Power Shift to G20
South Korea to Host Fifth Summit in November 2010
It is noteworthy that leaders of the Group of 20 have agreed to make their summit the premier forum for international economic cooperation. For this, they have decided to hold regular annual meetings from 2011. The agreement was contained in a communiqu? issued by leaders at the end of their two-day gathering in Pittsburgh, Pa., last week. It is no exaggeration to say that the global economic structure is undergoing a historic transfer of power to the developing world in the wake of the unprecedented financial and economic crisis.
The power shift reflects a reality that global financial and economic issues can no longer be tackled by the rich G8 nations as their decades of dominance has weakened after the worst crisis since the Great Depression hit the world last September. It is inevitable for the G20 to replace the G8 as the main forum for steering the global economy. In other words, the change shows that countries such as China, India and South Korea need to play a bigger role in overcoming the crisis and setting a new global financial and economic framework. In turn, the emerging economies should take more responsibilities to match their enhanced role.
As U.S. President Barack Obama pointed out in his news conference during the summit, the world cannot meet the challenges of the 21st century with 20th-century approaches. ``And that's why the G20 will take the lead in building a new approach to cooperation,'' he said. ``To make our institutions reflect the reality of our times, we will shift more responsibility to emerging economies with the International Monetary Fund and give them a great voice.'' Thus, emerging economies belonging to the G20 will be given a bigger share of the vote at the IMF and the World Bank. The increased share will enable the developing countries to have proper clout in proportion to their financial contributions.
The G20 nations now account for 85 percent of the world's total gross domestic product (GDP). And the emerging economies make up more than half of the global economy. Against this backdrop, the G8 forum came to lose its economic and political confidence as it cannot meet the rapidly changing global environment. But it is too early to conclude that the eight advanced countries, including the U.S., Britain, Germany France and Japan, have given up their dominance completely and forever. Thus, it is important to create a new global economic order which will allow the industrialized nations to forge a better partnership with the emerging economies to step up their cooperation for sustainable growth.
It is also necessary to make efforts to institutionalize the G20 summit as a leading forum to deal with such important issues, including global imbalances between developing and industrialized nations, rising protectionist moves, financial reform and joint action for exit strategy. Besides, the 20 major countries are required to prepare for a post-crisis era by strengthening their coordinated efforts for better global economic governance.
One of the remarkable outcomes of the Pittsburgh meeting is a decision to hold the fifth G20 summit in South Korea in November 2010, which is emerging as one of the fast-recovering countries from the global recession. We hope Korea will play the role of bridging differences between the advanced nations and the emerging economies. The hosting will also provide a good opportunity for the world's 14th-largest economy to enhance its international status and contribute to a sustainable and balanced growth of the global economy.