October 25, 2010
The Financial Times discusses CGD working paper on global governance co-authored by Vijaya Ramachandran.
From the article:
However the G20 aspires to bigger things. It claims that its “economic weight and broad membership gives it a high degree of legitimacy and influence over the management of the global economy and financial system”. Its critics reply that its membership meets only one of several criteria of legitimacy, namely that it “represents” the world in the sense that its members account for a high proportion of global population and gross domestic product.
On other criteria it falls down, particularly on the legitimacy of the process by which the non-G7 members were selected and on regional representation. The non-G7 members were chosen by the G7 which, led by the US Treasury and the German finance ministry, decided that Spain, Nigeria, Bangladesh and the Nordics, for example, should not be invited, while Argentina, Australia, Canada, and Saudi Arabia should. It also ruled that membership was permanent.
A firmer constitutional basis would result from using explicit criteria to guide the selection of members of a new Global Economic Council (GEC), of which at least four should be considered. One is representation, which means that the group must cover a high proportion of the world’s population. A second is weight in the world economy (hence effectiveness in turning decisions into action), measured by GDP in purchasing power parity terms. A third is regional representation, to ensure that no region is left out. A fourth is for the grouping to be small enough to allow personal trust to develop between the members.
With reference to the first two criteria, 16 countries meet the condition of 2 per cent or more of either world GDP or world population (using 2008 figures) proposed by Enrique Rueda-Sabater, Vijaya Ramachandran and Robin Kraft.* Applying the 2 per cent rule would exclude Argentina, Australia, Mexico, Saudi Arabia, South Africa and Turkey of the current G20, and include Bangladesh, Nigeria, Pakistan and Spain.