Summary - The G-20 is an economic forum that brings together the seven largest world economies as well as many developing nations. Together, the member countries in the G-20 (i.e. the Group of Twenty) account for 90% of the gross world product (GWP), 80% of world trade, and two-thirds of the world population. The G-20 conducts a summit meeting every year that rotates among the member countries.
Despite including nearly 70% of the world’s population, every G-20 summit meeting includes other invited guests. For example, Spain is a permanent “invitee” as are the chair of the Association of Southeast Asian Nation (ASEAN), two African nations, and at least one additional country at the host country’s discretion. International organizations such as the International Monetary Fund (IMF), the World Bank, the United Nations and World Trade Organization (WTO) are also invited guests to the G-20 summits.
This has opened up the G-20 to criticism for being too restrictive in its membership criteria and its lack of a formal charter. To that end, the G-20 is, at best, a think tank. It does not make economic policy but creates a forum for member nations to engage in a meaningful dialogue.
It’s frequently said that the world is getting smaller, which also means that the economies of the world are also more interconnected. It used to be that the economies of the world operated somewhat in isolation. However, if the financial crisis of 2008 has taught us anything it’s that the butterfly effect is in effect. We know that small events that happen in one country can spread to other nations. To help monitor and debate the issues affecting the global economy, the nations of the world have agreed to form associations. One such group is the G-20. In this article, we’ll define what the G-20 is, which countries make up its formal (and informal) membership, what role the organization plays, and why does the G-20 receive criticism.
What is the G-20?
The G-20 (an abbreviation for The Group of 20) is a group of finance ministers and central bank governors from 19 countries that serve as the main economic council of nations. The G-20 is made up of countries with the world’s largest economies, including developing nations as well as the European Union. The G-20 was formed in 1999 with a mandate to promote global economic growth, international trade, and regulation of financial markets.
What member countries make up the G-20?
The G-20 is made up of the Group of Seven (G-7) countries which are the seven countries with the largest developed economies. These countries are (in alphabetical order): Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. The other members of the G-20 are Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea, and Turkey. The G-20 countries represent 90% of the gross world product (GWP), 80% of world trade, and two-thirds of the world population.
In addition to the countries that make up the permanent membership, it is common practice for the G-20 to invite guest countries to attend its events. Spain is a permanent guest as is whatever country serves as the chair of the Association of Southeast Asian Nations (ASEAN). Also receiving invitations are the leaders of two African countries and at least one country invited by the host country.
What is the role of the G-20?
The G-20 is not a political body. It does not have the authority to make legislation. At its core, the G-20 is a think tank with the ability to, at best, influence the policies of the member nations and ensure global cooperation towards stated goals. At their annual summits, the G-20 discusses topics that evolve based on the global financial concerns of the member nations. Some of the themes that have dominated the G-20’s agenda since its initial summit in 2008 have been:
- The sustainability of sovereign debt
- Global financial stability
- Global economic growth
- International trade
- Regulation of financial markets
However, beyond these macroeconomic issues, the group of 20 has also gotten into some topical debates regarding such issues as cryptocurrency, food security, and trade wars.
Where is the G-20 summit held?
The host country rotates among members every year. In 2019, Japan hosted the summit in Osaka. In 2018, Argentina was the host. Future hosts include Saudi Arabia (2020), Italy (2021) and India (2022).
The host countries propose the agenda
The host country proposes agenda priorities but the topics discussed are agreed upon by the membership. In 2019, Japan proposed a focus on the global economy including topics such as trade and investment, innovation, energy and climate change, employment, and women’s empowerment. It is not uncommon for topics to reoccur from one year to the next.
How is the G-20 different from the G-7?
The G-7 (or Group of Seven) is a subset of the G-20 that is exclusive to the seven largest developed economies worldwide. The members of the G-7 (Canada, France, Germany, Italy, Japan, the United Kingdom and the United States) are all members of the G-20. The G-7 is considered to be a more political body than the G-20 since, in addition to the nations’ leading finance ministers, the G-7 meetings typically include the heads of state (i.e. presidents and prime ministers). Since the global recession of 2008, the G-20 has started to include heads of state to their meetings. The G-20 is different from the G-7 in that it includes countries with developing economies.
Criticism of the G-20
One of the common criticisms of the G-20 is who is admitted into the group. As shown above, the qualifications for member countries are somewhat arbitrary and even made more confusing by the practice of inviting additional countries in an effort to make the summit more reflective of the world’s diverse economy. Other concerns include a perceived lack of transparency some of which may result from the lack of a formal charter.
The final word on the G-20
As the global economy continues to grow, forums like the G-20 have emerged as think tanks to discuss, debate, and shape economic and monetary policy in their member countries. The G-20 (or Group of Twenty) is one such organization. While not a legislative body, the G-20 serves an important role in creating a united front with the governments of the member nations. The G-20 includes every member of the G-7 plus other developing nations. Despite accounting for a majority of the world’s population, the G-20 has drawn criticism for having membership standards that are too descriptive.