The G-20 which was established in Germany in 1999 has its missions on strengthening the international financial structural design and the promotion of sustainable economic growth and development between the developed and developing countries.
The group is made up of 20 members – Australia, Argentina, Brazil, Britain, Canada, China, Chile, France, Germany, India, Indonesia, Italy, Japan, Russia, South Africa, South Korea, Saudi Arabia, Turkey, the United States and the European Union – where strategic economic significance was used in choosing of these countries.
The economic bloc which made up the two-thirds of the world population has a combined 85% of GNP and has the 80% of share of the world trade, is facing a heated debacle nowadays on the in the midst of the impending world financial crisis.
Members who are from the developing countries fear that the thrust of the group is swaying into providing recovery measures to the devastated economy of the developed countries like the US as the primary task, to their expense.
Furthermore, current protectionist schemes by the developing countries to revive their local economies are blocking the exports products of the developing countries which will result to big trade deficits to the weaker economies.
The direction of the group which serves for the mutual economic cooperation and benefits of both the developed and developing countries in the world has been altered by the effects of the economic downturns. Retraction of foreign capital and investments in the developing countries and the pathetic plight of exports before the tax barriers and quotas of the developed countries have left the developing countries paddling on troubled waters.
Seemingly, developing countries have no resources to finance their survival and they are making desperate efforts for the stronger members to heed to their appeals.
The world economic crisis will intensify in the next few months and will directly hit the developing countries as they are the weakest link in the global financial chain. More on the G20 can be found in this New York Times article and in this The Guardian story.
After the US economy dipped for months that economists have even compare it to the experience in The Great Depression in the early decades 20th century, it is highly possible now that the recession will fall upon the feeble economies of the developing countries as withdrawal of investments and the shrinking of economic trade and credit lines by the struggling economic giants of the West are being felt in the developing countries. US firms and companies would soon concentrate its investments in the US to revive its ailing economy. Likewise, foreign investors would do same for the interests of their mother countries.
On the other hand, the World Bank has been encouraging developed countries to dish out a very small amount of money from their recovery fund to equalize the devastating effects of the looming crisis in the developing countries. A new Vulnerability Fund out of 0.7 percent from every stimulus package of the developed countries will be a big relief.
To finance the Vulnerability Fund is not a heavy financial burden to the developed countries. This aid will help the developing countries from the possibilities of jobs retrenchment and reduction of wages that are not beneficial to the economies and more particularly to the millions of people in the world. See this article for more.
The percentage could be increase to strengthen the move to offset economic havocs in the developing countries and thus, avoiding political and social turmoil.
Developed countries should consider this option because they will have many vulnerable markets to invest in the future if the possibility of unrest spread out in the almost two-thirds of the states in the world.