Move over G7. The future belongs to a more inclusive G20.
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Move over G7. The future belongs to a more inclusive G20.
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by Isaac Kwaku Fokuo Jr., Founder and Principal, Botho Emerging Markets Group, and Akinyi Ochieng, Esther Ocloo Fellow, Botho Emerging Markets Group
June 24, 2018
June’s G7 meeting in Canada was not exactly a harmonious meeting of minds. While this year's event was notable for its discord, critics have long observed that the "G7 looks increasingly anachronistic". Although its member countries were once the industrialized leaders of the world, they can barely lay claim to that label much longer, with countries such as China, India and Brazil climbing the ranks.
As the titans of Western democracy are slowly eclipsed by emerging markets, the G20 appears a better equipped forum than the G7 to navigate the challenges of the global economy. But to succeed where the G7 has failed, the G20 must redefine its membership and broaden its mandate.
EMERGING GLOBAL PROBLEMS REQUIRE EMERGING MARKETS
Contemporary and future global issues cannot be solved without the input of emerging economies. Tensions between the US and North Korea, for example, will fail without continued input from South Korea. Likewise, Russia and Turkeyare integral to resolving the Syrian crisis. Debates over China’s military activity in the South China Sea inevitably include Indonesia, a growing global power cementing its maritime sovereignty. South Korea, Russia, Turkey and other members of the G20 represent 85% of global economic output, two thirds of the world's population, and 75% of international trade. But the G20’s flawed membership handicaps its ability to navigate the most pressing challenges.
While the world remains mesmerized by the growth of China and India, frontier economies are quietly taking off. The Philippines, Iran and Egypt, for example, will overtake Italy and Canada on a purchasing power parity (PPP) basis by 2050. Growth in developed economies is projected to slow to 2.2% in 2018, but countries such as Ghana and Ethiopia are reaching 8.3% and 8.2%, respectively. Over the next decade, consumer spending in growth markets will grow three times faster than consumer spending in developed nations, reaching a total of $6 trillion by 2020.
This year’s G20 agenda includes the future of work, infrastructure for development and a sustainable food future. But these issues cannot be navigated without a more representative body. It should include the economies that will be shaping the future.
THE NEW REGIONAL POWERHOUSES TO WATCH
Although the European Union is a member of the G20, four EU countries - Germany, the UK, France and Italy - have separate G20 representation due to their individual economic sizes. While retaining the UK as a G20 member is logical because of Brexit, restricting European membership to the EU and including more high-growth economies from under-represented regions will help the G20 develop smart, broad-based policy proposals. Considering that Germany, France and Italy have some of the highest voter turnout and highest allocation of seats in the European Parliament, their interests should be adequately represented by the EU’s G20 delegation.
These three additional member slots should be filled by emerging regional powers from Africa, the Middle East and South and Central Asia, such as Nigeria, Iran, and Pakistan, given their strategic importance on critical issues from security to climate change to the future of work.
Nigeria, Sub-Saharan Africa’s largest economy, will be the third most populous country in the world by 2050. While countries such as China might tout their large population as an opportunity, Nigeria’s boom poses challenges due to poor infrastructure and weak institutions, as well as terrorism and climate change. With the youngest population in the world, Africa will define the future of work, and Nigeria will be an integral part of its growth story. The country's unemployment rate has increased for the 12th consecutive year, but the growth of tech investment in Lagos presents an opportunity to turn Nigeria into Africa’s digital engine.
Meanwhile, Iran, the second-largest economy in the Middle East, is aggressively pursuing a knowledge economy that may help it realize its projected status as the 17th largest global economy by 2050, surpassing Italy, Canada, and Spain. While Iran may be building software for the future, it is also making considerable investments in military technology. Speculation around its nuclear capacity aside, Iran has rapidly expanded its space programme following the successful launch of a satellite in orbit in 2009. It has also become a critical figure in the global arms market due to regular shipments of weapons to Iraq, Syria, and Lebanon. Given its population, fast-growing economy and pivotal role in the international security apparatus, Iran should be given a more significant role in elite policy forums such as the G20.
Finally, Pakistan, projected to be the sixth most populous country by 2050, is critical to the global food security agenda. Nearly 60% of Pakistanis are food insecure and 44% of children under five are malnourished. Food security is deeply interlinked with religious extremism. Abid Qaiyum Suleri of the Sustainable Development Policy Institute in Islamabad writes of the "mullah-marxist nexus - religious forces tapping into the 'anti-elite' sentiments of poor, young, food-insecure Pakistanis in order to recruit new suicide bombers". Addressing the food security issues of Pakistan today will better inform food security policy of the future. By 2030, the demand for food will be 60% greater than it is today. Pakistan’s perspective as a large economy navigating these challenges would be an asset to G20 efforts to shape international policy on stemming hunger.
The future of the world will no longer be decided in the Élysée Palace or Downing Street. Instead, it will be shaped by the streets of Jakarta and the tides of the Red Sea. It is time that our institutions adjust to this reality, and develop proactive policies for the world of tomorrow, rather than working from the playbook of a bygone era.