Third World Quarterly, Vol. 33, No.

1, 2012, pp 116

The G20, the Crisis, and the Rise

of Global Developmental Liberalism
PAUL CAMMACK
ABSTRACT The emergence of the G20 leaders meeting during the recent global

nancial crisis as the premier forum for international economic cooperation

reects a signicant shift of hegemony over global governance towards the
emerging economies but does not challenge the authority or objectives of the
international nancial institutions. On the contrary, successive G20 initiatives,
culminating in the adoption of the Seoul Development Consensus for Shared
Growth in November 2010, reveal both a further strengthening of the already
close institutional relationship between the G20 and the Bretton Woods
institutions and a strong shared commitment to a developmental form of global
liberalism. This article charts the ascendancy of emerging economy perspectives
through the lens of the G20, maps their ties to the IMF and other international
organisations, sets out the content of the new global developmental liberalism,
and assesses the implications of emerging economy hegemony for the advanced
and the emerging economies, respectively.

There is a general consensus that the leaders G20 brought together in 2008
played a major part in co-ordinating policy responses to the global nancial
crisis that avoided catastrophe, but beyond this views of its signicance dier
widely. The G20 leaders themselves quickly declared it to be the premier
forum for our international economic cooperation1a substantial turnaround for an informal organisation whose membership was cobbled
together on the back of an envelope in April 1999 by Paul Martin (then
Canadian nance minister) and Larry Summers (then US deputy treasury
secretary).2 But, over a decade from its origin as a gathering of nance
ministers and Central Bank governors expanded beyond the G8 in the wake
of the Asia crisis, many still nd its informal and unrepresentative character, lack of justiable membership criteria and failure to advance on its
initial response to the crisis problematic.3 Nor is it yet clear how far if at all
the new G20 challenges the hegemony of the advanced economies. In a
perceptive article written just before its conversion into a leaders meeting,
Beeson and Bell contrasted models of US-led group hegemony and
Paul Cammack is in the Department of Asian and International Studies, City University of Hong Kong, Tat
Chee Avenue, Kowloon, Hong Kong SAR. Email: paul.cammack@cityu.edu.hk.
ISSN 0143-6597 print/ISSN 1360-2241 online/12/01000116
2012 Southseries Inc., www.thirdworldquarterly.com
http://dx.doi.org/10.1080/01436597.2012.628110

PAUL CAMMACK

collectivist cooperation (an institutionalized voice and new role, especially

for the non-G7 members of the G20), and suggested that it sat somewhere in
between, reecting a genuineif still incrementalshift toward wider
participation in the governance of the international economic and nancial
system. Their argument hinged on the view that two dierent structural
logics were at work: if the broadly neoliberal policy commitments of the
G20 reected important elements of structural inuence over the international political economy by the major powers, notably the United States, the
rise of signicant emerging market economies, recognised by the G20 itself as
a tectonic shift in the global economy, was altering both power balances and
levels of economic integration in the international system.4
I argue here that this view now needs adjusting, rst, because the broadly
neoliberal policy commitments are strongly espoused by the leading
emerging economies themselves, rather than imposed upon them, and,
second, because the sharp intensication of the crisis subsequently prompted
by the collapse of Lehman Brothers in September 2008 undermined the
hegemony of the US and the G7, giving rise to a situation neither of US/G7
group hegemony nor of collective co-operation, but of emerging economy
group hegemony over the character and direction of global economic
governance. Not only did the G20 gain authority and new momentum as a
consequence of the crisis but, I shall argue, the emerging economies gained
immensely in authority within it. Their increased authority is at an early stage
of institutionalisation, but still represents a signicant permanent shift and
inaugurates a new phase in global governance. If one looks to the G20, as
many have, for solutions to the problems besetting the advanced economies,
one will inevitably be disappointed. Hence the negative character of much
recent commentary. But if one looks instead for the signs of an emerging
alternative approach to global economic governance based on the leadership
and interests of the emerging economies themselves, as I attempt to do here, a
rather dierent picture emerges.
At the same time, the G20 has been shaped and supported from its
inception by the IMF, the World Bank and the OECD, who have been its
strongest allies and institutional partners. In return the G20 and the emerging
economies within it have been unswerving from the very start in their support
for a liberal global regime of open markets, competition and international
nance institution (IFI)-led global regulationnot surprisingly, as the
emerging economies hope to be its major beneciaries. As this expectation
is all the stronger since the crisis broke, it is an error to see the programme
pursued by the G20 and its international partners as subjecting the emerging
economies to the hegemony of their advanced peers. The G20 is committed to
the development of the emerging economies as the current and prospective
leading edge of the development of capitalism on a genuinely global scale, on
the good Leninist principle that things cannot go on in the old way any more.
In short, I shall argue, the crisis created the conditions for the international
organisations led by the OECD and the World Bank to promote energetically
the eastward and southward shift of the centre of gravity of the global
economy, and that they have done so, in conjunction with the multilateral
2

