The G-8 and G-20 summits held in Canada last week yielded few headlines on development issues, but there was plenty of rhetoric about global interdependence and poverty reduction and a handful of promising, if mostly modest, development initiatives just below the media’s radar.
As expected, the G-20 declaration focused on when and how to unwind stimulus programs that helped to avert a global economic collapse, and on strengthening regulation of the financial sector to avoid a repeat of the 2008–09 financial crisis.
More on Canada’s Twin Summits
“These are important issues for the global economy, including for developing countries. But it’s striking that developing countries’ voices are mostly absent from the G-20 declaration, even though several big emerging markets are G-20 members,” said CGD senior fellow Liliana Rojas-Suarez. “This is still largely a conversation between the United States and Europe.”
For example, she said, the challenges that Asia and Latin America face because of an upsurge of capital from the high-income countries is strikingly absent from the G-20 declaration. How to handle risks from these flows is the focus of a recent statement by the Latin America Shadow Financial Regulatory Committee, which Rojas-Suarez chairs.
There was no progress on trade, beyond extending to 2013 a previous commitment to restrain from protectionism. There was much hand-waving about completing the stalled Doha Round, which is supposed to address trade and development, but no new commitments. There was also no mention of reforming preference programs to boost market access for low-income countries, a proposal championed by CGD senior fellow Kim Elliott and others.
Nonetheless, there were several substantive new initiatives, including some that have a striking resemblance to CGD policy proposals:
- Principles for Innovative Financial Inclusion: The nine principles set forth by the G-20 are designed to extend financial services—e.g., loans, savings and insurance—to the approximately 2 billion people who are currently excluded, while nonetheless still ensuring financial stability. The principles are very similar to those put forth last year in a CGD working group report, Principles for Expanding Financial Access, led by Rojas-Suarez.)
- Pull Mechanisms for Ag Innovation: The G-20 committed to explore “the potential of innovative, results based mechanisms such as advance market commitments to harness the creativity and resources of the private sector in achieving breakthrough innovations in food security and agriculture development in poor countries.” A progress report is expected at the Seoul Summit later this year. Canada has been leading in this area and is supporting CGD research on policy options; see Kimberly Elliott’s new working paper, Pulling Agricultural Innovation and the Market Together.)
- SME Finance Challenge: Despite the continuing buzz about microcredit, small and medium-sized enterprises (SMEs), the main job growth engine in most countries, often lack access to finance. The SME Finance Challenge, the first competition launched by the G-20, includes a search (organized by Ashoka) for innovative models for boost finance for SMEs, and a pledge to come up with the money to support the winning proposals, to be announced at the next summit in Seoul. (Read an analysis of this by CGD research fellow Ben Leo).
Two important development-related pieces of news emerged not at the G-20 but the day before, at the G-8 Summit north of Toronto. It’s an odd anachronism that this club of the world’s large rich democracies continues as a forum for announcing development commitments even though the intended beneficiaries are not at the table! In any event, G-8 Summit included two announcements of note:
- Muskoka Initiative for Maternal and Child Health: Named for the scenic region north of Toronto where the G-8 gathered, this Canadian-led effort aims to significantly reduce the number of maternal, newborn, and under-five child deaths in developing countries. CGD senior program associate Nandini Oomman welcomed the focus and pledges of some $7.3 billion from a variety of bilateral and philanthropic donors, but noted that there is so far no commitment to ensuring that the money is spent well. Instead, an annex to the G-8 communiqué explains: “Each donor is free to choose the mechanisms they consider most effective, including multilateral agencies, civil society partners, and direct bilateral support to developing country partners.”
- A New U.S. Approach to Advancing Development: President Obama took the occasion to release a statement outlining a new U.S. development strategy that appears to draw heavily on the still unreleased report from the Presidential Study Directive on U.S. Global Development Policy. Elements include being more selective, leveraging other public and private donors, supporting well-governed countries, better use of multilateral organizations, and more rigorous monitoring, evaluation, and analysis. CGD director for policy outreach Sarah Jane Staats offers “three cheers” for the president (finally) using his bully pulpit for development. “This puts to rest any fears that the review would not be turned into policy,” she writes. “It doesn’t mean implementing the policy directive will be easy, but it does mean we will see something concrete, and I hope sooner rather than later.”