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India: G20 overlooks emerging economies

Friday 12 November 2010 - by Andrew Hickley

Taj Mahal in India

The Prime Minister of India has said that the G20 must consider investing in emerging economies, believing such a measure would represent a "powerful signal" to help address global imbalances of wealth while adding clout to the global economy.

Speaking at the plenary session of the G20 Seoul summit, Manmohan Singh said that a workable G20 mechanism for international cooperation must be developed.

He believes that while collective areas such as avoiding competitive currency devaluation and following fiscal consolidation have been established, the idea of investing in areas such as sub-Saharan Africa "had not been sufficiently discussed", despite an improvement in the economic conditions of these countries in recent years.

He believes that there is a strong case for supporting long terms flows towards stimulus investment in these countries, particularly in areas of infrastructure, in order to redress development imbalances.

Singh said: "These countries are now in a position to absorb capital flows aimed at an expansion in investment, which would inject much needed demand into the global economy. Multilateral Development Banks have an important role to play in this process through recycling of global savings. Many emerging market countries are also in a position to attract private investment, including into infrastructure.


"Recycling surplus savings into investment in developing countries will not only address the immediate demand imbalance, it will also help to address developmental imbalances. In other words, we should leverage imbalances of one kind to redress imbalances of the other kind."

Dr Singh said that the G20 would convey a "powerful signal" to markets if they committed themselves to a second stage Mutual Assessment Process aimed at coordinating policies in these areas.

While he stated that this would not be easy, it could make a lasting contribution to a "new style" of global governance if achieved.


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