G20 AND THE RISE OF GLOBAL DEVELOPMENTAL LIBERALISM

development banks in particular. If the G20 is a steering committee, the

emerging economies are at the helm. Even so, too narrow a focus on the G20
alone, and especially on the agenda as seen from Brussels or Washington,
misses the real story: the underlying south- and eastward shift of the centre of
gravity of the global economy and the associated rapid rise of a newly
hegemonic discourse of global developmental liberalism, generated and
enthusiastically acted upon by the Bretton Woods institutions and related
international organisations. The crisis has sharply reduced the ability of the
advanced economies to block this long-standing agenda, which is being taken
forward in a number of locations, among which the G20 is only one.
The new authority of the G20 and the emerging economies
The creation of the G20 of nance ministers and Central Bank governors in
1999 was a response both to the rising weight of emerging economies in the
global economy, and the series of nancial shocks among them in the latter
half of the 1990s. At the time the dominant narrative contrasted the
inadequate regulation of nancial institutions and the lack of nancial
transparency in those economies with the superior framework of nancial
rules and regulations in the G7. Paul Martin, the prime mover behind the
initiative, attributed the reluctance of the emerging economies to follow the
lead of the G7 to two motives: First, they felt we talked a better game than
we played. Second, and most important, they were not at the table at the time
we came up with our solutions.5 Larry Summers, for his part, was insistent
on the special role for the United States as the worlds only economic
superpower in managing global integration and clearly (unlike Martin)
expected the US to be able to set the rules.6 Martin was increasingly
frustrated with the deeply resented and seriously counter-productive ad hoc
initiatives through which a changing cast of emerging economy leaders was
invited to meet their betters, if only for lunch.7 But his eorts to convert the
G20 into an L20, intensied during and after his tenure as prime minister of
Canada (200306), bore little fruit. All this would change abruptly once the
intense phase of the crisis broke.
The situation on its eve is reected in the 2007 agenda of the most formal
of the ad hoc processes by which emerging economies were integrated into G8
debates, the Heiligendamm Process (G85), which still sought to draw
emerging economies into a global project shaped by the G7/8, and showed
no hint of the storm clouds that were about to break.8 That was another
world. With the breaking of the crisis, one motivating factor for the original
creation of the G20 was sharply accentuated, and the other was suddenly
reversed, creating the new dynamic which persists today: the salience of the
emerging economies in the global economy was sharply increased, while the
dominant narrativeemerging economies shaky, advanced economies
soundwas turned on its head. The emerging economies became paragons
of sound banking and regulatory virtue, while the claims of the US in
particular and the leading states in the G7 in general to have discovered the
secret of eternal nancial stability were shown to be hollow.
3

PAUL CAMMACK

In spring 2008, even before the worst of the crisis struck, the IMF was
already forecasting recession in the US, and identifying the emerging
economies as the source of global salvation:
All eyes now turn to the worlds leading emerging economies. They have come
of economic age in the past half-decadediversifying their exports, strengthening their domestic economies, and improving their policy frameworks. It is
conceivable that their strong momentum, together with some timely policy
adjustments, can sustain both their domestic demand and the global economy.9

In the event overall growth in world output of 2.9 per cent in 2008 was the
combined result of 0.2 per cent growth in the advanced economies (with zero
growth in the US), and 6.1 per cent in the emerging and developing economies;
in 2009 world output fell by only 0.5 per cent because a fall of 3.4 per cent in
the advanced economies was oset by continuing growth of 2.7 per cent in the
emerging and developing economies, led by developing Asia (7.2 per cent). The
restoration of growth from 2010 set a pattern of two-speed recovery in which
the advanced economies were predicted in April 2011 to grow at 2.5 per cent per
annum, compared with 6.5 per cent for the emerging and developing economies.
Six months later the September 2011 World Economic Outlook: Slowing Growth,
Rising Risks projected global growth at four per cent for 2011 and 2012, with
growth in the advanced economies falling below two per cent (1.6 per cent and
1.9 per cent per annum, respectively), and all the risks on the downside.10
As all that seemed solid about the new world economic order and its
indispensable leading state melted into air in 200708, a dramatic shift took
place, marked by the collapse of advanced state policy coherence, and the
new authority of the emerging states. Eichengreen and Baldwin captured the
moment precisely on the eve of the November 2008 Washington meeting of
the G20 leaders:
There is no agreement on what to do about the global economic downturn.
Economically and nancially there is a clear sense of things spiralling out of
control again. Turning from the crisis to the reform agenda, there is no
consensus about how to prevent a recurrence. Everyone agrees on the need
to strengthen supervision and regulation, but there is no agreement on how to
go about this. Everyone recognises the threat posed by large cross border
institutions and banks that are too big to save, but there are few practical ideas
for solving these problems.11

Within and around the G20 events had moved fast in the intervening months.
Its November 2007 communique had already noted that downside risks to
the near-term outlook have increased as a consequence of recent nancial
markets disturbances, but had been pleased to note . . . the resilience of
emerging market and other developing countries during the recent
turbulence.12 Even so, as the crisis continued into 2008, Beeson and Bell
reected the prevailing view that there seems to be little current prospect of
converting [the G20] into a more robust Leaders group, or L-20.13 On 11
October, however, after the Lehman Brothers collapse, incumbent chair
Guido Mantega, Finance Minister of Brazil, gave a press conference in
4

G20 AND THE RISE OF GLOBAL DEVELOPMENTAL LIBERALISM

Washington following meetings of the IMF and the G20 ministers, in which
he extolled (in Portuguese) the soundness of the Brazilian banks, took
pleasure in describing the Brazilian regulation system as more advanced than
the American or European regulation systems, noted the slowing of growth
towards zero in the US and Europe, and called for the expansion of the G7 to
bring in excluded G20 leaders. He went on to say that:
The emerging countries will grow faster, and . . . it will be up to the emerging
countries to carry out countercyclical policies to maintain a certain level of
world economic growth, to somehow neutralize the drop in economic growth in
the advanced countries.14

