The G-8 Who Are They?
The Countries of the G8
The G8, or "Group of Eight," consists of eight large world economic powers. The G7, as the group is sometimes known, lacks Russia
Canada
France
Germany
Italy
Japan
Russia
United Kingdom
United States
History of the G8
How It All Started
In the wake of the economic crisis that broke out in the early seventies, the main industrialized democracies decided – at the invitation of the French Government – to hold a top-level meeting providing an opportunity for an informal exchange of views and for talks on the measures that might be adopted to handle the serious economic and financial situation. That first meeting, which was thereafter to take place every year, was held in 1975, in the Château de Rambouillet, just outside Paris. It was attended by the Heads of State and Government of the main six industrialized countries: French President Valéry Giscard d’Estaing, German Chancellor Helmut Schmidt, Italian Prime Minister Aldo Moro, Japanese Prime Minister Takeo Miki, British Prime Minister Harold Wilson and US President Gerald Ford.
From G6 to G8
The initial purpose of the “Group of Six” (G6) was to join forces to address the mid-seventies economic crises, and the repercussions of the oil shock in particular, and the international monetary system reform necessitated by the demise of the Bretton Woods currency exchange system based on the dollar’s convertibility into gold.
In less than two years, Canada’s admission in 1977 turned the G6 into the G7. The European Community was also invited to attend.
The Soviet Union was invited for the first time to the forums held in parallel with the London G7 Summit in 1991. The new Russian Federation was subsequently brought gradually into the G7 process, until Russian President Boris Yeltsin made his début at the Naples Summit in 1994, thus launching the format dubbed G7+1.
It was the Denver Summit in 1997 that – at the invitation of the United States and the United Kingdom – brought Russia in as a member of the G8 in its own right. The first Summit chaired by Russia was held in St. Petersburg in July 2006.
How the Topics Have Evolved
The topics addressed by the Heads of State and Government at the G7 Summits were largely of an economic and financial nature in the first few years. Even now, the ministers of economic affairs and finance continue to meet in the G7 format, which preserves its own specific focus on their spheres of action compared with the G8.
The agenda subsequently broadened, first in the form of the working parties and ministerial meetings, to take in new topics, such as health and nuclear power.
The Italian-chaired Venice Summit also addressed strictly political issues, such as the military occupation of Afghanistan and terrorism, as full-fledged items on the agenda. As the topics and levels of cooperation have been extended, the final statements issued by the Heads of State and Government at the annual Summits have become increasingly wide-ranging and detailed. The statements are not binding, but they are important because the Heads of State and Government make political pledges at the highest political level, indicating the direction in which they intend to move together on crucial issues, such as finance, development, the environment and security.
With the dawn of the nineties, capital market liberalization combined with the rise of the emerging markets and the complexity of the new global challenges, such as the fight against poverty and development policies, urged the G8 to promote dialogue with the developing countries, and with Africa in particular.
The Summit held in Germany in 2007 saw the launch of dialogue with the major emerging economies – Brazil, China, India, Mexico and South Africa –, which has been dubbed the Heiligendamm Dialogue Process (HDP), on four topics: investment, energy, innovation and development. The final report on the Dialogue Process will be submitted to the 2009 Summit. It will fall to Italy, in its capacity as Presidency of both the G8 and the Heiligendamm Process, to propose the format to be adopted by the G8 for continuing dialogue with the emerging economies.
Its awareness of the global scale of climate change and of the pressing need for action has led the G8 to impart strong political thrust to the issue and actively to involve the emerging economies as well. At the initiative of the United States, the Major Economies Forum (MEF), a form of intensified dialogue among the major world economies, was launched in 2007 with a view to fostering a positive outcome for the UN negotiations on the future post-2012 agreement on climate. There are 16 countries taking part in the MEF: the G8 countries, the five major emerging economies (Brazil, China, India, Mexico and South Africa) and Australia, South Korea and Indonesia.
Towards the New Challenges Posed by Globalization
The G8’s track record from the mid-seventies to the present day has shown that the informal nature of its meetings has fostered an open exchange of views among countries that share democracy and similar levels of development.
The emergence of a world crisis in the financial and economic system in 2008 now poses a major new challenge for the Group of Eight, which, under the Italian Presidency, is being called upon to discuss a new form of world governance, based not least on a new, better-structured form of dialogue with the major emerging economies.
