We have launched our policy brief, “Divided we fall: can the G20 save globalisation?” 

In the last week we have also had two excellent and well-attended events on the theme of this important summit.   In Brussels, Andre Sapir, Sharon Bowles MEP and Emil Paulis discussed the role of enhanced regulation in building a more secure framework for global finance.  In London, Vince Cable, Roland Rudd and Gillian Tett ranged widely over issues including the future shape of banking, the possibility of a global fiscal stimulus and comparisons with the ‘lost decade’ in Japan.

We make no apologies for treating the G20 as so important.  Global coordination is essential for both resurrecting and then rebuilding the global economy.  CentreForum has published widely on globalisation and related issues (for example, find our book of essays here).  Free movement across borders of goods, capital and people has generally proven an effective way – arguably the only way - of spreading capital, technology and thereby prosperity across the globe.  Countries that have tried to find ways of shielding themselves from international pressures have fallen behind those that looked to exports as the way forward – see these comparative figures for Argentine and South Korea as an example.

There are great risks in the current financial crisis, but perhaps none greater than it forcing embattled governments worldwide to turn inwards: to the false comfort of domestic finance, home-protected industries, regulations designed for purely national interests , a beggar-thy-neighbour free-riding approach to fiscal and monetary policy, and a stubborn attachment to global institutions from the 1950’s. Nations that picked the wrong economic model have subjected their populations to decades of stagnating living standards.   But while free market capitalism is the best system around, it needs a continuously evolving set of liberal institutions to control its inherent instability. When finance becomes global, so should the framework that makes it possible. That is what the G20 is for. 

The debate about the agenda for the G20 has raged to and fro in the last few weeks.   Some areas we identified – such as a need for coordinated fiscal action – have moved further from agreement.   Others, like a decision to recapitalise the IMF, attract more consensus.  Our view about reform of the IMF is echoed widely elsewhere (see Brookings paper). The BBC is similarly alive to the long term issue of world structural imbalances. 

Meanwhile, new ideas, such as this from John Gapper on the need for a planned system for cross-border bailouts, are coming forth continuously. Kevin Rudd joins a small club of people (like Brad DeLong) applauding the Geithner plan and calling for similar action worldwide (if you want to agree with Rudd, don’t read too many Krugman posts like this).  

We will be continuing to monitor the G20 process – for it is a process, not a day of photo-calls – over the next few months, with more events and publications.