It was not agreed even at this point that the G20 leaders would meet but,
after a visit to Washington from the French president Nicolas Sarkozy and
the EU president Jose Manuel Barroso, White House press secretary Dana
Perino conded on 22 October that Bush had spent two days on the
telephone talking to various leaders, and that the President thinks its very
important to include developing nations, because they have emerging
markets, theyre important on a variety of levels to the global economy,
and their input is important.15 The Leaders Summit on Financial Markets
and the World Economy was then convened as a one-o event, with a
permanent shift to a Leaders G20, formalised only in the following year.
G20 nance ministers and bank governors met as scheduled in Sao Paulo
on 89 November, and welcomed the decision to call the 15 November
meeting, blaming the nancial crisis squarely on excessive risk taking and
faulty risk management practices in nancial markets, inconsistent macroeconomic policies, which gave rise to domestic and external imbalances, as
well as deciencies in nancial regulation and supervision in some advanced
countries.16 It came as no surprise, therefore, when the Declaration
published at the end of the Washington meeting a few days later lambasted
market participants who sought higher yields without an adequate
appreciation of the risks and failed to exercise proper due diligence. The
Declaration also highlighted weak underwriting standards, unsound risk
management practices, and increasingly complex and opaque nancial
products, and concluded: Policy-makers, regulators and supervisors, in
some advanced countries, did not adequately appreciate and address the risks
building up in nancial markets, keep pace with nancial innovation, or take
into account the systemic ramications of domestic regulatory actions.17 Not
only had the G20 moved to centre-stage, but a narrative marking the shift of
authority to the emerging economies had gained ascendancy within it.
The capacity of the emerging economies to seize the initiative did not come
from nowhere. For a number of years they had been developing positions
and alliances that challenged the hegemony of the advanced economies, as
Chin has recently shown for Brazil, China, India, Indonesia, South Africa
and South Korea.18 Brazilian assertiveness reected a long-standing
aspiration to articulate the interests of developing states and the South,
intensied and given practical expression under President Luis Inacio da
Silva.19 And the willingness of Brazil and the Asian emerging economies to
5

PAUL CAMMACK

condemn lax regulation in the North, as well as their condence in the

soundness of their own nancial systems, reected a decade of reform on
which they have continued to congratulate themselves.20 The shift of authority towards the emerging economies has been accentuated since 2008, as their
economies have fared better, their nancial systems have emerged relatively
unscathed, and their markets and nancial resources have kept the global
economy aoat, while the failure of the leading members of the G7, whose
regulatory laxity unleashed the crisis, to address the problem at national level
has kept them on the sidelines.21 If the ascendancy of the emerging economies
has not led to the repudiation of the Bretton Woods institutions, then, we need
to look elsewhere than to US/G7 hegemony to explain it.
The G20 and the international institutions: partners in the promotion
of global developmental liberalism
It was to the satisfaction of the international organisations, as well as the
emerging economies, that the crisis nally broke the resistance of the
advanced economies most hostile to a rebalancing between North and
South, the US pre-eminent among them. Andrew Cooper, from whom that
phrase is taken, quotes John Lipsky, then IMF deputy Managing Director, as
describing the shift to the G20 as recognizing economic realities. You cant
talk about the global economy without having the major dynamic emerging
economies at the table; Cooper then went on to pinpoint the limits of its
reforming content:
In many ways the G20 is a stereotypical state-centric project, at odds with the
impression that global diplomacy has opened up to a plurality of
actors . . . Yet, although in its core composition the G20 is a concentrated
club of states, central to its role both as a crisis committee and as steering
committee are some features of the networked approach, apparent in its links to
not only the international nancial institutions (IFIs), including the FSB, but
other layers of technical experts in both the public and private domains.22

This reected the will of its founders. The G20 was intentionally created
within the IFI framework but outside its direct control. G7 nance ninisters
had agreed at Cologne in 1999 to create a group that could facilitate
dialogue among systemically important countries within the framework of
the Bretton Woods institutional system; but the option of joint chairing by the
chairs of the IMF Committee (IMFC) and the Development Committee (or by
the G7 chair) was rejected in favour of a separate, rotating G20 chair with the
chairs of the IMFC and the Development Committee and the heads of the IMF
and World Bank as ex ocio members.23 Martin would later comment:
The simple fact is that todays global concerns require a level of international
co-ordination that is fundamentally dierent from any earlier period of history.
And while successful international global institutions are essential if the world
is to work, national governments are the masters of those institutionsnot the
other way around. Thus, the system of global governance must build on
national governments as the ultimate source of authority.24

G20 AND THE RISE OF GLOBAL DEVELOPMENTAL LIBERALISM

This is consistent with the World Banks conception of country ownership

and with OECD head Angel Gurr as description of that body as a strategic
partner in the political economy of reform. It suggests that from its inception
the G20 was intended to operate, to take a phrase from former World Bank
president James Wolfensohn, with country representatives in the driving
seat.25 Those leaders have endorsed and promoted IFI initiatives and
authority consistently from its rst meeting onwards, and continually pressed
for their further extension; and they responded to the 200708 crisis, both
before and after its conversion to a leaders meeting, not by questioning but
by emphatically endorsing the IFI vision of a global liberal order. But,
further, the G20 has led the demand for greater emerging economy
representation and for recognition of the particular concerns of developing
and emerging economies within the Bretton Woods institutions, becoming
the prime mover in attempts to force the pace of global embedding of the
IMFs role. As the following section details, the G20 has not challenged either
liberal principles or global competitiveness. On the contrary, it has advocated
their active promotion on a genuinely global scale.
Faithful partners: the G20 and the

IFIs

The rst G20 communique committed itself to informal dialogue within the
Bretton Woods institutional system, rearmed the importance of progress by
the World Trade Organization (WTO) to multilateral liberalisation of trade in
goods and services, endorsed the need for sound national economic and
nancial policies, and undertook to complete Reports on Observance of
Standards and Codes . . . and Financial Sector Assessments, within the
context of continuing eorts by the IMF and the World Bank to improve
these mechanisms.26 At that time its stance was clearly consistent with a process of drawing emerging states into a framework devised and supported by
the G7. Successive communiques continued to endorse IFI policies, invariably
emphasising that the needs of the emerging economies and the poorest
countries should be given full consideration, and pressing for progress on
stalled initiatives such as the Doha Round, along with the strengthening and
extension of IMF surveillance. Against that background, the rst signs of crisis
in 2007 were met with emphatic endorsement of the continued promotion of
global liberalism and universal competitiveness:
We rearmed our commitment to maintain open trade and investment regimes
and to resist protectionist pressures. We committed to working with our trade
authorities to reach a rapid and successful conclusion to Doha, to promote open
and rules-based trade and investment regimes, improve productivity, create jobs,
alleviate poverty and spur competition. We noted the critical importance of
trade liberalisation and Aid for Trade for global poverty reduction.27

