Sunday, June 20, 2010

The G20 and MAKTISAS

Why should you care about the G20?

The G20 represents the arrival of the emerging markets!

The 2008 financial meltdown made clear the reality of a multipolar world. The United States, while still the strongest country in the world, ain't what it used to be. And there are a number of new important players in international affairs.

So, even if the meetings produce nothing more than photo-ops and media frenzy, the G20 makes a splash when it meets.

Funny thing is, I have never found anyone who can name the G20. And I'm not just talking about people I meet on the street or even my wonderful students. I'm talking about fellow professionals who teach international affairs for a living.

This is a reflection a few things, I think: (1) The G20 doesn't really do anything. (2) The selection process was arbitrary and membership is already out of date. (3) The group is just too big to be effective (which, by the way, may be by design).

Still, learning who is in the G20 - and who is not - is a good way to get a sense of the mightiest countries on the horizon. Note, however, that the G20 does not actually reflect the largest countries in terms of Gross Domestic Product, so it's important to pay attention to a few countries who are out.

First, who's in?

Let me give you a manageable way to remember them in 4 easy steps:

G7 + BRIC + EU + MAKTISAS

(1)
Start with the G7.
You should already know these countries if you have been paying attention to the world of international affairs for the past 30 years or so. But, just in case, they are:
The United States of America
Japan
Germany
The United Kingdom
France
Italy
Canada


(2) Add BRIC:
Brazil
Russia
India
China


(3) 11 down... so 9 countries to go, right? Wrong!
Only 8 more to go because the G20 only has 19 countries.
The 20th member is:
The European Union.

(4) So who are the remaining 8? They are... MAKTISAS!
M-exico
A-ustralia
K-orea
T-urkey
I-ndonesia
S-audi Arabia
A-rgentina
S-outh Africa



So there you have the G20 in 4 easy steps:

G7 + BRIC + EU + MAKTISAS

No more excuses - this is easy to remember. And don't worry, the G20 has stated it will keep the same membership.

That's good news for remembering these countries... but bad news for global governance. Just like the current international institutions, the G20 is destined to become out of sync with economic reality. Indeed, it's already out of sync.

Who's out? Again - 4 groups:
(1) EU Countries, (2) Other European Countries, (3) The Bad Guy, (4) Good/Bad Guesses

(1) EU countries
There are EU countries that are big enough to be in the top 20, but they're not G20 because there'd just be too many Europeans around the table. Personally, I would like all the EU countries - or at least the Eurozone countries - to unite as one voice. An EU voice would be the largest, most powerful at the table - surpassing even the United States... but that's not going to happen. Germany, France, the UK, and Italy are in, and they don't want to give up their individual seats. Who's out?
Spain
Poland
The Netherlands

(The remaining EU countries are too small - they wouldn't get an individual voice anyway.)

(2) Other European countries
There are two remaining countries of Europe that could have top 20 status (depending on how you measure), but they are not in the G20. The reason is the same as above - there'd be too many Europeans. But unlike the previous group, this group really loses out, because they don't even have nominal representation through the EU seat because they're not members of the EU:
Norway
Switzerland


(3) The bad guy
So here's a game I like to play. Name a country whose GDP (measured in either nominal or PPP terms) is larger than that of G20 members South Africa and Argentina, but who is not in the G20 and is not a country in Europe... At this point, people start throwing out names of countries. I've never had anyone guess right at first, and I often offer the following hint: When I tell you the name of the country, it will be obvious why the country is not in the G20. At this point, clever people get it. The answer is...
Iran

(4) Good/Bad Guesses
Finally, I'd like to list some countries that people often guess and address the merits of those guesses.

Bangladesh & Pakistan: These countries are very poor, so they don't meet the GDP criterion. But their populations are, well, huge. They each constitute at least 2% of global population. These are wrong, but good guesses.

Nigeria: The most populous country in Africa. At nearly 155 million people, it's much larger than South Africa (about 50 million). But South Africa is far richer, and its GDP is thus way bigger. That said, neither of these countries is really a top 20 economy. South Africa is in the G20 to have balanced representation - we want at least one country from Africa.

Egypt: It's got the 2nd largest economy on the African continent after South Africa. So, a good guess for Africa, but no cigar.

Thailand: Excellent guess. It's economy is bigger than that of South Africa in PPP terms (though not in nominal terms). And it's smaller than Argentina... and we needed a country from Africa.

Taiwan: Economically, a good guess. Politically, a terrible guess. Its PPP economy is bigger than that of Saudi Arabia, Argentina, or South Africa. But this country will never play a big role in global governance. The answer in three letters: P.R.C.

Venezuela: Depends on how you measure its GDP. In nominal terms, it's bigger than Argentina. But in terms of what you actually get for your money - Purchasing Power Parity (PPP) - it is not. Venezuela doesn't make the cut. And with Chavez at the helm, well, I wouldn't hold my breath for an invitation - remember, the United States is still the biggest kid on the block.

