What Holes Has The Financial Crisis Revealed In The G8 Will The G20 Fill Such Holes - Essay Example
Worldâ€™s wealthiest country; America was the major sufferer of this crisis. In fact many people believe that America was responsible for stimulating recent global recession. The unhealthy lending habits of American banks and the crazy life styles of American public have given momentum to the recent financial crisis. G8 and G20 are two of the major coalitions in the world at present. G20 was proposed by former Canadian Prime Minister Paul Martin in 1999 to deal with international financial matters. Sustainable development is the major theme of G20. It is also interested in solving global energy crisis, economic problems, demographic problems etc. Australia, Canada, Saudi Arabia, United States, India, Russia, South Africa, Turkey, Argentina, Brazil, Mexico, France, Germany, Italy, United Kingdom, China, Indonesia, Japan, South Korea and European Union are the members of G20. On the other hand the Group of seven (G-7) comprises Canada, Germany, France, Italy, Japan, United Kingdom and United states. â€œThe G7 is often referred to as G8 because Russia fully participated in all but financial and certain economic discussions of G7 since the 1998 Birmingham summitâ€. Before the formation of G7, G6 was formed in 1974 by world's major industrialized democracies such as United States, the United Kingdom, Italy, West Germany, Japan and France. In 1975 Canada joined G6 and it became G7. Russia joined G7 in 1997 to make it G8. Since, its formation G8 contributed heavily to global economy. Fratianni, et al (2005) pointed out that â€œThe world without G8 would be more brutish and riskier than it is nowâ€ (p.4). The recent financial crisis has unveiled many of the loopholes in G8 functioning whereas G20 stood well to the challenges raised by the recession. It should be noted that G8 consists of mainly European and American countries whereas G20 consists of countries from Asia also. It is often said that global wealth is currently shifting from America and Europe to Asia at present. This is evident from the fact that most of the prominent Asian countries escaped from recession problems whereas American and European countries are still struggling for survival. In other words, G8 failed miserably in tackling recession problems whereas G20 managed these problems well, mainly because of the contributions of Asian countries. This paper analyses the loopholes in G8 in tackling recession problems and the ability of G20 in filling that loopholes. What holes has the financial crisis revealed in the G8? Even though G8 countries are believed to be the wealthiest countries in the world, recent financial crisis has unveiled the loopholes in the governance of these countries. According to Fratianni et al. (2007), â€œToday, the G8 leaders are dealing directly with central question of how to build better global governance in both public and private sphereâ€ (p.23). As a result of globalization, privatization is taking place at rapid pace in most of the countries. Moreover, governments in G8 countries are privatizing many of the publicly owned companies to stay away from the responsibilities of servicing the people. It is a fact that private capital is essential for the economic growth of a country. However, uncontrolled private capital in critical sectors may bring more harm than good. India like emerging economies is allowing private participation cautiously even though they are following mixed economic policies. On the other hand, China does not allow private capital in critical sectors even though they are doing everything possible to encourage private capital on all other sectors. G8 countries on the other hand allowing private companies to invest at will in all major industrial
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