Short of expectationsLeaders of the world’s largest economies agreed last week to muster international efforts to counter the unprecedented economic turmoil sweeping economies around the globe.
At the Group of 20 summit meeting in London, world leaders pledged $1.1 trillion to ease the liquidity crisis. They also agreed to commit a combined $5 trillion by the end of next year to stimulate the global economy. The latest meeting, held amid the global economic meltdown, produced considerably more specific details compared with the first G-20 meeting held one year ago.
It is fortunate that consensus was reached despite the conflicts that emerged before the meeting. But the agreement nevertheless fell short of expectations as well as specifics, as the leaders hurried to coordinate and concoct a deal within the 24-hour time limit.
Those involved in the deal failed to outline plans for how each government would expand fiscal spending, prevent increasing trade protectionism, regulate the financial system and increase their commitments to the International Monetary Fund. In order to salvage the global economy and increase prosperity in countries worldwide, the summit should have established a tangible plan of action to back up the basic agreements that were reached.
But the London conference did highlight the growing power of emerging economies.
The world economy is no longer led by the United States and a few other rich Western countries amid the increasing economic power of China and other rapidly developing countries.
The global discussion on how to resolve the worldwide economic crisis has expanded from the usual Group of Seven to a Group of 20, which exemplifies the potent presence of emerging markets.
China, armed with foreign currency reserves of $2 trillion, has emerged as a formidable player on the global economic stage. Russia, India and Brazil have also become too big to be ignored.
The role these emerging economies play in international meetings and organizations on global issues should be modified to better reflect their economic power.
Going forward, we will now see a new world economic map. The authority of an individual economy will depend on its role in and commitment to the global community.
As a key player at the G-20 summit, South Korea is at the center of the evolving economic order. It can, and should, take an active role as a mediator between developing and emerging markets.