Opinion: Is the G-8 Still Relevant in the Global Economy?

Posted on May 18, 2012

As Group of Eight (G-8) leaders gather at the US presidential retreat in Camp David this weekend, questions continue to be asked about the relevance of this club of advanced industrial economies. Can the G-8 still provide leadership in a crisis-ridden global economy and lend weight in the fight to overcome poverty? While its visibility in global affairs has waned in recent years, the G-8 remains a powerful actor and continues to command influence in key areas.

Musician and development activist Bob Geldof seems to think the G-8 can still do more. During his tour of Ethiopia this week, he said the G-8 could end poverty and implored it to do so. It was not so long ago that the obituary of the G-8 was written. This was when the world was hit by the global financial storm and the G-20 became the focal point for managing global economic issues.

At the time, it appeared sensible to make the G-20 the central co-ordinating mechanism, as it represents about 90% of the world’s economic output, 80% of trade and two-thirds of the world’s population. However, it is a nebulous body that has no solid institutions and cannot enforce decisions. It has huge responsibility without authority.

Undermining its effectiveness is the fact that G-20 members speak with disparate voices, with a reaction time too slow to be meaningful. Its emergence did not only push the G-8 out of the limelight, it has also created the wrong impression that emerging economies are equal partners and have equal responsibility for fixing the global economy.

With the G-8 having receded into the background, many developing countries lost a clearly definable interlocutor. The G-8 had a well-structured outreach platform on which to engage developing and emerging economies on key developmental challenges. The outreach process had the potential to evolve into a more realistic yet effective multilateral process that is better suited for managing the global economy.

Through the G-8 outreach process, SA had an opportunity to promote the New Partnership for Africa’s Development as well as to raise concerns about the bad behaviour of advanced industrial economies in multilateral trade negotiations. There is no such an interlocutor in the G-20.

Instead, the G-20 is characterised more by contest s between divergent national economic interests and is unable to reconcile the institutional diversities and regulatory frameworks of various countries.

It also lacks an organised mechanism beyond statements and plans for meeting Africa’s developmental challenges.

Countries that are members of the G-20 are all assumed to be equal yet, in reality, they have unequal economic development and resource capacities. They are all expected to shoulder the cost of managing global risks, even though some of them, like SA, have less ability to do so.

On the other hand, despite its lack of representational legitimacy, the G-8 was an effective instrument for pulling support from the north to help poor countries. It also fulfilled another critical role: developing countries could always hold it to account for its commitments and follow up through bilateral diplomatic relations.

With the establishment of the G-20, the G-8 countries feel less pressured by outsiders to deliver on commitments. Yet the G-8 remains a quietly powerful body that shapes global decisions. Currently it is at the centre of exploring euro-zone-crisis exit strategies and stimulating growth.

The influence of the G-8 was also visible in the appointment of the heads of the International Monetary Fund (IMF) and the World Bank. Former French finance minister Christine Lagarde was backed by the G-8 for the top post at the IMF, as was the American Jim Yong Kim to head the World Bank.

If that is not convincing enough of the influence of the G-8 on global issues, the club is also the prime mover in elevating agriculture and food security — a key mobilising theme in addressing Africa’s development challenges — to global prominence.

It was at the Italian resort city of L’Aquila in 2008 that the G-8 countries unveiled a programme on agriculture and food security, and a collective pledge of $22bn in food aid. This programme was to be later introduced into the G-20’s agenda.

Further, the G-8 has launched a selective outreach process with a few African countries. US President Barack Obama has invited four African leaders to participate in this weekend’s Camp David summit meeting as part of finding solutions to tackling Africa’s poverty and food-security challenges.

It is clear that the G-8 has not entirely disappeared. It has become effective in core areas it has chosen to focus on. Its strength lies in its cohesiveness and collective identity and the fact that it can act faster. It possesses authority without a sense of responsibility.

This article appeared in the Business Day of 18 May 2012 

Copyright © University of Pretoria 2024. All rights reserved.

COVID-19 Corona Virus South African Resource Portal

To contact the University during the COVID-19 lockdown, please send an email to [email protected]

FAQ's Email Us Virtual Campus Share Cookie Preferences