rate (e.g. China);
• Emerging economies to boost domestic demand by promoting social safety nets ensuring that households save less; and
• Germany and Japan to provide greater incentives for their companies to invest.
LICs to provide plans, and benchmark their efforts, to promote transformative growth by:
• Building productive capacities and fostering productivity change;
• Promoting economic diversification and competitiveness;
• Promoting private sector development;
• Providing energy and road infrastructure, and responding to the challenges of development in a carbon constrained world;
• Investing in good quality and appropriate human capital to improve labour productivity;
• Ensuring and improving technological capacity to adopt new, and implement old, technologies;
• Streamlining governance and bureaucracy.
The G-20 to consider the effects of its core economic policies on LICs and, where appropriate, make its policies more developmentally friendly in areas such as:
• Exiting fiscal and monetary stimuli in a developmentally friendly way;
• Appropriate financial regulation taking into account the capital needs of poor countries; and
• Rebalancing the global economy, using reserves for global growth and promoting flexible exchange rates.
The G-20 to consider the policy coherence and effects of its external policies on growth in LICs in areas such as:
• Aid to address global challenges and transformative growth (AfT, e.g. supporting technical change and infrastructure, or filling the skills capabilities gap);
• Provision of global financial liquidity, stimulating financial inclusion and investing international reserves for global growth;
• Promoting open trading rules; and
• Removal of fossil fuel subsidies
What, if anything, is missing from this list? What else could the G-20 do in terms of development beyond the growth framework? As always, views and contributions are welcome.