The G20 mainly deals with the global imbalances through focusing on macroeconomic and financial stability, stimulating growth and job creation. The global business community gives special importance to the G20 governments’ policy coordination efforts, and in the last 5 years, all policy efforts were focused on the global financial crisis. Today we should contemplate a new question: If there will be no crisis agenda in the upcoming period, what should be the new agenda items of the G20? Even if there is no crisis agenda in the medium term, global imbalances will be here to stay. Moreover, enhanced globalization and rising interdependencies require enhanced policy coordination tools. So it is obvious that the G20 platform will need to last in the long term.
It is crucial to understand the interdependencies among all countries, both economically and politically. Furthermore being capable of managing these interdependencies will be a key success factor for the global economy. At that point, the G20 can be regarded as one of the vital global policy coordination tools.
However, in order to meet evolving expectations, the G20 should have a more inclusive agenda parallel to the global shift of power. The way the G20 dealt with the financial crisis shows that there is room for enhancing trade and investment as well. Therefore, a tighter collaboration between the WTO and the G20 might arise out of these new opportunities, of course, with a balanced distribution of tasks depending upon key responsibilities of organisations. Such collaboration opens a door to new economies and multilateral trade.
An agenda must focus not only on crisis management and prevention, as well as concentrating on developed markets and MNEs, but also covering the most disadvantaged of the global economy—emerging economies and SMEs within these economies. Practically, emerging economies and SMEs are more vulnerable to global economic imbalances.
First, the lack of south-south cooperation seems to be one of the biggest problems in the coming years. Currently, the global economy is arranged according to the needs of developed markets. Export baskets, supply chains, and trade routes are designed accordingly. Trade complementarity is low among emerging countries, largely due to low FDI flows between them. Low FDI flows are mostly the end result of low connectivity among emerging markets. For example, it is hard to find a direct trade route from Istanbul to Karachi. One must first ship the goods to Rotterdam, then to Karachi—doubling the route and costs. Now it is time to think about alternative transportation modes and connectivity tools. Thus, the G20 should pay more attention to fostering trade and investment relations among emerging markets.
Second, the G20 should focus more on SMEs and their integration into the global economic system. The emerging phenomenon of SME internationalization should be promoted. SMEs play a pivotal role in the economic development; yet most of them are stuck in their domestic markets with excessive competitive pressures. A coordinated effort for cross-border SME value chains might be very beneficial to integrate SMEs into global economy.
With the same tomorrow as it is today, the G20 will maintain its importance in the continuum of the global economic order. A more inclusive agenda, which focuses on south-south cooperation and SME internationalization, will keep the G20 on track even after the crisis agenda.
M. Rifat Hisarcıklıoğlu has been the President of the Union of Chambers and Commodity Exchanges of Turkey (TOBB) since 2001. Mr. Hisarcıklıoğlu is the Deputy President of EUROCHAMBRES and the Vice President of the Islamic Chamber of Commerce, Industry and Agriculture. As a Board Member in ICC, he is member of the ICC G20 Advisory Group and General Council of World Chambers Federation. He is board member of the Association of Balkan Chambers, ECO Chamber of Commerce and Industry, and Confederation of Asia-Pacific Chambers of Commerce and Industry. Recently, he has been elected as the International President of the Jerusalem Arbitration Center.
This article was originally published in the special annual G8 Summit 2013 edition and The Official ICC G20 Advisory Group Publication. Published with permission.
Photo: International Monetary Fund (cc).
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Towards a More Inclusive G20 Agenda
September 5, 2013
The G20 mainly deals with the global imbalances through focusing on macroeconomic and financial stability, stimulating growth and job creation. The global business community gives special importance to the G20 governments’ policy coordination efforts, and in the last 5 years, all policy efforts were focused on the global financial crisis. Today we should contemplate a new question: If there will be no crisis agenda in the upcoming period, what should be the new agenda items of the G20? Even if there is no crisis agenda in the medium term, global imbalances will be here to stay. Moreover, enhanced globalization and rising interdependencies require enhanced policy coordination tools. So it is obvious that the G20 platform will need to last in the long term.
It is crucial to understand the interdependencies among all countries, both economically and politically. Furthermore being capable of managing these interdependencies will be a key success factor for the global economy. At that point, the G20 can be regarded as one of the vital global policy coordination tools.
However, in order to meet evolving expectations, the G20 should have a more inclusive agenda parallel to the global shift of power. The way the G20 dealt with the financial crisis shows that there is room for enhancing trade and investment as well. Therefore, a tighter collaboration between the WTO and the G20 might arise out of these new opportunities, of course, with a balanced distribution of tasks depending upon key responsibilities of organisations. Such collaboration opens a door to new economies and multilateral trade.
An agenda must focus not only on crisis management and prevention, as well as concentrating on developed markets and MNEs, but also covering the most disadvantaged of the global economy—emerging economies and SMEs within these economies. Practically, emerging economies and SMEs are more vulnerable to global economic imbalances.
First, the lack of south-south cooperation seems to be one of the biggest problems in the coming years. Currently, the global economy is arranged according to the needs of developed markets. Export baskets, supply chains, and trade routes are designed accordingly. Trade complementarity is low among emerging countries, largely due to low FDI flows between them. Low FDI flows are mostly the end result of low connectivity among emerging markets. For example, it is hard to find a direct trade route from Istanbul to Karachi. One must first ship the goods to Rotterdam, then to Karachi—doubling the route and costs. Now it is time to think about alternative transportation modes and connectivity tools. Thus, the G20 should pay more attention to fostering trade and investment relations among emerging markets.
Second, the G20 should focus more on SMEs and their integration into the global economic system. The emerging phenomenon of SME internationalization should be promoted. SMEs play a pivotal role in the economic development; yet most of them are stuck in their domestic markets with excessive competitive pressures. A coordinated effort for cross-border SME value chains might be very beneficial to integrate SMEs into global economy.
With the same tomorrow as it is today, the G20 will maintain its importance in the continuum of the global economic order. A more inclusive agenda, which focuses on south-south cooperation and SME internationalization, will keep the G20 on track even after the crisis agenda.
M. Rifat Hisarcıklıoğlu has been the President of the Union of Chambers and Commodity Exchanges of Turkey (TOBB) since 2001. Mr. Hisarcıklıoğlu is the Deputy President of EUROCHAMBRES and the Vice President of the Islamic Chamber of Commerce, Industry and Agriculture. As a Board Member in ICC, he is member of the ICC G20 Advisory Group and General Council of World Chambers Federation. He is board member of the Association of Balkan Chambers, ECO Chamber of Commerce and Industry, and Confederation of Asia-Pacific Chambers of Commerce and Industry. Recently, he has been elected as the International President of the Jerusalem Arbitration Center.
This article was originally published in the special annual G8 Summit 2013 edition and The Official ICC G20 Advisory Group Publication. Published with permission.
Photo: International Monetary Fund (cc).