G8 summit: lessons in stimulus versus austerity around the G8
Stimulus or austerity: which path should Europe take? Friday's G8 summit at Camp David will offer European leaders an opportunity to take some well-informed advice on how to best tackle the financial crisis.
US recovery and stimulus
The United States has twice used financial
stimulus to stimulate growth. President Bush reacted quickly in early
2008 to bring in a $158bn package of tax cuts, while Obama followed this
up with an enormous $787bn package within days of his inauguration.
The situation in Europe is likely to dominate the two-day talks this week, as
political uncertainty in Greece fuels speculation that it could be forced to
leave the Euro.
New French president Francois Hollande and his German counterpart Angela Merkel are likely to find themselves at loggerheads over the best way to lead Europe from the crisis.
Hollande (who is making his G8 debut) was elected earlier this month on an anti-austerity platform and has campaigned to introduce spending measures to encourage growth.
Merkel believes they must stick to an European treaty which enforces firm budgetary discipline.
The leaders' growth-versus-austerity debate echoes the rising discontent across the Eurozone, as poorer countries struggle to meet the treaty's exacting demands.
Nowhere is this more tangible than in Greece, where the radical Syriza party
threatens to renege on the even stricter terms of an international bailout,
if it gains a majority in next month's elections - a move that could force a
Greek departure from the Euro.
But Hollande and Merkel would do well to listen to the advice of their fellow leaders at the summit, who have experience of both tactics - with varying success.
The US, this year's host, will be keen to ensure that these financial woes stay firmly on the other side of the Atlantic.
The Americans have turned repeatedly to financial stimulus to stimulate growth. The first move, a $158bn package of tax cuts, was signed into law by President Bush with bipartisan support.
Days after Obama's inauguration in January 2009, a second stimulus package worth an enormous $787bn was pushed through without a single Republican vote. The American Recovery and Reinvestment Act has paid out more than $755bn so far, details of which can be tracked at this website.
Shortly after, the US economy made a strong recovery, growing by 3.8% in the third quarter of 2009 and 3.9% in the fourth.
But the growth has faltered, falling to only 0.4% in early 2011, and despite the money being pumped into the economy, joblessness continued to rise for many months.
By October 2009, it was 10% - double what it had been eighteen months before. Only in the most recent months has it finally begun to recede.
In the UK, we have seen a very different picture. Unemployment has risen up a far gentler slope, but has doggedly continued northwards.
The most recent figures for both countries show the US unemployment rate dipping below the British rate for the first time since before the crash.
This has been an unwelcome result of the UK slipping back into recession, to the horror of the Coalition government.
While former Prime Minister Gordon Brown had embraced Keynesian ideas of stimulus - introducing a £20bn package in November 2008 - the Coalition have taken a very different tack.
Government departments were immediately asked to plan budget cuts of up to 40%, in a bid to tackle the growing deficit.
However, results have been mixed. In the fourth quarter of 2011, growth slipped into negative figures - with many warning that some of the heaviest cuts to funding and jobs are yet to take into effect.
A return to recession will have knocked Chancellor George Osbourne's confidence - he had forecast growth of 2.5% by 2012 - but he has shifted blame onto Europe. “The Euro-zone crisis is very serious and it’s having a real impact on economic growth across the European continent, including in Britain," he said on Tuesday.
Also around the G8 table will be two countries which have reaped very different rewards from the same tactics.
Canada has become something of a poster child for strict austerity, after the astounding success of Liberal Prime Minister Jean Chrétien's "bloodbath budget" of 1994.
When Chrétien took office in 1993, the country was in very poor economic shape. By the following year, the budget deficit was running at around 9% of GDP, and gross debt had reached more than 100% of GDP.
So Chrétien and his finance minister Paul Martin took a tough love approach, cutting government spending by 15% in real terms between 1994 and 1995, and from all areas - including health and education.
Thousands of public and thousands in the public sector lost their jobs.
But the risk paid off. The budget was brought back into surplus in only three years, while the booming private sector more than made up for the losses in government jobs.
But the Europeans - including Mr Osborne - should remember that the Canadian experiment took place in a completely different environment to that of today. The global economy was strong, including the neighboring US, which boosted consumer demand.
And Canada's success was unusual.
An International Monetary Fund study looked at more than 170 fiscal policy changes in developed countries, and found that a reduction in budget deficit tends to result in reduced output and increased unemployment.
