Brookings India, in collaboration with the National Institute of Public Finance and Policy (NIPFP) and the East Asia Bureau of Economic Research , Australian National University, hosted an India-Australia G20 Roundtable on September 10th.
The dialogue was an opportunity for Australian and Indian thinkers and policy advisers to exchange views with experts from G20 and Asian partner countries on core global and regional economic issues, the ability of international institutions to address them, how G20 and regional initiatives can facilitate their smooth resolution, including trough alignment with G20 priorities for 2014.
The dialogue was followed by a special lecture by Prof. Peter Drysdale of the Australian National University on “The G-20 Summit at Five”, the title of a recent book co-authored by himself and Kemal Derviş of the Brookings Institution. The book was assembled with the expectation that the G-20 leaders would see 2014 as an opportunity to address longer term challenges and to transform the G-20 from a “crisis committee” into a “steering committee” for the world economy, making it part of a lasting and useful feature of global economic governance.
The key messages from the roundtable were:
- Structural reforms have been the major theme in lifting the impediments of growth – so far countries have only led macro-economic policies, which can fix cyclical downturns but not the structural impediments to growth.
- There is a need for a new approach which combines microeconomic reforms with a macroeconomic strategy, and to do this within the 2% global growth target of the G20.
- The G20 must address the issue of spillover effects – the unintended and unplanned consequences of actions by advanced economies on emerging market economies.
- There needs to be a focus on the provision of safety nets, while accentuating the need for international cooperation, particularly in terms of data sharing and the transparency in protecting against financial instability.
- The G20 must shift its focus to the development of resilience in emerging market economies through policies such as exchange rate flexibility, judicious capital management, and developing constraints on leverage ratios.
- EMEs view the G20 as a forum to focus on coordination to develop collective resilience to externalities and volatility.
- Accelerating investment in economic infrastructure is high on the G20 agenda – with opportunities to boost short-term demand and long-term productivity.
- Extensive domestic reforms are needed to encourage investment in infrastructure – lessons can be learnt from country experiences, requiring cooperation in developing a global framework.
- Financing can become a constraint, however, multilateral development banks can help in steering more of the world’s savings towards infrastructure.
- The G20 has emerged significant on the issue of labour mobility, with the need to replicate the Australia model in India and other South-East Asian nations.
- The concept of ‘jobless growth’ remains a pressing issue – India must move from a reliance on domestic consumption and focus on expanding the garment manufacturing sector to boost labour force participation and growth.
- The G20 must evolve beyond its existing role as a crisis management unit to act instead as a “steering committee” for the world economy.
- The diversity of membership in the G20 is its greatest strength, leading to a greater possibility of a more collaborative effort in bringing about structural reforms.
The discussion consisted of four sessions on the world economy and the G20’s strategic priority for growth, financial rebalancing and emerging economies, investment and infrastructure, and employment and labour mobility.
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