The G20 development agenda: How can it make a difference?

20 October 2010 16:30 - 18:00 GMT+01 (BST)
Public event
Streamed live online

 

Speakers:

Shriti Vadera - Adviser to the G20 Presidency, Korea

Kamalesh Sharma - Commonwealth Secretary-General

Discussant:

Dirk Willem te Velde - Head of Investment and Growth, ODI 

Chair:

Alison Evans - Director, ODI

 

Description

 

The declaration of the G20 summit in Toronto earlier this year says that ‘We are committed to narrowing the development gap and must consider the impact of our policy actions on low-income countries.' The Declaration also states that ‘Narrowing the development gap and reducing poverty are integral to our broader objective of achieving strong, sustainable and balanced growth and ensuring a more robust and resilient global economy for all.' The poorest countries are, therefore, seen as central to the G-20 deliberations.  The Toronto Summit also initiated a Working Group on Development, with a mandate to create a development agenda and multi-year action plans to be adopted at the Seoul Summit.

 

Baroness Shriti Vadera, a former UK Minister for Economic Competiveness, and now an advisor to the Korean G20 Presidency, will discuss the development agenda of the G20 and its' potential impact. Commonwealth Secretary General Kamalash Sharma will provide views on the G20 development agenda from a Commonwealth angle.  ODI Director Alison Evans will chair the meeting.

 

TheChairperson opened thediscussion on ‘The G20development agenda: How can it make a difference?’ by quoting paragraph13 from the Declaration released following the conclusion ofthe G20 Summit meeting on June 26-27, 2010 in Toronto, Canada:

 

“We arecommitted to narrowing the development gap and that we must consider the impactof our policy actions on low-income countries. We will continue to supportdevelopment financing, including through new approaches that encouragedevelopment financing from both public and private sources.”

 

Baroness Shriti Vadera spoke in her individual capacity based on herexperience as adviser to the G20 Presidency. She mentioned that the KoreanGovernment has been responsible for putting Development on the Agenda after along hard fought battle. She mentioned that one of the obstacles had been aresistance to expanding the G20’s role beyond what is considered its area ofcomparative advantage, namely economics, rather than the social elements. Shenoted that the G20 could be perceived as an odd mix of donors and recipientsand hence it was therefore not right forum to talk about the role of aid.

 

The speaker went on to mention thatthe Republic of Korea is one of only twocountries that havetransformed from being a LowIncome Country (LIC)into a High-Income Country in just one generation and asshe emphasized this was achieved by notfollowing the prescriptions of the International FinancialInstitutions (IFIs). Korea used international trade asan essential component of its development policy. In fact, for Korea, exportpromotion served as the engine of growth and the organising principle underwhich industrial upgrading, infrastructure development, and human resourcedevelopment could be pursued.

 

 

Baroness Shriti Vaderathenoutlined why the KoreanG20 Presidency saw the need for a starting point focusing on economic issues. Sheargued that it is not enough to only rely on aid over the long term, butgreater reliance on domestic resources is critical to build more resilienteconomies, implement a home grown development agenda and effectively fightpoverty. The G20 Presidency wants to avoid that people confuse aid withdevelopment and forget that the purpose is investment and not charity. This iswhy growth is a central development item for G20. The work of the Korean G20Presidency is both based on evidence and the outcomes derived from thenegotiations. This eventually led to the focus on the eight key pillars ofeconomic growth, which are discussed in the Korean scoping paper for the G20development working group: Infrastructure; Private Investment and Job Creation;Human Resources Development; Trade; Financial Inclusion; Growth withResilience; Food Security; and Governance. Knowledge sharing is sometimesmentioned as a ninth pillar.

 

Baroness Shriti Vadera also said that the difference between G8 and G20,is that the G20 is quite democratic with it comes to the Agenda setting. The chaircountry is obliged to consult before the agenda can be decided. Moreover, theG20 has an internal accountability system based on a multi-year agenda.

 

The Commonwealth Secretary-Generalexpressed his satisfaction with development becomingmainstream within G20, because he wondered what the purpose of G20 otherwisewould be. The Commonwealth Secretariat (ComSec) regards the G20 as a majorglobal opportunity. In fact the Secretary General had contacted his counterpartAbdou Diouf, Secretary-General of L’Organisation internationale de laFrancophonie (OIF) to work together on the issuewhether the G20 can be the T20 – the Trustees of the whole world’s interests, giventhe fact that 90% of global GDP will be represented at the G20 table while 90%of the world’s countries (i.e. the G172) will be missing.

 

The Secretary-General said that the ComSec could not be sanguine about failed states. No matter the size of thepopulation, everyone deserves a place in the sun.

 

TheSecretary-General expressed his admiration of former UK PrimeMinister, Gordon Brown and his thinking, which led to the introduction ofimportant document focusing on inclusiveness and equity. The ComSec has relentlesslypursued the G20, particularly at the G20 summit in London. The same approachwas followed prior to the G20 Summit in Toronto, where the twoSecretary-Generals of respectively the ComSec and OIF had a meeting with theCanadian Prime Minister Harper, where they expressed the concerns aboutliquidity and access to funds; export; finance and debt overhang, whileemphasizing that the LICs/SVEs are the first to be affected by a tsunami ofcrises – of finance and food, of energy and the environment – that they had nohand in.

 

A keymessage of the Secretary-General on behalf of the ‘G172’ that are not invited tothe Seoul table, is that the impacts of the global slowdown are being felt moststrongly, and will be felt for the longest time, in the developing worldparticularly among the small communities. In many of these countries, economicstability is a matter of life and death. Thus, if the G20 really does representthe changing face of power in the world, then its first priority is torepresent the silent voice of those without that power e.g. by dealing with thematernal and infant mortality figures, which the Secretary General felt are a disgrace.

