G20 new directions on development: How the G20 can help poor households everyhwere

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Last week, George Osborne had to announce more bad news on the recovery to the British public. He might taken some solace in the fact that others in the G20 group of leading economies are not having an easy time either. The buoyant BRICS economies (Brazil, India, China and South Africa) are set to join us in the growth doldrums according to a new report by the OECD.

But it would be wrong for the leaders of those economies to conclude that they don’t have time to think about the new phase of the G20’s development agenda when they next meet in St Petersburg. Doing so properly would benefit not only the poorest men and women in low income countries, but also back at home in G20 ones.
The G20’s Seoul Development Consensus was launched in Korea in 2010 in recognition of the impact of the global economic crisis on the poorest countries. The consensus was accompanied by a multi-year action plan to support their economic development, which is set to expire during Russia’s presidency of the G20.

This offers a real chance for the G20 to assess its impact to date on development and to think of ways of improving it. Here are five things the G20 should consider.

Good objectives, need better measures and accountability:
One of the things the G20 has succeeded in doing is galvanising the will of a disparate group of countries, not just to get the global economy back on track, but to set it on a better one. G20 summit declarations speak of a “recovery for all”, that is sustainable and inclusive as well as fairer.

These are good ambitions, but it is still not possible to judge whether they moving in the right direction.

Developing and using measures to track not just how much growth overall there is in an economy, but whether that growth is inclusive, reducing inequality and environmentally sustainable is something the G20 could usefully put its weight behind.

Policies should be judged on their development impacts:

So far, the G20’s development agenda has been separated from its core agenda of fixing the global economy. But the G20’s impact on development extends to the whole of its work programme. For example, whether the G20 succeeds in imposing effective curbs on financial speculation will help tackle volatility of food prices, currently causing hunger in poor and G20 countries alike.

Improving the development focus of all of its work would be a huge step forward for the G20. One easy step toward achieving this “development coherence” is to allow more equal and systematic access to developing country governments and civil society to G20 processes, as well as better coordination with more inclusive UN processes. The absence of this consultation has hampered the adoption and progress of a truly development-friendly agenda, whilst there is evidence that financial lobbies have stalled progressive reforms.

Improving the development impact of the development agenda itself:

It might seem obvious: to help the poorest men and women to participate in the economy and benefit from it, you should focus directly on what works for them. But as the G20’s approach to promoting large-scale, private-financed infrastructure demonstrates, the emphasis to date has been too much on achieving aggregate growth and not enough on looking at the poverty impact of its action plan.

The G20 needs to focus its development action plan much more on direct benefits to poor small-scale businesses and improving the quality of informal jobs, where poor people tend to be more economically active.

Plugging gaps in global governance:

The value of the G20 is that it can do things together that individual governments cannot do alone. Some of these problems requiring a “big fix” will have a huge impact on poor families everywhere.

One topical example, is fighting excessive tax avoidance by global firms. The G20 has long held that financial opacity contributes to instability, allows corruption and undermines revenue collection efforts of governments.

The G20 is the forum that can coordinate exchange of information relating to tax and agree global standards for company reporting on a country or project level, to ensure that global firms pay their fair share. Yet the pace of reform is far too slow to match the serious proportions of the problem.

Pushing neglected agendas:

The G20 has done a good job of highlighting important, but orphaned agendas, such as that of finding new sources of finance to plug ever-widening holes in public spending and aid budgets and the urgent bill to finance tackling climate change. None other than Bill Gates was tasked with coming up with some ideas, alongside the International Monetary Fund.

The IMF’s Mobilizing Climate Finance presented to the G20 Summit in Cannes (November 2011) found that a range of sources of climate finance are available, from action on fossil fuel subsidies to raising potential new “innovative” sources of public funds. A report by the Gates Foundation on financing for development also advocated innovative finance methods such as a financial transactions tax (FTT) and carbon pricing of maritime and aviation sectors.

Again, the G20 could do more and more quickly on these neglected issues.

These five measures would help the G20 to improve the impact of its development efforts. Doing so, would not be a purely altruistic act to help countries that have been sidelined in the global economy. As G20 leaders themselves explained in Seoul in 2010:

Narrowing the development gap and reducing poverty are integral to our broader objective of achieving strong, sustainable and balanced growth and ensuring a more robust and resilient global economy for all.”

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