The G20 is keen to capitalise on its unique character to deliver something concrete on development in November.
This ambition is welcome, however last night’s communiqué shows that it has some way to go to deliver on it.
The G20 has rightly identified economic development as its particular area of expertise. However, it has failed to account of its responsibility to learn the lessons of financial and economic crises and not to return to business as usual.
It also falls short of realizing its potential as a group of the political, financial and economic movers and shakers.
For example, the G20 has rightly identified infrastructure as a critical area for attention to kick-start developing economies.
However, there is not much new thinking in its draft plans. Infrastructure to facilitate increased trade is its primary focus. Yet experience of most poor countries, is that such infrastructure investment might bring growth, but it doesn’t increase the participation or benefits of the majority of their economic actors – small business owners and farmers – who lack the rural roads, healthcare, accessible energy and other infrastructure services that will allow them to also benefit from the new port or regional corridor.
It also emphasizes the need to leverage private sector finance to bridge the infrastructure gap, but does not look at the poor track record of public-private-partnerships of the past, to learn lessons.
The G20 is also seeking to identify a list of priority pet projects as a concrete “deliverable” that would only exacerbate past problems of poor national ownership and lack of community consultation on infrastructure projects. (In fact, consulting more broadly on its agenda is critical if the is G20 to improve its performance on development.)
More welcome contributions from the G20 would have been to address the failings of the old approach. To look at establishing principles and mechanisms for improving the poverty impact of big infrastructure projects, and to mobilize investment for infrastructure needs of the poor, including identifying those projects where public investment will be needed but has to date been sadly lacking.
Its approach to food security is a similarly mixed bag. It is difficult to argue with ambitions to increase agricultural productivity – particularly if the focus is on small-holder farmers – or better agricultural research. But the real issues for food security are low incomes, including for farmers who rarely grow all the food they need, and the failure of local agriculture markets due to high transaction costs, volatility and low demand.
There is a lot to welcome in the G20 development agenda. Its economic expertise can bring renewed focus to neglected areas of investment and policy.
However, it needs to be bolder in learning the lessons of the crisis and past failures if it is to deliver its ambition of “inclusive growth”.
This means moving away from chasing improvements in aggregate growth, and instead pursuing growth strategies that not only benefit the poorest but that allow them to participate and to contribute.
The majority of economic actors currently don’t count towards GDP figures. They don’t feature in economic or private sector development plans. Yet unlocking the potential of poor men and women – who are generally active in the informal, micro and rural parts of the economy – is the key to producing growth that is truly inclusive. These sectors are where the majority of jobs for poor men and women are likely to be found for some time, supporting them is critical if they are to benefit from other G20 initiatives. Trickle up is needed for trickle down to work.
G20 initiatives can undoubtedly help. The welcome recognition of social protection as a critical element of inclusive growth is such as case.
However, the G20 needs to be aware that its activities are not simply additional to those of established development institutions. Its considerable clout means that it can divert attention and resources. If the G20 calls for an increase in productive safety nets, for instance, then it is probable that support for social assistance programmes for non-active groups (pensions, disability payments) will be neglected.
The imperative then is for the G20 to ensure that its economic development agenda benefits, but also includes the poorest. Its infrastructure and other efforts must help poor small, rural business owners, including farmers, to flourish.
It also demands that the G20 uses it political and financial clout to remove barriers to unlocking financing to pay for its activities – to ensure they truly add value rather than replace other important development initiatives. Identifying and earmarking innovative sources of finance for development and tackling climate change needs to move to the top of its to-do list.