During the same time frame Japan took the opposite tack, turning to fiscal stimulus to prop up an economy battered by the bursting of a property bubble and a stock market which had dropped 60% in three years.
Over the next decade, a succession of governments spent billions on public works, loans for small businesses, income tax cuts and telecommunications projects. The many stimulus packages are well documented in this post in the Wall Street Journal.
But while the economy grew reluctantly in fits and starts over the decade, the national debt exploded from 68% of GDP in 1990 to 142% in 2000, and to 233% in 2011 - hardly an efficient use of funds.
Merkel and Hollande would be well advised, therefore, to draw heavily on the experience of their fellow leaders as they battle it out between German austerity and a new French enthusiasm for spending their way into safety.
But Hollande and Merkel would do well to listen to the advice of their fellow leaders at the summit, who have experience of both tactics - with varying success.
The US, this year's host, will be keen to ensure that these financial woes stay firmly on the other side of the Atlantic.
The Americans have turned repeatedly to financial stimulus to stimulate growth. The first move, a $158bn package of tax cuts, was signed into law by President Bush with bipartisan support.
Days after Obama's inauguration in January 2009, a second stimulus package worth an enormous $787bn was pushed through without a single Republican vote. The American Recovery and Reinvestment Act has paid out more than $755bn so far, details of which can be tracked at this website.
Shortly after, the US economy made a strong recovery, growing by 3.8% in the third quarter of 2009 and 3.9% in the fourth.
But the growth has faltered, falling to only 0.4% in early 2011, and despite the money being pumped into the economy, joblessness continued to rise for many months.
By October 2009, it was 10% - double what it had been eighteen months before. Only in the most recent months has it finally begun to recede.
In the UK, we have seen a very different picture. Unemployment has risen up a far gentler slope, but has doggedly continued northwards.
The most recent figures for both countries show the US unemployment rate dipping below the British rate for the first time since before the crash.
This has been an unwelcome result of the UK slipping back into recession, to the horror of the Coalition government.
While former Prime Minister Gordon Brown had embraced Keynesian ideas of stimulus - introducing a £20bn package in November 2008 - the Coalition have taken a very different tack.
Government departments were immediately asked to plan budget cuts of up to 40%, in a bid to tackle the growing deficit.
However, results have been mixed. In the fourth quarter of 2011, growth slipped into negative figures - with many warning that some of the heaviest cuts to funding and jobs are yet to take into effect.
A return to recession will have knocked Chancellor George Osbourne's confidence - he had forecast growth of 2.5% by 2012 - but he has shifted blame onto Europe. “The Euro-zone crisis is very serious and it’s having a real impact on economic growth across the European continent, including in Britain," he said on Tuesday.
Also around the G8 table will be two countries which have reaped very different rewards from the same tactics.
Canada has become something of a poster child for strict austerity, after the astounding success of Liberal Prime Minister Jean Chrétien's "bloodbath budget" of 1994.
When Chrétien took office in 1993, the country was in very poor economic shape. By the following year, the budget deficit was running at around 9% of GDP, and gross debt had reached more than 100% of GDP.
So Chrétien and his finance minister Paul Martin took a tough love approach, cutting government spending by 15% in real terms between 1994 and 1995, and from all areas - including health and education.
Thousands of public and thousands in the public sector lost their jobs.
But the risk paid off. The budget was brought back into surplus in only three years, while the booming private sector more than made up for the losses in government jobs.
But the Europeans - including Mr Osborne - should remember that the Canadian experiment took place in a completely different environment to that of today. The global economy was strong, including the neighboring US, which boosted consumer demand.
And Canada's success was unusual.
An International Monetary Fund study looked at more than 170 fiscal policy changes in developed countries, and found that a reduction in budget deficit tends to result in reduced output and increased unemployment.
During the same time frame Japan took the opposite tack, turning to fiscal stimulus to prop up an economy battered by the bursting of a property bubble and a stock market which had dropped 60% in three years.
Over the next decade, a succession of governments spent billions on public works, loans for small businesses, income tax cuts and telecommunications projects. The many stimulus packages are well documented in this post in the Wall Street Journal.
But while the economy grew reluctantly in fits and starts over the decade, the national debt exploded from 68% of GDP in 1990 to 142% in 2000, and to 233% in 2011 - hardly an efficient use of funds.
Merkel and Hollande would be well advised, therefore, to draw heavily on the experience of their fellow leaders as they battle it out between German austerity and a new French enthusiasm for spending their way into safety.
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