Antalya, November 14, 2015
Now in its fourth year, the Think 20 (T20) is an official engagement group of the G20. This year, the Economic Policy Research Foundation of Turkey (TEPAV), an independent think tank in Ankara, coordinated the T20 activities. The T20 serves as an “ideas bank” for G20 governments, bringing innovativeness to the G20 agenda. In this role, T20 develops new policies, new ideas, new initiatives, and new projects to support the agendas of G20 policymakers and other official G20 engagements groups.
In 2015, building on the idea that think tanks and academia are less likely to be constrained by political considerations and are free to think “outside of the box”, T20 Turkey introduced discussion around technological transformation and innovation into the G20 agenda. This initiative also coincided with the Turkish government’s initiative to incorporate the Innovation 20 – an unofficial effort that began during Australia’s 2014 G20 presidency – into the T20 framework.
The T20 Summit is the final one in the series of T20 Turkey events in 2015, and is being held alongside the G20 Leaders’ Summit in Antalya on November 15-16, 2015.
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Global growth rate has not picked up its pace compared with pre-crisis levels. In the post-financial crisis era, public and/or private debt build-up continues to grow in many countries, weighing down spending and growth. Advanced economies in Europe showing significantly lower growth are also facing acute unemployment problems. While the US economy shows strong signs of economic recovery, China’s growth rate has slowed, creating additional adjustment challenges to sustainable global economic stability. Other large emerging economies have also experienced a much slower growth trajectory than previously. The impact of central banks’ monetary policies in advanced economies – most notably the Federal Reserve’s signal to raise its interest rate – is further threatening the economic stability of emerging markets such as Turkey, Brazil, and India.
Against this backdrop, global governance institutions still have not adapted themselves or their policies to tackle the challenges posed by today’s economic environment. Hence, while the IMF was responsive to the needs of developing regions during the crisis, the World Bank was less so. Yet, there is still no resolution on the IMF quota and associated governance reforms to make the Fund more representative. These are still pending implementation because the United States Congress has not ratified all the necessary agreements. At the same time, China has led its own efforts by establishing the Asian Investment and Infrastructure Bank (AIIB) and has announced that the development bank will forgo veto power. Also pointing to deficiencies within the global governance architecture, a recent US court decision stopped Argentinean creditors from receiving their payments.
WTO multilateralism has not produced concrete steps towards liberalization either. The stalemate in the WTO Doha Round has fostered an increased focus on the negotiation of preferential trade agreements (PTAs), including the so-called “mega-regionals”. Yet, the negotiation of US mega-regional deals such as the Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP) presages the start of a new era in the global trading system; however, most countries – both within and outside the G20 – will be obliged to comply with rules that they have not contributed to making if such mega-regional deals becomes “game-changers”.
The G20 brings together 19 systemically important countries and the European Union. The G20 countries play a leading role in the global institutions discussed above. This is why G20 is important. The effective coordination that the G20 achieved in responding to the financial crisis in 2008 underlined the organization’s significant contribution to the global economic recovery.
Nevertheless, whether or not the G20 has been able to further its relevance in global governance since the crisis is questionable. Looking back at the roots of the G20, the platform was established as a mechanism to respond to the 1997 Asian financial crisis. The G20’s inaugural meeting took place on December 15-16, 1999, in Berlin, bringing together finance ministers and central bank governors from the central 19 economies plus the European Union. The platform rose to prominence with the onset of the 2008 financial crisis, for the first time convening at the leaders’ level in Washington in November 2008.
As the main focus for G20 still remains financial issues, the platform has not been able to prioritize emerging global challenges effectively, commensurate with its significance in global governance. The incorporation of the Sherpa track into the G20 Forum during the Korean G20 Presidency was a critical step towards expanding the agenda to address non-financial issues at the global level. However, compared with the Finance Track, the Sherpa Track is still in its infancy.
Constituting an important step towards addressing the emerging global challenges of the 21st century, the sustainable development goals (SDGs) were adopted by member states at the UN General Assembly meeting in New York in September. The SDGs underline a framework that links economic prosperity, social inclusion, protection of the planet as well as peacefull socities. The G7 leaders have already committed to the “decarbonisation of the global economy over the course of this century.” The G20, as a group, should commit itself to support the SDGs by implementing them in their own countires and though international cooperation.
The agenda of the G20 beyond financial issues requires the same momentum if it is to effectively address emerging global challenges. Solutions to address such challenges will significantly depend on a series of technological innovations and how these technologies will spread globally. Mega-regional trade agreements such as TTIP and TPP – which aim to broaden existing rules and principles, and establish new and stronger international standards – may stand in the way of the global diffusion of technologies. The TPP provisions announced last week include extensions of restrictive intellectual property laws and patents for innovations such as in biotechnology, and introduce new regulations (i.e. for the Internet) that go beyond existing trade rules.
If the G20 is going to further its relevance in global governance of the 21st century, it should start forming an agenda that incorporates the role of technology in sustainable development. This agenda includes discussions on a range of issues from the design of multilateral trade and investment rules to the global rules that govern the Internet (i.e. cybersecurity, privacy), as well as the creation of new regulations to address challenges created by new innovations (e.g. drones and self-driving cars), while also addressing the potentially disruptive aspects of technological progress on labor markets. While many of these issues cut across existing G20 agenda items, the transformative aspects of technological development have not been part of the G20 agenda.
For instance,
- Solar panels can bring environmentally sustainable energy to rural areas in developing regions without the need for developing infrastructure. Yet, the contribution of solar energy to sustainable development and to energy governance is not adequately addressed by the G20 Energy Working Group.
- New technologies can help reduce carbon emissions and ensure the sustainability of resources. Yet, the contribution of new technologies to tackle global problems such as climate change is not addressed by the G20 Energy Working Group.
- Technology-driven productivity is viewed as among the causes of growth in joblessness and the decline in labor incomes as a share of GDP. While the G20 Employment Working Group has addressed the reasons behind these trends, the potential effects of automation on labor markets are not on its agenda.
- Digital payment technologies offer opportunities for greater inclusiveness by facilitating remittance transfers to developing countries at a low cost. Yet there has not been an emphasis on digital payments in the G20 development agenda.
- E-commerce is changing world trade dynamics and facilitating internationalization of SMEs. Yet, it was not discussed at the G20 Trade Minister’s meeting in 2015.
- The speedy development of pharmaceuticals to respond to global epidemic outbreaks is as important as the governance of outbreaks after they occur. While the G20 issued a statement on the Ebola outbreak last year, this statement did not address ways to speed up the development of pharmaceuticals to respond to such crises.
A G20 that does not revise itself cannot steer the global agenda of the 21st century. Today’s global challenges reach far beyond financial governance. As the Think 20 Chair, we call for the Chinese G20 Presidency to advance both short-term and long-term issues in 2016.