A year later the G20s critique of excessive risk-taking and lax regulation in
the advanced economies cited above was coupled with calls for all countries
to resist protectionism, and demands for a prompt and ambitious conclusion
of the Doha Development Round of trade negotiations, and the granting of
7

PAUL CAMMACK

increased powers to the IMF in relation to early warning capabilities,

surveillance, and the provision of macroeconomic policy advice.28 The onset
and deepening of the crisis was met, in other words, with a renewed and
reinforced commitment on the part of the G20 to a global regime based on
liberal principles, to be governed by a strengthened IMF in particular.
The same objectives were pursued consistently through successive leaders
summits in Pittsburgh, Toronto and Seoul, but with an increasing inection
towards the specic concerns of emerging and developing economies as growth
rates diverged and US and European leaders dragged their heels on adjustment
and reform. The outcome is what we might call a global liberal developmental
regimethe new face of the regime of universal competitiveness in the wake of
crisis at the centre, still superintended by the IMF and the World Bank, with
increasingly close support from the Financial Stability Board (FSB), OECD,
International Labour Organization (ILO), United Nations Conference on Trade
and Development (UNCTAD) and other international and regional organisations.
In institutional terms the global developmental regime may be described as a
partnership between the G20 on the one side, led by the emerging economies, and
a range of international and regional institutions, led by the IMF and the World
Bank, on the other. At its core is a new liberal-developmental policy framework,
launched at the Pittsburgh Summit in 2009 simultaneously with the baptism of
the G20 as the premier forum for international economic co-operation, in the
form of the Framework for Strong, Sustainable and Balanced Growth:
Today we are launching a Framework for Strong, Sustainable, and Balanced
Growth. To put in place this framework, we commit to develop a process
whereby we set out our objectives, put forward policies to achieve these
objectives, and together assess our progress. We will ask the IMF to help us with
its analysis of how our respective national or regional policy frameworks t together. We will ask the World Bank to advise us on progress in promoting development and poverty reduction as part of the rebalancing of global growth.29

This reects precisely the role that I have previously ascribed to the IFIs in
promoting the politics of global competitiveness through a partnership with
states in which the IFIs have the task of reconciling national and global
patterns of development, or promoting national reforms that contribute
simultaneously to national and global competitiveness.30
By November 2010, as a consequence of the initiative of the host
government, South Korea, the Framework had taken the form of the Seoul
Summit Document, comprised of the Seoul Action Plan, the Seoul Development
Consensus for Shared Growth, and the Multi-Year Action Plan on Development. The Seoul Action Plan, to be pursued with expert guidance from the
OECD, IMF, World Bank, ILO and other international organisations, seeks to
secure co-ordination between countries in the areas of monetary and exchange
rate policies, trade and development policies (with a renewed commitment to
free trade and investment); scal policies (with advanced economies enjoined
to formulate and implement clear, credible, ambitious and growth-friendly
medium term scal consolidation plans), nancial reforms, and, most
signicantly, structural reforms (see Table 1).
8

G20 AND THE RISE OF GLOBAL DEVELOPMENTAL LIBERALISM

TABLE 1. The structural reforms advocated in the 2010 G10 Seoul Action Plan
Structural Reforms: We will implement a range of structural reforms to boost and sustain global demand,
foster job creation, contribute to global rebalancing, and increase our growth potential, and where needed
undertake:
. Product market reforms to simplify regulation and reduce regulatory barriers in order to promote
competition and enhance productivity in key sectors.
. Labor market and human resource development reforms, including better targeted benets schemes to
increase participation; education and training to increase employment in quality jobs, boost productivity
and thereby enhance potential growth.
. Tax reform to enhance productivity by removing distortions and improving the incentives to work,
invest and innovate.
. Green growth and innovation oriented policy measures to nd new sources of growth and promote
sustainable development.
. Reforms to reduce the reliance on external demand and focus more on domestic sources of growth in
surplus countries while promoting higher national savings and enhancing export competitiveness in
decit countries.
. Reforms to strengthen social safety nets such as public health care and pension plans, corporate
governance and nancial market development to help reduce precautionary savings in emerging surplus
countries.
. Investment in infrastructure to address bottlenecks and enhance growth potential.
Source: G20, Seoul Summit Document, G20 Seoul Summit Declaration, 2010, para 10.

The ngerprints of the IMF, the OECD, the World Bank and the UNDP are all
over this set of structural reforms, which replicates perfectly the consensus put
together through the 1990s and promoted throughout the early years of the
present century. At the same time, as noted by Kalinowski, the development
model put forward, with its emphasis on capacity building in low-income
countries for foreign investment- and private sector-led growth, corresponds
exactly to the interests of Korea itself, as its largest companies look for
investment opportunities abroad.31
Supporting the policy framework set out in the Action Plan (and more
discursively in the Seoul Consensus) were the second and third elements of
the new global liberal developmental regime: the greatly enhanced power
of the IMF (again), and the vehicle through which it would lead the process of
policy co-ordination, the country-led, consultative Mutual Assessment
Process. The G20 had been calling since 2005 for the strengthening of the
IMFs powers and representativeness, in accordance with the logic expressed
at the 2010 Toronto summit: Modernizing the IMFs governance is a core
element of our eort to improve the IMFs credibility, legitimacy, and
eectiveness.32 As with so many other initiatives primarily of concern to the
emerging economies, progress was glacially slow until the crisis struck.
Thereafter it has been swift, at least in terms of generating new resources and
implementing prior commitments to greater representation of systemically
important economies, for all that it still falls short of anything approaching
equity.33 The Seoul Action Plan commits to completion of the six per cent
shift in quota shares to the dynamic emerging market and developing
countries and to under-represented companies and to the doubling of quotas
by 2012. It adds a commitment to a comprehensive review of the quota
9

