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Here's my wish list (as a development economist especially concerned with the effects of the financial crisis and a subsequent global downturn on poor people in emerging markets and low-income countries) for the G-20 Summit. I’ll return to ask how they did next week.
G-20 countries announce a combined global fiscal stimulus of at least 2 percent of global GDP. That would be on the order of $2 trillion.
The G-8 process gets permanently folded into a G-20. 20 is a big number – smaller would be better – but it has the benefit of not opening the Pandora's Box as Colin Bradford puts it, of which countries should steer the global economy. This group exists, its finance ministers have met regularly for almost a decade since the Asian financial crisis (and thanks to Larry Summers and colleagues at the Clinton Administration Treasury for its creation then), and so be it.
China, India, Brazil and some Middle East oil economies with high reserves contribute to IMF financing, to ensure the IMF has another $1 trillion (that's trillion with a "t") (Simon Johnson) to help developing countries at risk right now implement the counter-cyclical fiscal policies that the G-20 finance ministers called for -- to protect their own growth prospects and jobs as well as keep the global economy afloat.
In exchange, in a sensible Grand Bargain the emerging market economies -- and the rich oil economies of the Middle East -- get more quotas in the IMF (that is, make a greater financial commitment and get more votes) and contribute to special funds to deal with global issues at the World Bank climate change (e. g. change mitigation and adaptation and agricultural R&D).
And finally, that the G-20 heads of state note the absence of any representation of the the low-income countries where reside 1 billion of the world's poorest people, and commit to sustaining aid flows, which historically have tended to amplify real business cycles in aid-dependent countries, following instead of compensating for private flows. Otherwise those countries will be forced into a terrible choice, between populist and inflationary spending, or undue fiscal and monetary tightening -- because of mistakes in the rich world over which they had no control.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.