Globalization is getting increasingly bad press in the West nowadays. Populist movements allege that it does not benefit the average citizen very much, if at all. Instead, they tout protectionism and unilateralism. National policies, whether with respect to trade or financial regulation, are seen as the surest way to restore national greatness.
But this populist agenda is based on the deeply flawed premise that international cooperation and international trade are zero-sum games, producing only winners and losers. In fact, cooperation and trade can deliver benefits to all countries. For many years now, they have increased global security and certainly global prosperity, with hundreds of millions of people lifted out of poverty, both in the developed and the developing world.
To be sure, globalization needs rules and a recognized framework to ensure that it benefits everybody, delivering sustained and inclusive economic growth. As with national legislation, it is a framework that requires constant adjustments. But to abandon it altogether and retreat from globalization is the wrong answer. On the contrary, we should be seeking ways to deepen and broaden international economic cooperation.
In my view, the G20 is the best forum for increased and inclusive cooperation. Of course, the G20 is not perfect, but it is the best institution we now have for achieving a form of globalization that works for everyone. Through it, the world’s main industrialized and emerging countries have worked together toward constructing a shared global order that can deliver increasing prosperity. Indeed, the G20 is the political backbone of the global financial architecture that secures open markets, orderly capital flows, and a safety net for countries in difficulty.
The G20 has achieved much in recent years, including better coordination on financial regulation and international taxation. And, as the country that holds the G20 presidency this year, Germany is committed to continuing the important work begun under our most recent predecessors in China and Turkey.
For example, more needs to be done to strengthen the global economy’s resilience against sudden shocks. So one of the G20’s top priorities this year will be our work to prevent a recurrence of a global financial and economic crisis like that of 2008-2009, which stemmed from a myopic, debt-based growth model.
But, in order to tackle the gulf between the richest and the poorest countries, we need to go beyond the G20. In particular, the G20 – indeed the entire world – must reach out to Africa at this critical moment in the continent’s development.
Beyond the moral question of raising Africans’ living standards, the continent’s development is crucial to reducing geopolitical risks. But investment in Africa is still low, depriving people in African countries of opportunities to improve their lives.
For these reasons, the G20 during the German presidency is working to intensify its partnership with Africa. A central pillar of this effort is the “Compact with Africa,” which provides a framework for supporting private investment, including in infrastructure. We propose that, with the G20’s political backing, African governments, international organizations, and bilateral partners prepare comprehensive, country-specific investment compacts to encourage private-sector investment. Each country is to implement a bespoke package of measures to decrease its investment risks.
Essentially, the Compact with Africa is a contribution to implementing the African Union’s Agenda 2063 blueprint for economic development. That AU agenda provides guidance for improving macroeconomic, business, and financial frameworks across the continent.
While the Compact with Africa is open to all African countries, five have already committed to pioneering this new approach: the finance ministers of Côte d’Ivoire, Morocco, Rwanda, Senegal, and Tunisia want to work on compacts and have expressed this in writing. I have invited them to attend the G20 Finance Ministers and Central Bank Governors meeting on March 17-18 in Baden-Baden.
At that meeting, my G20 peers and I will offer these countries an international platform to present their plans. We want to discuss with them, and the heads of the African Development Bank, the World Bank, and the International Monetary Fund, what the elements of country-specific investment compacts could be.
Afterwards, these five countries, together with international organizations and bilateral partners, will select the specific measures and instruments to be included in each individual investment compact. The G20 will provide high political visibility, helping to raise investors’ awareness of these changes. I am confident that significant progress can be achieved when all partners involved work together closely and on an equal footing.
International cooperation is the only way to achieve strong, sustainable, balanced, and inclusive global growth. Germany is committed to do its best as an honest broker within the G20 and beyond to ensure that globalization truly does benefit all.
[Source: The Project Syndicate]
* Wolfgang Schäuble has been Germany’s Federal Minister of Finance since 2009, helping to engineer the country’s remarkable post-crisis growth. He previously served as Minister of the Interior during the governments of Angela Merkel (2005-09) and Helmut Kohl (1989-91), and has been Chairman of Germany’s ruling Christian Democratic Union.