Israel: I hear this one a lot, but it's a terrible guess. Israel is, of course, strategically important, and because it is a nuclear state, it is militarily powerful. But it's citizens are not that rich (Israel makes the top 30 for GDP/capita, but not the top 20), and its population is tiny (around 100th in the world, making it median-sized). As for its GDP, it is significantly smaller than South Africa or Argentina. Israel is just not even close to being a top 20 economy. The fact that I have heard so many people guess this country shows just how out of sync people are when it comes to Israel's economic weight.

North Korea: Another terrible guess that I hear a lot. Again we have a strategically important country with nuclear ambitions. But this country is small. Just 20 million people... and it is poor! So GDP turns out to be ranked around 100th in the world - this is a median-sized economy.


Now, to conclude, it's useful to go through the countries above one more time, giving a rough sense of their economic size and their population. Together, these two factors can give you a sense of how rich their citizens are: GDP/capita. This variable has been shown to be a powerful predictor of many phenomena, from civil war to the survival of democracy and respect for human rights. I won't give you the exact figures - the point isn't to memorize numbers. Rather, I'll give you a sense of the "order of magnitude" - you should be able to remember the ball park range for the most important countries in the world:

GDP (in PPP terms):

The >14 Trillion PPP Dollar Club
The European Union
The United States
(In that order. See how powerful Europe would be if it could speak with one voice?)

The >10 Trillion PPP Dollar Club
Eurozone
(Still would be a powerful voice.)

The >4 Trillion PPP Dollar Club
China
Japan

The >2 Trillion PPP Dollar Club
India
Germany
United Kingdom
Russia
France
Brazil

The >1 Trillion PPP Dollar Club
Italy
Mexico
Korea
Spain
Canada

The >500 Billion PPP Dollar Club
Indonesia
Turkey
Australia
Iran
Taiwan
Poland
Netherlands
Saudi Arabia
Argentina
Thailand

Note: South Africa is the only G20 country not to make the >500 Billion PPP Dollar Club.


Population (here I list only countries that were discussed above - in most cases, rounded to the nearest 5 million):

The >1 Billion People Club
China (1.3 billion)
India (1.2 billion)

The >500 Million People Club
No one. See, China and India really dwarf the rest of the world when it comes to population.

The >300 Million People Club
United States (310 million)

The >200 Million People Club
Indonesia (230 million)

The >150 Million People Club
Brazil (190 million)
Pakistan (170 million)
Bangladesh (160 million)
Nigeria (155 million)

The >100 Million People Club
Russia (140 million)
Japan (130 million)
Mexico (110 million)

The >70 Million People Club
Germany (80 million)
Egypt (80 million)
Iran (75 million)
Turkey (75 million)

The >60 Million People Club
France (65 million)
Thailand (65 million)
United Kingdom (60 million)
Italy (60 million)

The >40 Million People Club
Korea (50 million)
South Africa (50 million)
Spain (45 million)
Argentina (40 million)

The >30 Million People Club
Poland (40 million)
Canada (35 million)

The >20 Million People Club
Venezuela (30 million)
Saudi Arabia (25 million)
North Korea (25 million)
Taiwan (25 million)
Australia (25 million)

4 comments:

  1. Right, the EU is big in absolute terms and is probably the largest economic power (depending on how you measure it and which exchange rate you use). But the reality is that it is no longer a dynamic economy. I'd like to think of the G-20 as the countries that will matter in the future and respect global governance (so Iran and NK cannot be part of it). Had leaders thought that Europe is still relevant, they would not have created the G-20; they would give the OECD a mandate to deal with the global economic governance.
    From that perspective, I think the membership is balanced, though those who are left out can always make a case...

    ReplyDelete
  2. Great point, Francisco!
    It's interesting to consider the countries that are in the OECD but not the G20, and vice versa:

    In the OECD but not the G20:
    Austria
    Belgium
    Chile
    Czech Republic
    Denmark
    Finland
    Greece
    Hungary
    Iceland
    Ireland
    Luxembourg
    Netherlands
    New Zealand
    Norway
    Poland
    Portugal
    Slovak Republic
    Spain
    Sweden
    Switzerland

    In the G20, but not (yet) the OECD:
    Brazil (Enhanced engagement country)
    Russia (Accession candidate countries)
    India (Enhanced engagement country)
    China (Enhanced engagement country)
    Indonesia (Enhanced engagement country)
    Saudi Arabia
    Argentina
    South Africa (Enhanced engagement country)

    ReplyDelete
  3. Israel, Estonia and Slovenia are also candidates to join the OECD (none of them in the G-20). If the G-20 ever develops a Secretariat, the OECD will be the biggest loser.

    ReplyDelete
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