Group of 20

Group of 20

Updated: Oct. 21, 2010

The Group of 20, or G-20, is an international body that meets to discuss economic issues. Its members— 19 countries with some of the world's biggest industrial and emerging economies, plus the European Union— represent about 90 percent of the world's gross national product, 80 percent of world trade (including trade within the European Union) and two-thirds of the global population. The G-20, which represents a far broader range of the world's industrialized economies than the more Atlantic-oriented G-8, has taken on a new prominence in the current economic crisis.

The next meeting to be attended by heads of state is scheduled for Nov. 11 in Seoul, South Korea. Members of the group are likely to  confront festering disputes over trade and currency that have strained the G-20, threatening to undermine what was supposed to be the most productive forum for international economic cooperation.

As the United States and China battle over the artificially low value of China’s currency and the American trade imbalance, officials from the big emerging economies of the G-20 seem frustrated at being caught in the crossfire. The slide of the dollar has led a wide range of nations to take actions to keep their currencies from rising too much in response.

Disagreements loom on another front as well. G-20 leaders agreed in Pittsburgh in September 2009 to promote “strong, sustainable and balanced growth.” In essence, that mantra means that deficit countries — like the United States and Britain — should save and export more while borrowing and importing less. Surplus countries — like China and Germany — should stimulate domestic demand by their consumers. But few other countries are satisfied that either China or Germany have done nearly enough.

At that 2009 meeting, world leaders agreed that the once elite club of rich industrial nations known as the Group of 7 will be permanently replaced as a global forum for economic policy by the much broader Group of 20 that includes China, Brazil, India and other fast-growing developing countries. The move highlighted the growing economic importance of Asia and some Latin American countries, particularly since the United States and many European countries have found their banking systems crippled by an economic crisis originating in excesses in the American mortgage market.

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Origins of the G-20

The G-20 was established in 1999 as a response to the Asian financial crisis of the late 1990s and to a "growing recognition that key emerging-market countries were not adequately included in the core of global economic discussion and governance," according to the G-20's public materials.

A smaller group of industrialized nations has been meeting since the 1970s (the G-7 and G-8, which convene finance ministers and heads of government, respectively). In the 1990s, given the extent of the Asian financial crisis, government leaders decided to involve a broader group of countries, including emerging market countries, to deal with the turmoil. A group of 22 countries ("G-22") and then a group of 33 countries ("G-33") met on an ad hoc basis. The G-20 was created as a more permanent international economic body that includes representation from emerging countries. The member countries are Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey and the United States. The European Union is also a member, represented by the rotating council presidency and the European Central Bank.

The membership of the G-20 has not changed since it was established, and the organization says there are "no formal criteria for G-20 membership." With the exceptions of Argentina, Saudi Arabia and South Africa, all of the member countries fall within the list of the top 20 biggest state G.D.P.'s in the world (using the 2007 rankings from the C.I.A. World Factbook, International Monetary Fund and the World Bank).

Usually, the attendees of the annual meetings are the finance ministers and central bank governors of the member countries, plus top leadership of the World Bank and the International Monetary Fund. In November 2008, heads of government attended an emergency G-20 session held in Washington to deal with the crumbling of global credit.

The Washington meeting was referred to by many observers as a possible prelude to a sort of Bretton Woods II, meaning an event that marks the start of a new international financial framework. (The term Bretton Woods System refers to an international monetary system set up during a 1944 conference in Bretton Woods, N.H.; it established, among other things, the I.M.F.).