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G20's Stronger Economic Role Reflects Asia's Growing Influence

  • Brian Padden

G20's Stronger Economic Role Reflects Asia's Growing Influence

G20's Stronger Economic Role Reflects Asia's Growing Influence

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President Barack Obama is expected to announce that the G20 group of nations, which includes the Asian economies of India, China, Indonesia and South Korea, will replace the G8 in coordinating the world economy. The G8 represented only the more developed economies of North America, Europe, Japan and Russia. Asian economists say this change reflects the growing economic power of the region but it also imposes greater responsibility as well.

Economists in Asia say designating the G20 group of leading and emerging economies the permanent body to coordinate the world economy will have little immediate impact.

Hadi Soesastro, the senior economist at the Center for Strategic and International Studies in Jakarta, says it will not dramatically change the balance of economic power in the world.

"Let's be honest. The agenda of the G20 continues to be dominated by the larger European countries and the United States. East Asia has not asserted itself," said Soesastro.

David O'Rear, the chief economist for the Hong Kong General Chamber of Commerce, says the change does reflect the growing economic power of China and other Asian economies.

"In the short-term, I don't see how they can many any significant changes. But certainly over longer period, it recognizes that China is now a very, very large economy, and should be part of the decision-making for the global financial and economic architecture," he said.

The G20 was created as a ministry-level advisory body in 1999 after the Asian financial crisis. It was only last year that the leaders of the group met for the first time.

Many developing nations complain that the crisis was created by financial regulatory mismanagement in the big developed nations. They have argued that as a result, their economies have suffered and they should have a greater say in how the global financial system operates.

An enhanced role for the G20 commits member countries to continue cooperating even after the global financial crisis ends. The group also agrees to give developing countries more votes in the International Monetary Fund, which oversees aspects of the global financial system.

Soesastro says with new power also comes new responsibility.

"There is so much expectation of such countries like China and India because of their recent economic performance but also because of the size of their economies, that they should do more for the global economy," he said.

He adds there will be increased pressure on Asian countries to act on issues such as reducing carbon emissions, cutting fuel subsidies and ending protectionist trade policies.

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