Developing Countries Join Economic Powerhouses
In one of the most notable and perhaps enduring legacies of the financial crisis, world leaders will announce today that the Group of 20, a consortium of powerful economies but also developing countries, is permanently replacing the G-8 as the main forum for coordinating international economic policy.
On the second day of the G-20 summit in Pittsburgh, the announcement would make clear that the G-20's broader membership better represents the new world economy.
Countries including China, India and Brazil have seen stunning economic growth in the past few years, and their continued economic expansion is viewed as increasingly linked to the future of highly developed economies such as that of the United States and Japan.
As part of this broader group, the G-20 is expected to forge an agreement that would open economies to "peer review," the Wall Street Journal reported.
Major countries are looking to begin the delicate task of withdrawing some of the tremendous financial support governments have provided to stabilize the financial system.
In addition, they're working to come to agreement on new international financial regulations as well restoring some balances to the global economy that might reduce the chances of another crisis.
One area of concern has been the enormous trade imbalance between China and the U.S. that existed before the crisis and continues today. Savings by Chinese consumers were lent to American consumers, who then overextended themselves as they gobbled up houses and flat-screen TVs, sowing one seed of the crisis.
China, which already has enormous debt holdings in the United States, wants the U.S. to borrow less. Likewise, the U.S. wants China to do more to boost consumer spending there.
Posted by: Dermitt | September 26, 2009 12:06 AM | Report abuse
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