PAUL CAMMACK

formula by January 2013 to better reect economic weights, for completion

in 2014, along with the removal of two advanced European chairs from the
Executive Board to make way for greater representation of emerging market
and development countriesthis to be followed by a move to an all-elected
board, and a review of its composition every eight years.34 Finally, the
Mutual Assessment Process (MAP) is described on the IMF website as a new
approach to policy collaboration, conceived and owned by the members of
the G20, at whose request the IMF provides technical analysis.35 Initiated at
Pittsburgh, it is a straightforward insertion of enhanced IMF surveillance into
the heart of the G20 process.
In sum, the G20 has contracted a long-term partnership with the
international nancial institutions and associated international organisations, and it works closely with them in what is invariably presented as a
process owned and led by the G20, with advice and support from the IFIs. I
argued in the rst section that the emerging economies have experienced an
increase in their authority within the G20 in the wake of the crisis. Two
further points emerge from this section. First, the programme adopted by the
G20, with its focus on development and specic attention to the needs of
emerging economies and poorer countries, still centres upon the policy of
convergence on global competitiveness espoused by the IFIs, the OECD and
the UNDP well before the crisis broke. Second, the pace at which the voice and
representation of the emerging economies has been strengthened (at the
World Bank as well as the IMF) has quickened appreciably. At the same time
the IFIs have moved, for reasons to be established, to prioritise the needs of
the emerging economies over those of the advanced economies.
Global developmental liberalism: emerging economy leadership,
regional integration and SouthSouth cooperation
Needs must when the devil drives. I have argued previously that the World
Banks commitment to poverty reduction is real within limits, but conditional
upon and secondary to the broader goal of the systematic transformation of
social relations and institutions in the developing world, in order to generalise
and facilitate proletarianisation and capital accumulation on a global scale,
and build specically capitalist hegemony through the promotion of legitimating schemes of community participation and country ownership.36 The same
logic informs the Banks alliance with the emerging economies today. The
conjunction of the emergence of a genuinely global capitalist economy in
which dynamic emerging economies have been playing an increasing role and
the negative impact of the 200708 crisis on the advanced economies has
persuaded the international organisations that for the foreseeable future the
emerging economies will be the motors of growth in the global economy, and
that their prosperity and the greater integration of low income countries into
the world economy holds out the best hope for sustained global accumulation.
This was already true before the crisis broke, and it has been a constant theme
since the dynamism of the emerging economies has been an undisguised
blessing for the IFIs, and it has been welcomed as such.
10

G20 AND THE RISE OF GLOBAL DEVELOPMENTAL LIBERALISM

The World Bank was addressing the costs and benets of Chinese and
Indian growth and its implications for Africa in particular before the crisis,
and its 2009 World Development Report, Reshaping Economic Geography,
reected a marked shift of focus towards Asia in general and China in
particular.37 A year later the OECDs 2010 study of Shifting Wealth
documented the rise of the rest, welcomed the fact that the new
conguration of global economic and political power means that the auent
countries can no longer set the agenda alone, and explicitly advocated
increased trade, aid and investment between emerging economies and poor
countries, SouthSouth FDI and SouthSouth peer learning. Both development strategies and the way in which the OECD and non-OECD countries
interact, it declared, will need to change in a very fundamental way.38
In a wider ocial literature that is expanding rapidly, two themes stand
out, each geared towards the dissemination throughout emerging and lowincome countries of sustainable processes of domestic accumulation. First,
regional integration should be pursued by means of reduced taris and other
barriers to regional trade and investment; second, SouthSouth integration
should be pursued with vigour, along with a diversication of economic
activity away from markets in North America and Western Europe.
Regional integration has been most actively pursued at the heart of Asia,
with the creation of the ASEAN Economic Community and ASEAN free trade
treaties with AustraliaNew Zealand, China, Japan and Korea.39 More broadly
the Asian Development Bank promoted a seamless Asia in 2009 with the
argument that, to mitigate the medium-term consequences of the ongoing crisis,
Asia will need to put greater emphasis on increasing regional demand. This will
have strong implications for regional infrastructure, which will need to be
geared more towards supporting Asian production networks and regional
supply chains for intra-regional trade to meet the rising regional demand.40
A similar logic infuses the Inter-American Development Banks 2011
Sector Strategy to Support Competitive Global and Regional Integration, as
the title suggests. And as regards Africa, the World Bank, African
Development Bank and international donors are collaborating on a new
strategy that sees regional integration as a critical aspect of the competitiveness agenda. In the World Banks New Africa Strategy (March 2011):
Pillar 1 focuses on competitiveness and employment, covering all traded goods
and service sectors (for example, light manufacturing, agribusiness, mining,
information and communication technology, and tourism) as well as key domestic
sectors that support competitiveness (for example, agriculture, transportation,
utilities, education and skills development, construction, and retail). A priority
will be to focus reforms and public investments on areas of highest growth
potential, a healthy and skilled workforce, womens empowerment, and regional
integration programs. Strategically targeted interventions will be complemented
by deeper and broader interventions targeted at each of the three main investment
climate constraints: infrastructure, business environment, and skills.41

On SouthSouth integration and co-operation, meanwhile, initiatives

proliferate so fast that an indicative list must suce to demonstrate its
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PAUL CAMMACK

