Economics of G20. Группа авторов
shows a substantial difference between the countries on the Latin American continent including Mexico and the Central American and Caribbean countries (Table 12). The latter show much larger CADs, and these have become very large in this century.
Table 10. Exports of Goods and Services as Percent of GDP
Source: World Bank World Development Indicators.
Average 2 is the average of Costa Rica, El Salvador, Guatemala, Guyana, Honduras, Jamaica, Nicaragua, namely the Central American and Caribbean countries.
The average deficits of the other group, usually the larger countries, are much more moderate, rarely exceeding 2% of the GDP. In many periods, the CAB is positive showing that the countries were running surpluses. This happened in the 1980s after the debt crisis. Many of these countries were hit by the debt crisis and ran surpluses in order to service their debts.
Table 11. Correlations of Growth Rates of Countries in LA with the World, LAC, USA and Chian
Source: Authors’ calculations based on data from World Bank World Development Indicators.
Table 12. CAB (% of GDP)
Note: Average 1 is the average of Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Panama, Peru, Uruguay and Venezuela.
Conclusions
The Latin American region has grown very slowly over the past half a century. The average annual growth rate of per capita income at 1.7 is higher than the growth rate of only the Sub-Saharan region. The performance has been particularly poor since the debt crisis broke in 1982. Thus, the region has not been catching up with the high-income countries. There is no convergence within the region either. If anything, the richer countries have shown a weak tendency to grow faster.
Even over the 2001–2015 period, most saw a decline in their growth rates after the onset of the 2008 crisis and then followed by a slight recovery. Only Bolivia, Guyana and Uruguay grew faster after the crisis than they had done earlier, and only Brazil did not experience a recovery over the 2010–2015 period.
The share of GFCF in GDP declined after the onset of the debt crisis and has never recovered to the pre-crisis levels. This share is also much lower than that in the Asian region since the debt crisis. But despite this lower GFCF share, growth has been so much slower that the ICOR of the region and of most countries within the region has been relatively high. The region has experienced a greater integration with the world economy as the share of exports in GDP has doubled over the past half century. The integration with other countries has resulted in an increased correlation between growth rates of the countries of the region and with the outside world. The correlations are particularly high for growth rates with the entire world and with the region itself. The correlation with growth rates in China is also becoming stronger. However, the increase is less than that in other regions, and thus, the ratio of exports to GDP was the lowest for the LAC region in the period 2011–2015. This means that the CAB remains precarious. However, foreign exchange reserves as a share of GDP have continued to grow after the 2008 crisis unlike in many other large countries.
The slow recovery since the crisis, the low rates of investment and the precarious state of the current account all point to continued slow growth for the region. Recovery of the world economy would help. Also, the stronger correlations between the growth rates of the countries and that of the region as a whole suggest that the time may be ripe for a revival of the project for a closer regional integration.
Reference
Agarwal, M. (2013). South-South Economic Cooperation: Emerging Trends and Future Challenges, Background Research Paper Submitted to the High Level Panel on the Post-2015 Development Agenda, May 2013, New York: United Nations.
1It is difficult to judge whether there was a psychological fear of larger deficits among policymakers. However, we do know that during this period a number of countries in Latin America (LA) were experiencing very high rates of inflation, some even hyperinflation. This may have constrained the scope for expansionary policies more than the state of CAD.
2But it could still be that the experience with the debt crisis was traumatic and countries wished to avoid at all costs the possibility of having to borrow from the IMF.
3The ratio of reserves to other relevant variables such as imports GFCF or short-term liabilities was also rising. For further analysis, see Agarwal (2013).
Chapter 4
What Realistically Can the G20 Contribute to Development?*
Manmohan Agarwal
Centre for Development Studies Thiruvananthapuram, India [email protected]
John Whalley
Western University, London, Canada Centre for International Governance Innovation (CIGI)/NBER [email protected]
Abstract
The G20 has grown beyond its initial crisis management focus stemming from the 2008 global financial crisis. In the development areas, it adopted the Seoul Development Consensus at its 2010 meeting and has initiated interactions with international agencies in the two areas of food security and infrastructure as they relate to development goals and the successful attainment of Millennium Development Goals (MDGs) and later the Sustainable Development Goals (SDGs). The G20, however, lacks both resources under its direct control and a clear legal structure and faces issues of legitimacy in any discussion of development since most developing countries are not its members. Its legitimacy can be further questioned because of its inability to deliver on its promise of strong, sustainable and balanced growth (SSBG). Here we ask what realistically can the G20 contribute to development in such circumstances. We argue that the potential contributions are significant even if its initial steps thus far are modest. At the leaders’ level, it can provide the overall framework for cross-agency development initiatives and objectives, and its legitimacy in the area can be enhanced by regional consultative processes already initiated. We provide detail on actions thus far on development, plus discuss possibilities for the future. But the realisation of such a goal will require it to go beyond its currently limited analytical framework. The G20 alone in our view cannot drive global development policy, but through its positioning across agencies, it can play a constructive role. The G20 also could decide on a more activist approach by proposing improved global resource management for development, moving towards a global legal structure and providing strengthening of international disciplines. These latter steps may be years or decades away, but strengthened global disciplines would be positive for smaller countries and for development.
Introduction and Background
This chapter discusses the impacts the G20 process has had and might have in the future on development as a global issue. The G20, as it exists for now, has evolved from the G8 meetings at the leaders’ level and the finance ministers’ meetings at the G20 level, but it is now much more than a larger G8, with a troika secretariat, an assertion of global economic policy coordination and cumulative communiqués and directions from sequential meetings. The G20 was born during the 2008 global financial crisis and, as it has grown beyond the initial crisis management entity that it was at formation, it provides a potential opportunity for a major future