G-20 Summit To Focus On Development Issues

By GAUTAM Jha

G -20 Summit, Seoul

Asia-Pacific region has nowadays become the centre of gravity for the world economy where India and China ushering the way to the world from the recovery of global recession. Seoul Summit is also considered as the milestone because it is the first time that the G-20 Summit has been held in the Asia-Pacific region.

The Seoul summit will be remembered as the development summit. United Nations General Secretary Ban Ki-moon will start the discussion of the summit on development by expressing the views of those countries that are not the part of G-20 at this forum.

The challenges of G-20 are many but the focus will be on the recovery of global economy and to get the momentum by castling the uneven and fragile nature of global economic recovery. The winding down of fiscal stimuli ought to be considered very cautiously in the view of the continuing risks of a double dip recession. Many smaller countries are unhappy regarding the policies adopted by advanced countries that are leading to massive short-term capital outflows to emerging market economies with the consequences such as asset price bubbles, inflationary pressures and exchange rate appreciation with highly disruptive effects.

G-20 leaders have to support the use of capital controls needed by affected countries. Another threat is to keep the currency wars and protectionism in the developed countries at bay. The challenge thrown up by the financial crisis in terms of diminishing aggregate demand can be turned into an opportunity for promoting inclusive development. Poverty reduction should be treated as a critical part of the strategy to promote growth itself.

The G-20 leaders should give a strong message that achievement of the Millennium Development Goals (MDG), expanding development gaps and other policies to bolster balance development and make it occupy the central place in sustaining growth in post-crisis world. The potential of south- south cooperation also needs to be fully exploited in ending up the gaps.

The adoption of international standards of prudential financial regulation is important to all countries regardless of their level of development. It should be recognized that low income countries lack institutional and technical capabilities for their implementation. Thus, it is prerequisite to support these countries with technical assistance to develop modern financial systems.

The crisis has pointed out that the long pending agenda of reform of international financial architecture is very important for the development of the world uniformly.