Reuters | Fri Jun 4, 2010 | 9:51am IST
Giving developing countries a bigger say in global economic governance could help the world economy recover more quickly from the crisis, the World Bank said on Friday. The Group of 20, bringing together the world’s top developed and emerging economies has emerged as the leading global forum, representing over 80 percent of the world’s economic activity, but over 170 poorer countries feel left out. Strong growth, forecast by the World Bank at 6 percent this year in emerging countries, twice the rate of mature economies, should be recognised, Ngozi Okonjo-Iweala, World Bank managing director, told Reuters. "What this immediately tells you is that they can help a lot in making up for some of the demand that is missing from the developed countries and that’s the point, that the G20 cannot afford to ignore them," she said on the sidelines of a forum.
High growth in non-G20 countries could be crucial just as Greece’s debt problems threaten to spill over to other euro zone countries. "Just when we thought we had turned the corner there are clouds on the horizon," Okonjo-Iweala said, referring to problems in Greece and elsewhere in Europe. Developing countries need access to overseas markets to grow faster and the G20 must give development the central place it deserves on its agenda, she added. "We can envision not just Asian tigers but African lionesses," Okonjo-Iweala said. "There is money to be made. Companies investing in low income countries are reaping disproportionately higher returns."
Her call won heavyweight backing from South Korea, the host of a meeting of G20 finance ministers and central bankers on Friday and Saturday, and a summit of the group’s leaders in Seoul in November. Il SaKong, chairman of the G20 summit presidential committee, said Korea will put development on the agenda of the November summit. "The G20 cannot claim to be a credible and legitimate forum if it fails to take into account the priorities and concerns of these countries and get their support, Il said. Education, human resources, infrastructure and the promotion of private investment were key developmental issues to consider, he said.
However, Ifzal Ali, chief economist at the Islamic Development Bank, said the G20 should not be overloaded. "There is only so much the G20 can do at any point in time," Ali said. The G20 has replaced the G7 as the main global governance forum by including countries such as China, India and Brazil. It came to the fore in 2008 in its attempts to avoid the worst financial crisis since the 1930s turning into another Great Depression and set the agenda in reforming financial regulation. The outlook for emerging countries is not all rosy, however. Jong-Wha Lee, chief economist of the Asian Development Bank, said growth in Asia is expected to be robust this year and next but may not be sustainable beyond 2011. "The critical issue is if private demand can take over from public demand. Clearly there are some challenges," Lee said. The G20 also faces the challenge of shifting from crisis management to enhancing longer term growth in the world, Lee said.