Tapping into new potential for world economic growth

2016-09-05 14:54

The G20 Summit held in the Chinese city of Hangzhou from September 04-05 focused on development—especially that of emerging countries including African countries. This makes it different from previous G20 summits and the theme Toward an Innovative, Invigorated, Interconnected and Inclusive World Economy suggests that the summit could deliver some changes and help boost growth.

A record number of emerging countries participated and the topics were in line with the interests and needs of emerging countries and they were also consistent with the trends of world development. The Hangzhou summit—with the participation of more emerging countries than ever in the history of G20 was more representative and inclusive in its composition.

The G20 Hangzhou Summit is on track to yield more fruits than previous summits.  Promoting G20 cooperation is needed to implement the 2030 Agenda for Sustainable Development which commenced this year.  Adopted at the UN Sustainable Development Summit last September, the Agenda is a forward-looking blueprint and a powerful written commitment.  But setting the goals is only the first step.  It must be followed through with the hard work and cooperation of all countries.  As a major platform for international economic cooperation, the international community expects the G20 to play a leading role in this respect.

Promoting G20 development cooperation is crucial for tapping into new potential for world economic growth.  As global economic growth, trade and investment remain sluggish and the macro-policies of major economies diverge, new inequalities and imbalances in development could emerge.  There is tremendous potential for the development of emerging countries which is like a blank slate.  Tapping into this potential could unleash immeasurable power for growth and promote a global economic recovery.

Inclusive and interconnected developments deals directly with development issues, facilitates coordinated progress among various economies, promotes the win –win development of all industries and enables people in all the social strata to share in the prosperity created.

The G20 will advance cooperative initiatives on supporting industrialisation in African countries and the Least Developed Countries to help accelerate industrialisation in these countries and reach the poverty reduction and sustainable development goals.

Discussion topics included agriculture, employment, inclusive business and other wide-ranging issues, climate change, issues related to women, youth and small farmers, agricultural innovation and sustainable development and the relationship between macro-policy regulation and job creation, entrepreneurship and innovation.

Innovation was one of the major topics in the Summit, in the hope that innovation can serve as a new driving force for the world economy.

Emerging countries can no longer continue to look to the Superpowers to fund their priority needs.  They must look to create new revenue streams from domestic resources at the same time avoiding piling more debt onto an already extensive pile of debt.  Yet they still have many valid socio-economic development needs.  How can these be financed in light of the sluggish world economy and dwindling foreign aid?

One way in which this could be done is through Innovative Financing for Development (IFD).  There are global organisations working in the Innovative Financing for Development space that are dedicated to the socio-economic development and social transformation of emerging countries that work with government to provide solutions for them to implement their own funding mechanisms.

These companies assist emerging countries to set up IFD financing mechanisms based on the country’s own resources.  Micro-contributions are levied on globalised sectors such as telecommunications and financial transactions and when aggregated, these can provide significant additional revenues for the government. The companies work with multilateral institutions to find a perfect match between the country’s specific requirements, as well as the revenue streams to fund their development projects.  However, to be successful, the IFD process must be properly implemented through the following three phases: resource mobilisation, revenue assurance and revenue utilisation.

This is an innovative, targeted and powerful approach and represents a huge opportunity for any emerging country to invest funds in healthcare, agriculture, industrialisation to combat poverty, revitalise the agricultural and manufacturing sectors.

The G20 stresses a broader concept of development .  While making feasible action plans to tackle development issued based on member’s own comparative advantages and added value, it also calls for an economic perspective and explores the relationship between growth and development in multiple dimensions.

The development perspective was the thread running through all the key agenda items of the G20 this year, including macro-economic policy, international trade and investment, innovation in growth models and global economic governance.

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