Global growth is subdued and the outlook is not improving quickly in a sufficient amount: the International Monetary Fund has revised down its global growth forecasts repeatedly over the last 2 years. Many nations are struggling to generate enough jobs for their people.
The G20 Leaders' Summit that convenes in St Petersburg today will address the world's economic challenges. This year, focus will shift away from dealing with unstable financial markets, fiscal crises and still a possible break-up of the euro, and towards collective efforts to rebuild confidence and boost growth, reducing unemployment and improving quality of jobs to create improved opportunities for all.
As such, this Summit is a golden opportunity to perform two urgent tasks: bring the global economic agenda's focus back to adopting policies and measures that may have tangible impacts on people's every-day lives; and reconnect policy-making with people.
Many countries have relied heavily on the policies to support their economies, particularly in the result of the global financial crisis. Coordinating policies to make the most of growth and reduce unintended effects would remain a central role of the G20 in 2014. Other than we also need new approaches to ensure development is sustained in the years ahead. It is the only way to bolster confidence and generate employment opportunities. It is the only long-lasting way to lift people out of poverty and build national prosperity.
Achieving this would not be easy. The key is for governments to enable private sector to drive economic activity. Only private enterprise may deliver the sustainable development in investment, trade and job creation that the world requirements.
Strategies to Stimulate the Growth
In September 2013, G20 Leaders in St Petersburg committed to develop comprehensive growth strategies by Brisbane summit in 2014. These commitments would be encapsulated in a 'Brisbane Action Plan'. This challenge for 2014 is to turn that commitment into results. To be effective, these growth strategies will need to include practical actions to get better productivity and competitiveness, strengthen investment in infrastructure, encourage trade, make it easier to do business and boost employment. Individual country reforms would need to be complemented and strengthened by similar actions by all G20 members.
Building Global Economic Resilience
Adding to addressing the growth challenge, G20 has an important role in ensuring that international and domestic economic policies work together to immunise global economy against future shocks. The G20 has established a wide-ranging work program to manage global economic and financial risks. Implementing these commitments would complement the G20's growth agenda to make sure growth is strong but sustainable in the long term.
The financial crisis has profoundly changed economic landscape and shown, in excess of ever, the requirement for both advanced and developing economies to work together more closely to tackle global problems.
With advanced economies, particularly in Europe, continuing to show weak economic prospects and the larger emerging economies showing signs of economic deceleration after several years of strong growth, G20 leaders would not be short of agenda items. Though, as The Global Competitiveness Report 2013-2014 launched yesterday, highlights, the global economy will find out itself on a more solid footing only by adopting long overdue reforms and investments to enhance productivity levels and raise competitiveness.
Explore the competitiveness tracker.
There is no medicine to address all these concerns. Numerous advanced economies for example Spain or Italy continue to suffer from important competitiveness challenges, as in the emerging economies, especially BRICS, competitiveness levels have stagnated.
But even as the drivers of competitiveness differ from country to country, The Global Competitiveness Report 2013-2014 also finds common factors holding back economical in many of these countries. The lack of a strong and well-organized institutional set-up, along with bureaucratic institutions and high levels of corruption, ranks high on list.
Furthermore, inefficiencies in the functioning of markets due to insufficient levels of competition affect the productive allocation of resources. Rigidities in labour markets hamper countries' ability to get the best out of their workforce.
Innovation is probably the most important factor. The lack of capability to translate ideas into high-value products or services is a concern that increasingly affects advanced and emerging economies. As the innovation landscape becomes increasingly "flat", raising the innovation potential of companies by supporting the generation of new ideas and an enabling business environment is crucial to unlocking productivity, contributing to the rise of global information spill over's, and providing more and improved opportunities for all.
Setting these problems right will need strengthening function of the global financial market, reigniting enhanced competition in the goods markets during increased trade, boosting entrepreneurship measures and clamping down on market-dominant positions. It also means improving functioning of institutions and creating the right environment to advance innovation through investments in education, skills, research and technology.
It will not be easy to adopt these reforms will not be it must be at the top of long-term agenda of the G20. It will need commitment and determination, and political leaders will have to rebalance key elements of their countries' social and economic systems, while winning public support for change. Cooperative leadership among business, government and civil society, both nationally and globally, should set shared objectives around the global competitiveness agenda. If the G20 gets this correct, we may look forward to new and improved opportunities for all.