Yes, G20 is bigger than G7

Published 18.11.2015 02:05
Updated 18.11.2015 02:12

This weekend the leaders of countries in the Group of Twenty, or G20, gathered in Antalya, Turkey to discuss a wide range of global affairs, including income inequalities and poverty within and between countries, stagnating economic growth rates and of course the massacre of Syrian people by President Bashar Assad's regime and the terror inflicted by DAESH, the PKK, People's Protection Units (YPG) and the like, and the resulting refugee crisis experienced by Syria's neighboring countries and Europe.

Yes, the G20 has now eclipsed the G7 and is the leading forum in which participant countries discuss global affairs at both ministerial and presidential levels. Back in 2008, The Economist suggested that the "G7 looks increasingly anachronistic." This is even truer today.

The world is changing very fast. And the last two decades witnessed a monumental shift of economic power from industrialized to developing countries such as China. For example, of the G7 countries, the U.S. had been producing some 22 percent of global output in 1990. Today, this share has declined to roughly 16 percent. Yes, the decline was dramatic and even more dramatic declines are on the way. The shares of other G7 countries have almost been halved in just two decades. France had a share of 4.1 percent of global output, but it only has 2.4 percent. The "machine" of Europe, Germany's share was 6.1 percent, but n is just 3.5 percent. Overall, the share of global output of the six countries of the G7 - the seventh is European Union and three countries of the G7 are also EU member states - was roughly 48 percent as of 1990. Now it is below 30 percent.

On the other hand, China's share of global output has more than quadrupled in just two decades from just 4 percent to over 16 percent, having surpassed the U.S. in 2011 to become the biggest economy in the world. Another developing country, India, had a share of 3.7 percent as of 1989, now it boasts a 6.8 percent share of global output.

The G20, which consists of not just industrialized countries with rapidly declining global economic shares, but also developing countries such as China, India, Indonesia and Turkey, now has a global economic share of roughly 85 percent. In comparison with the share of the six G7 countries, which represent 29 percent of global output, the G20 is much more representative of the global economy and the people of the world. Therefore, it is not a surprise that the G7 is now largely out of fashion and the G20 is now the premier forum globally. Yes, the world is bigger than five, and yes, the G20 is bigger than the G7. Therefore, developing nations should have a say in global affairs other than some industrialized countries with rapidly declining shares of global economic power. Yes, power is now shifting from west to east and this should have corresponding repercussions in all areas such as the G20.

The first G20 forum held at the presidential level was in 2008, at the height of global financial economic crisis. This global crisis lingers on after seven years, particularly for industrialized countries, but also for the whole world, albeit to a lesser extent. Therefore, the fundamental goal of the G20 has understandably been to achieve satisfying and sustainable economic growth rates. Moreover, Turkey, in its G20 presidency in 2015, incorporated inclusiveness as a basic concept and an important goal to be attained. This concept is about apportioning global and national outputs in a fairer fashion and ensuring all of society will benefit from economic growth and prosperity. In order to achieve this fundamental goal, Turkey pushed for reforms and implementations in order to, among other things, empower small- and medium-size enterprises (SMEs) and advance gender equality, not to mention addressing youth unemployment. At the international level, Turkey also addressed the woes and troubles of the least developed countries (LDCs) in order to achieve inclusiveness on a global scale. To no surprise, these efforts have largely been welcomed, especially by developing countries such as Brazil and India.

The introduction of the inclusiveness concept to economic discussions and giving a fair share to humanitarian issues are invaluable indicators of the shift of the global economic power from industrialized to developing countries that are interested in not just economic growth and power, but regional and global income inequalities and imbalances as well.

Yes, the G20 is bigger than the G7.

*Associate Professor at Economics and Finance Department at Istanbul Medipol University

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