2010 EAI Special Report_Toward a New Global Governance: Korea and the G20

 

Author 

Yul Sohn, Yonsei University

Seungjoo Lee, Chung-Ang University

Chaesung Chun, Seoul National University

Hong Sik Cho, Soongsil University

 

 

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Executive Summary  

 

The G-20 as an International Institution

 

Following the outbreak of the Global Financial Crisis in 2008, the major economies of the world came together to overcome the crisis and establish a post-crisis order. What emerged from these efforts was the G-20 summit, which is now seeking to enhance its status as a new global governance institution. As the host country of the upcoming G-20 Seoul Summit, South Korea needs to take up this challenge not only to make this event successful but also to devise a strategy for global governance. Therefore, it is important for South Korean policymakers to understand the characteristics of the G-20 as an international institution before establishing a specific action plan.

 

Whereas “Global Governance” (GG) in the twenty-first century still shows the traditional characteristics of institutions dominated by power politics, it is also slowly evolving toward a network-based structure with diversified actors and issue linkages. Informal, flexible, and voluntary, network-based institutions are taking part in what is known as the “G-X” process. Included within the “G-X” process are the G-20 as the premier forum, the G-7/8 which continues to function, and the G-2 that has recently drawn attention from all over the world. If the traditional institutional structure is considered to be GG 2.0 and network institutional structure as GG 3.0, we may then consider the current situation to be GG 2.5.

 

The Fundamental Changes in World Politics

 

GG 2.5 reflects changes in the landscape of twenty-first-century world politics. These changes have been dramatic. First, the distribution of power in terms of global structure has been changing as the power gap between established powers and emerging ones narrows. Manifesting this change, there has been the relative decline of the United States as a hegemonic power, the stagnation of the traditional great powers such as Europe and Japan, and the significant rise of developing countries like China and India. In light of this shift of power, it is becoming increasingly difficult for international institutions to continue to be managed by a few developed Western counties without reflecting the new position of emerging countries.

 

Second, it is well known that the number of non-state actors and their power has increased dramatically in the era of globalization and information revolution. Multinational corporations have expanded their influence through the transnational production network and supply chain. At the same time, the Internet has facilitated the rapid expansion of non-governmental organizations (NGOs). These newly emergent actors now play such an important role that major international decisions cannot be made without their cooperation.

 

Third, it is important to remember that with globalization and information revolution new agendas emerge, such as preserving the environment, combating terrorism, and coping with rising energy demands. A careful observation will show that there are complex linkages among these global challenges. That is why the current financial crisis, which is connected to trade, development, and environmental degradation issues, can hardly be resolved within an existing international institution that is geared only for specific issues. With the fundamental changes in world politics, which include the emergence of a network among diversified actors and linkages among different issues, a new type of international institution is required. Global governance in the twenty-first century has evolved by reflecting these changes in international politics. The G-20 represents these trends.

 

The Evolution of the G-20

 

The G-20 developed over three stages: the launch of the G-20 finance ministers' meeting, the elevation of its status to the G-20 summit level, and subsequent changes. The origins of the G-20 go back to the Asian Financial Crisis, when the organization was initiated as a finance ministers’ meeting. By including developing countries as well as developed ones, the G-20 finance ministers’ meeting created a perspective for the future shape of global governance. Its mandate has always been as a forum for discussing and adjusting international economic policies by embracing the positions of emerging economies, which have traditionally been on the periphery of world politics. The G-20 at that time, however, was more a forum to educate developing countries on neo-liberalism rather than a means of global governance reflecting the interests of both developed and developing countries. From the perspective of liberal institutionalism, the G-20 was an “institution” to solve the problems of the Asian Financial Crisis, whereas from the perspective of realism, it was a tool for “hegemonic engagement.”

 

After the Global Financial Crisis of 2008, the G-20 finance ministers’ meeting was elevated to a leaders’ summit. With this new prominence, the summit’s attendees began to consider how to construct a new order for the global economy. It was essential that this effort reflect the structural changes in the global economy, such as the rise of both China and India, the complex linkage of various issues, and the emergence of a network among diversified actors.

 

Over the process of four summits, the G-20 has made multifaceted efforts to meet the challenges of the Global Financial Crisis effectively and to establish new processes of global governance. In order to tackle the Global Economic Crisis, the G-20 began by focusing on international cooperation to counter the spread of the crisis and curtail further financial meltdown. It gradually expanded the agenda to include the reform of international financial institutions (IFI), sustainable growth, and development issues that were crucial for taking the reins of global governance. In a sign of its new role in tackling complex challenges, the G-20 even included environmental issues that are vital for sustainable global governance. This broadening of the G-20’s scope is indicative of the growing perception among its members that efforts should not be limited to financial issues but rather should also include improving efficiency in global governance.

 

Characteristics of the G-20

 

Following on from the background mentioned above, the G-20 shows four characteristics. First, the G-20 exercises the flexibility of a network institution in terms of membership, agenda setting, and meeting management. Second, in countering the Global Financial Crisis, it has operated as a meta-institution which defines new roles for the G-8, the IMF, and the World Bank. In effect, the G-20 readjusts these existing institutions’ ways of management and reestablishes the relations among them. Third, the G-20 summit has expanded its role to cover multiple challenges, including the global finance, climate change, international development, and political security disputes (for example, comments on the Cheonan incident). The ability to cover such wide-ranging issues shows the flexibility of the G-20. Last, the institutional shape of the G-20 summit can be changed as needed, because it is organized as an informal network.

 

Each of the actors in the G-20 also shows new characteristics. In order to shape the G-20 to be more favorable to their own interests, member states are utilizing knowledge, ideology, agenda setting power, persuasion, and network power. These strengths cause changes not only in the distribution of power but also in the characteristics of global power itself. In this context, soft power and network power are becoming increasingly important determinants of national power. For example, the ongoing discussions on the future model for capitalism can be regarded as a competition using these new elements of national power...(Continued)

 

 

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This executive summary has been translated from the original on October 5, 2010 by Yang Gyu Kim and Stephen Ranger.

The full text in Korean is available here.