centrality to thinking in international and regional organisations around the

world. The OECDs Shifting Wealth devotes a chapter to the increasing
importance of the South to the South; UNCTADs 2010 report on economic
development in Africa similarly addresses the theme of SouthSouth
Cooperation, and a 2011 policy brief hails SouthSouth integration as
key to rebalancing the global economy. The Asian Development Banks
April 2011 Development Outlook is dedicated to SouthSouth economic
links and the G20 itself took advantage of such initiatives at its Seoul
Summit to ask the OECDs Task Team on SouthSouth Cooperation and the
42
UNDP to explore the topic of SouthSouth knowledge exchange.
Conclusion: leading dragons and the new global economy
Beeson and Bell pushed their case for collectivist cooperation in the G20
only as far as to suggest the appearance of perhaps a broader shared vision
of how the system should be managed, and argued that the consensus on
neoliberal policy arose from acceptance on the part of emerging economies
that this was more or less the prerequisite for participation in the trade and
especially the nancial ows of the international economy, and such
participation is something all G-20 members desire.43 I would go further,
on two counts. First, it is not surprising that the non-G8 OECD economies
(Australia, Mexico, South Korea and Turkey) and the emerging economies
that carry most weight in the G20 (Brazil, China, India, Indonesia and South
Africa) should nd co-operation with the IFIs congenial, as they are all
positively committed to integration into the global economy through the
pursuit of overseas markets and global competitiveness. It should be clear
from the above that the relationship is one, from the perspective of leaders, of
shared goals and mutual advantage. Indeed, as the crisis unfolded in 2011, it
became even more clear just how much IFI perspectives were swinging
directly in their favour, as four closing vignettes of World Bank initiatives in
May 2011 will illustrate.
First: on 4 May World Bank Chief Economist Justin Yifu Lin delivered the
Annual WIDER lecture in Maputo, Mozambique (the rst time it had been
delivered in Africa), on the theme of Flying Geese and Leading Dragons.
He argued that low-income countries should tie their fortunes to the leading
dragons among the emerging economies, led by China, whose continuing
development and shift into higher value-added activities would create the
opportunity for poorer countries to begin their own ascent to development.44
Second: on 17 May the World Bank launched a new initiative in favour of
multipolarity with the publication of an advance edition of Global
Development Horizons 2011, predicting that by 2025 Brazil, China, India,
Indonesia, South Korea and the Russian Federation would account for more
than half of all global growth, and identifying the rst four as emerging
economy poles of growth.45
Third: speaking on the theme of Promoting Sustained Growth in the
Caribbean in Port of Spain three weeks later, then World Bank managing
director Ngozi Okonjo-Iweala told her audience in the backyard of the US
12

G20 AND THE RISE OF GLOBAL DEVELOPMENTAL LIBERALISM

that multiple poles of growth have emerged and for your region this means
new markets and new investors, and an opportunity to hedge shocks
through a diversication in markets. She went on to advocate delinking from
the West:
Consider this. The United States contributed 27 percent of the worlds GDP
growth in the 80s and a whopping 36 percent in the 90s; but only 21 percent in
the 2000s. By contrast, the share of China and India increased from 5, to 12,
and now to 32 percent! And closer to home, the share of Brazil increased from
1, to 2, and now 3 percent. Against this shifting economic geography,
Caribbean countries exports are still going primarily to the US and Europe,
with 54 percent to the US and 19 percent to the EU, but less than 1 percent to
China and India combined, and merely 3 percent to neighboring Argentina,
Brazil, and Mexico combined. These numbers represent a huge opportunity.46

Fourth: Dr Okonjo-Iweala then boarded a plane for Cyprus, to preview for

the EDS19 Constituency (a mixed European and Central Asian group of
World Bank clients) the forthcoming Europe and Central Asia report on the
European growth model. She did not share the news that she had advised
Caribbean governments to look away from Europe and North America.
Instead, she enumerated the aspects of the European model that may have to
be altered: improvements were needed in productivity, innovation, higher
education, markets for services, and the availability of credit, but most of all
in relation to labour and scal policies:
European societies will have to make big changes in their approach to work and
government. The reasons are quite obviousthe labor force is shrinking, people
are aging, social security is already a big part of government spending, and
government scal balances and public debt conditions are already fragile in
many countries in Europe (emphasis in the original).47

Such instructions to European countries to cut welfare, increase labour

mobility, and cut wages in sectors with low productivity (along with the
determination of the IMF to seize the opportunity of scal crisis in Greece,
Ireland, Portugal and Spain to make it happen) are core elements of the
global liberal developmental regime oriented towards universal competitiveness. The message is uncompromising: The world has changed, and the onus
is on you to adapt, and persuade your citizens to accept it. In circumstances
in which the advanced economies depend upon emerging economy growth,
the international nancial institutions seek to secure further reforms to
strengthen the degree of competition to which capital is subjected, and the
power of capital over labour.
The statement submitted to the IMF /World Bank Development
Committee at the Annual Meeting in September 2011 by combative Brazilian
Finance Minister Guido Mantega reected the logic of a global liberal
developmentalism owned by the emerging economies. Mantega declared
roundly that Equality and inclusion pave the way to solid economic growth,
but creation of well-paid jobs, which add to domestic productivity and
competitiveness, is certainly the way to warrant sustainability in the process,
13