 

TheSecretary-General expressed his satisfaction with the facts that theODA levels holds on. With tax dollars scarce and aid levels barely rising, newsources of money are required for development. The World Bank indicates that$315 billion is required to meet the gap between what developing countriesrequire and what is currently available in 2010 alone. The G20 should endorse aserious action plan to identify innovative potential sources of non-sovereignfinancing, embracing widespread consultation with those not at their table, tofill the funding gap.

 

TheSecretary-General strongly felt that the ComSec’s intervention didmake a huge difference on the Toronto G20 agenda. Therefore it is the intentionof the ComSec that before every G20 meeting to meet the G20 chair to make surethat ComSec’s concerns are on the Agenda, which is an idea that is beingaccepted. A quarter of G20 members belong to the ComSec and therefore theComSec want to use them at various ministerial conferences to put forward what theComSec would like on the G20 Agenda.

 

TheSecretary-General expressed the need to get the philosophy right onaid. What are members ready to do to: Accelerate trade from SVE/LICs to OECDmarkets to manage poverty; set targets for increased A4T; and automaticfinancial facility for SVEs/HIPCs. He suggested the options of: Swapping debt; Debtbuy-backs; Temporary debt moratorium etc.

 

TheSecretary-Generalsaid that legitimacy andresilience is what ComSec stands for. The ComSec has also developed a methodology;framework and index, which the UN has adopted.

 

Summary of the floor discussion (Questions &Answers)

 

Pointsraised in the discussion included:

 

·What does G20 exactly do and where do theboundaries lie for the G20? The Secretary General replied that the G20introduces processes to secure the views of as many countries as possible. The Baroness replied that the Committee WGon Development addresses the fear that the concerns of the Developing Countriesare not called subsidiary matters as with the G8. There was a discussion on theinstitutionalization of the LICs within the G20 in the sense that every G20 hasNEPAD and AU represented in addition to South Africa. This would beinstitutionalised at Seoul. She also underlined that the G20 is a set of meetingswith a mobilisation power, which e.g. could give a mandate of action to otheractors such as the IFIs.

 

Dirk Willem te Velde mentioned how the Agendaof the G20 has been rapidlychanging in the last few years. He drew the audience attention to the fact thatthe ODI has done a lot of work on G20, e.g. the Development Charter to G20(March 2009) to help poor countries tackle the effects of the global economicrecession. Before the Toronto G20 Summit the question was how the LICs/SVEscould fit into G20 framework for strong sustainable and balanced growth. TheG20’s development agenda is different from traditional development agendabecause it includes emerging markets dealing with beyond aid issues such asFDI; Trade; SWFs; DFI etc; the G20 is a network of countries, not a developmentagency, and it works best when dealing with urgencies.

 

Dirk Willem te Velde gave 3 aims for his presentation on how the G20 canmake a difference:

  1. How development is included in the core policies of the G20.
  2. The G20 Development Working Group.
  3. The G20 process.

 

1)    Dirk Willem te Veldeexplained that all core issues are not neutral to development,however some countries are affected more than others e.g. with regards to globalrebalancing. He suggested that it might not be a good idea to overburden the existingG20 core issues. On the other hand there is a need for Policy coherence fordevelopment.

2)    Dirk Willem te Velde proposed that theDevelopment WG thinkabout the emerging markets coming to the G20 table and link them, to increasedopportunities for returns in poor countries. He mentioned the possibility ofthinking about DFI to ensure they can channel their finance and the role ofblended finance. He also proposed a knowledge exchange based on e.g. China;Korea and South Africa’s development models, with the aim of bringing thelessons learned to the forefront. Thus, the G20 could think about knowledgeexchange to exploit its network function.

 

3)    Dirk Willem te Velde explained that the G20 isa network, which doesn’t operate likebodies such as the EC, which has a clearly defined role with respect to outsiders.He proposed that there should be fixed seats at the G20 table for non-G20countries to ensure transparency on which countries will be there at eachmeeting.

 

Second Round of Q&A

 

·Q1. Whoare the winners and losers of the new structure emerging? Baroness Shriti Vadera replied that the G20 does not have a realcompetency to deal with some complex new issues and therefore shouldn’t doeverything.

·Q2: Whetherthe growth of Korea from LIC to HIC without following external prescription isa coincidence or not? Baroness ShritiVadera replied that Korea did something that less empowered states mightnot be able to do due to lack of capability. Moreover, the Korean leadershiphad a vision, which also was well aided too e.g. by the US. She emphasised thatthe most common factors between countries that grow are: Governance andcapability.

·Q3: Whetherthe G20 can influence the fact that aid seems to favour urban areas and that aideffectiveness still has not had a big impact on the ground? Baroness Shriti Vadera replied in herpersonal capacity that she has been shocked by the aid community and that shewas not sure whether aid is relevant for growth (poverty is different). On theother hand the evidence shows that a country needs to growth to reduce poverty.That is why the G20 Presidency is focusing on growth if the MDGs are to bereached.

·Q4: Doesn’taid cover too many activities to be generalized whether it has an impact ongrowth? Baroness Shriti Vadera repliedthat social protection systems are important to ensure that the gains fromgrowth are not lost.

·Q5: Whatcan the G20 leaders deliver that the ministers of finance cannot? Baroness Shriti Vadera replied that itis politics. Some issues cannot be discussed at the Minister of Finance level.

·Dirk Willem te Velde replied to the question on aid effectiveness, that whilstthe G20 is not the right forum, it is important to ensure that the G20 isaccountable to its commitments and multi-year action plans to be published atSeoul. It is important to seize the opportunities to hold the G20 to account tokick start a different development discussion beyond aid.