PAUL CAMMACK

thereby noting and welcoming the proposed focus on jobs and productivity
announced for the World Development Report 2012.48 Speaking in the
BBC Global Debate held at IMF headquarters on 23 September 2011, IMF
Managing Director Christine Lagarde pointed to the implications for the
advanced economies: structural changes were taking place, with economic
power shifting to emerging market and developing countries; the challenge
was to accommodate the restructuring of the world economy in a way
that will allow advanced countries to cope with the current slowdown.49 For
anyone who believed that the current crisis might bring about the eclipse of
the Bretton Woods institutions, and with it the remorseless drive towards
capitalism on a global scale, the message is dierent: if another world is
possible, it is not (yet, at least) the world that some imagined.
Notes
1 Leaders Statement: The Pittsburgh Summit, 25 September 2009, p 3, para 19; and The G20 Toronto
Summit Declaration June 2627, 2010, p 1, para 1. All ocial G20 statements are taken from http://
www.g20.org/pub_communiques.aspx.
2 The episode, which took place on 27 April 1999 in Summers oce in the US Treasury, is recounted J
Ibbitson & T Perkins, How Canada made the G20 happen, Globe and Mail (Toronto), 19 June 2010,
at
http://www.theglobeandmail.com/news/world/g8-g20/news/how-canada-made-the-g20-happen/
article1609690/, accessed 3 June 2011.
3 See, for example, A Payne, How many Gs are there in global governance after the crisis? The
perspectives of the marginal majority of the worlds states, International Aairs, 86(3), 2010, pp
729740; J Vestergaard, The G20 and beyond: towards eective global economic governance, DIIS
Report, 4, 2011, Copenhagen: Danish Institute for International Studies; AF Cooper, The G20 as an
improvised crisis committee and/or a contested steering committee for the world, International
Aairs, 86(3), 2010, pp 741757; and S Soederberg, The politics of representation and nancial
fetishism: the case of the G20 summits, Third World Quarterly, 31(4), 2010, pp 523540.
4 M Beeson & S Bell, The G-20 and international economic governance: hegemony, collectivism, or
both?, Global Governance, 15(1), 2009, pp 6869. Contrast BK Gills, Going South: capitalist crisis,
systemic crisis, civilisational crisis, Third World Quarterly, 31(2), 2010, who concludes that, despite
shared hegemony (p 170), the USA and the West, together as an ensemble, remain globally
hegemonic (p 181).
5 P Martin, Time for the G20 to take the mantle from the G8, in J Kirton & M Koch (eds), G20
Growth, Innovation, Inclusion: The G20 at Ten, London: Newsdesk Communications/G20 Research
Group, November 2008, p 22.
6 The phrase quoted is from LH Summers, Reections on managing global integration, Journal of
Economic Perspectives, 13(2), 1999, p 4. For an equally pompous exercise in hubristic pontication, see
his International nancial crises: causes, prevention, and cures, American Economic Review, 90(2),
2000, in which we learn what it means to have an ecient nancial system and the best ways to design
one (p 2). Footnote 1 on the same page marks this as a moment at which Summers was most condent
of the benets that liquid markets provide.
7 The image of Hu Jintao, the president of China, and Manmohan Singh, the prime minister of India
leaders of the two most populous countries on earth, quite possibly destined to be the largest
economies on earth within our lifetimeswaiting outside while we held our G8 meetings, coming in for
lunch, and then being ushered from the room so that we could resume our discussions among
ourselves, is one that stayed with me. P Martin, Hell or High Water: My Life in and out of Politics,
p 358, quoted in GS Smith, G7 to G8 to G20: Evolution in Global Governance, CIGI G20 Papers, No 6,
May 2011, p 5.
8 Brazil, China, India, Mexico and Korea were invited to deliberate upon promoting and protecting
innovation; enhancing freedom of investment by means of an open investment climate including
strengthening the principles of corporate social responsibility; dening joint responsibilities for
development focusing specically on Africa; and joint access to know-how to improve energy eciency
and technology cooperation with the aim of contributing to reducing CO2 emissions. Ibid, p 5, note 7.
9 IMF, World Economic Outlook April 2008, Washington, DC: IMF, 2008, p xii. See also R Wade, The
First-World debt crisis of 20072010 in global perspective, Challenge, 51(4), 2008, pp 2425.

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G20 AND THE RISE OF GLOBAL DEVELOPMENTAL LIBERALISM

10
11
12
13
14
15

16
17
18
19

20
21
22
23
24
25
26
27
28
29
30
31

32
33
34

IMF, World Economic Outlook April 2011, Washington, DC: IMF, 2011, p 181, Table A1; and IMF,
World Economic Outlook September 2011, Washington, DC: IMF, 2011, p 2, Table 1.1.
B Eichengreen & R Baldwin, Introduction, in Eichengreen & Baldwin (eds), What G20 Leaders Must
Do to Stabilise our Economy and Fix the Financial System, London: Centre for Economic Policy
Research, 2008, p 1.
G20, CommuniqueKleinmond, Cape Town, South Africa, 1718 November 2007, p 1, para 2.
Beeson & Bell, The G-20 and international economic governance, p 77. They did presciently suggest,
however, that a major systemic crisis would allow the G20 to take up issues central to perceived US
interests ( p 81).
IMF, Transcript of a Press Brieng by Guido Mantega, Finance Minister of Brazil and Chairman of the
G-20, Washington, DC, 11 October 2008, at http://www.imf.org/external/np/tr/2008/tr081011.htm,
webcast at http://www.imf.org/external/mmedia/view.aspx?vid79160994001, accessed 13 June 2011.
See Press Brieng by Press Secretary Dana Perino, 22 October 2008, at http://georgewbushwhitehouse.archives.gov/news/releases/2008/10/20081022-2.html, accessed 13 June 2011. See also PM
Kevin Rudds role in international crisis summit, The Australian, 25 October 2008, which reports a
lengthy conversation between Rudd and Bush on 10 October in which Rudd urged the calling together
of the G20 leaders, at http://www.theaustralian.com.au/news/pms-role-in-crisis-summit/storye6frg6no-1111117850306, accessed 3 July 2011. The claim that Bush asked Rudd Whats the G20?
was subsequently denied.
G20, Communique Sao Paulo, Brazil, 89 November 2008, p 1, para 3.
DeclarationWashington, US, 15 November 2008, p 1, para 3.
G Chin, The emerging countries and China in the G20: reshaping global economic governance, Studia
Diplomatica, LXIII(2), 2010, pp 105123.
See the trenchant (and far from diplomatically expressed) case for emerging power recognition put
forward by Brazilian diplomat Marcel Biato in MF Biato, Shaping global governance: a Brazilian
perspective, Artigos CEBRI, 3(1), 2008, which notes Brazilian outreach to Africa and India, and the
South in general, and derides the G5 and Heiligendamm processes. Note also the more recent
characterisation of Brazilian foreign policy in P da Motta Veiga & S Polonia Rios, A pol tica externa
brasileira sob Lula: o m do Consenso de Bras lia?, Artigos CEBRI, 5(3), 2010, p 13: it is important
to note that issues of global governance are essentially perceived in Brasilia through the lens of North
South opposition. From this perspective, the central policy issue, as regards global governance, is the
redistribution of power between developed and developing countries in international forums. Measures
to deal with global challenges should be compatible with this objective, which is to say that they should
not only increase the voice of developing countries, but also make the developed countries foot the bill
for the measures concerned.
See, for example, M Kawai, G-20 Financial Reforms and Emerging Asias Challenges, in K Dervis,
M Kawai & D Lombardi (eds), Asia and Policymaking for the Global Economy, Manila/Washington,
DC: Asian Development Bank Institute/Brookings, 2011, pp 105106, 11622.
See J Pisani-Ferry, International governance: is the G20 the right forum?, Bruegel Policy
Contribution, March 2009, pp 34.
Cooper, The G20 as an improvised crisis committee and/or a contested steering committee for the
world, p 744.
G20, The Group of TwentyA History, Study Group Report presented to Finance Ministers and
Central Bank Governors, Kleinmond, South Africa: November 2007, pp 1819, emphasis added.
Martin, Time for the G20 to take the mantle from the G8, p 25.
P Cammack, What the World Bank means by poverty reduction and why it matters, New Political
Economy, 9(2), 2004, pp 189211.
G20, Communique, 1999, p 1, paras 25.
G20, Communique, 2007, p 2, para 4.
G20, Communique, 2008, p 5, para 14.
G20, Leaders Statement, the Pittsburgh Summit, 25 September 2009, p 6, para 6, emphasis added.
P Cammack, Poverty reduction and universal competitiveness, Labour, Capital and Society, 42(12),
2009, p 45.
T Kalinowski, Can Korea be a bridge between developing and developed countries in the G20 and
beyond?, in T Fues & P Wol (eds), G20 and Global Development: How can the New Summit
Architecture promote Pro-poor Growth and Sustainability?, Bonn: Deutsches Institut fur Entwicklungspolitik, 2010, pp 8687.
G20, The G20 Toronto Summit Declaration, 2627 June 2010, p 25, para 14.
See P Cammack, All power to global capital!, Papers in the Politics of Global Competitiveness, No 10,
Institute for Global Studies, Manchester Metropolitan University, e-space Open Access Repository,
2009.
Seoul Action Plan, pp 45, para 16.

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35
36
37

38
39
40
41

42

43
44
45
46
47
48
49

IMF, Factsheet: The G20 Mutual Assessment Process (MAP), at http://www.imf.org/external/np/exr/

facts/g20map.htm, accessed 16 June 2011.
Cammack, What the World Bank means by poverty reduction and why it matters, p 190.
LA Winters & S Yusuf (eds), Dancing with Giants: China, India and the Global Economy, Singapore/
Washington, DC: Institute of Policy Studies/World Bank, 2007; H Broadman, with G Isik, S Plaza,
Xiao Ye, and Y Yoshino, Africas Silk Road: China and Indias New Economic Frontier, Washington,
DC: World Bank, 2007; and World Bank, World Development Report 2009: Reshaping Economic
Geography (two vols), Washington DC: World Bank, 2008.
OECD, Perspectives on Global Development 2010: Shifting Wealth, Paris: OECD, pp 2325.
P Cammack, The shape of capitalism to come, Antipode, 41(S1), 2010, pp 266269.
Asian Development Bank, Infrastructure for a Seamless Asia, Manila: ADB, 2009, p iv.
World Bank, Africas Future and the World Banks Support to It (sic), Washington, DC: World Bank,
2011, p 1, see also pp 2930; African Development Bank Group, ADB Regional Integration Strategy,
20092012, Tunis: AFDB, 2009; and UK Department for International Development (DFID), Joining Up
Africa: Regional Economic Integration in Sub-Saharan Africa, East Kilbride: DFID, 2010. See also
UNCTAD, Economic Development in Africa Report 2009: Strengthening Regional Economic Integration
for Africas Development, New York: UNCTAD, 2009.
IMF, Shifting Wealth, ch 3; UNCTAD, Economic Development in Africa Report 2010: SouthSouth
CooperationAfrica and New Forms of Development Partnership, New York: UNCTAD, 2010; UNCTAD,
SouthSouth Integration is Key to Rebalancing the Global Economy, Policy Brief No 22, February 2011;
Asian Development Bank, Asian Development Outlook 2011: SouthSouth-Economic Links, Manila:
ADB, 2011; and OECD, Scaling up SouthSouth Knowledge Sharing: A G20 Mandate for TTSSC and
UNDP, Paris: Task Team on SouthSouth Cooperation, OECD, at http://www.oecd.org/document/51/
0,3746,en_2649_3236398_43385523_1_1_1_1,00.html, accessed 18 June 2011.
Beeson & Bell, The G20 and international economic governance, pp 73, 77.
JY Lin, From Flying Geese to Leading Dragons: new opportunities and strategies for structural
transformation in developing countries, WIDER Lecture, Maputo, Mozambique, 4 May 2011.
World Bank, Global Development Horizons 2011Multipolarity: The New Global Economy,
Washington, DC: World Bank, p 46.
N Okonjo-Iweala, Promoting sustained growth in the Caribbean: challenges and opportunities, 12th
William G Demas Memorial Lecture, Caribbean Development Bank, Port of Spain, Trinidad, 24 May
2011, at http://go.worldbank.org/PD8PWIJKF0, accessed 8 June 2011.
N Okonjo-Iweala, Restoring Europes luster, address at the EDS19 Meeting, Cyprus, 2729 May 2011,
emphasis added, at http://go.worldbank.org/1TMLN7F5R0, accessed 18 June 2011.
Statement by Mr Guido Mantega, Minister of Finance of Brazil, Development Committee, DC/S/
2011-0061, 24 September 2011, p 1, emphasis added.
World economy seen at tipping point in BBC debate, IMF Survey Online, 23 September 2011, at http://
www.imf.org/external/pubs/ft/survey/so/2011/POL092311A.htm, accessed 25 September 2011.

Notes on contributor
Paul Cammack is Professor of Global Political Economy, City University of
Hong Kong. He is author of Capitalism and Development in the Third World
(1997) and most recently of The shape of capitalism to come, Antipode,
41(S1), 2010 and Knowledge and power in the eld of IPE, in S Shields, I
Bru and H Macartney, eds, Critical International Political Economy:
Dialogue, Debate, Dissensus (2011). He is currently completing a monograph
on The politics of global competitiveness.

16

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