Social Analysis

From its inception in 1999, the G20 was created to provide a “mechanism for informal dialogue in the framework of the Bretton Woods institutional system, to broaden the discussions on key economic and financial policy issues among systemically significant economies and promote co-operation to achieve stable and sustainable world economic growth that benefits all” (3). In an attempt to streamline talks between the Bretton Woods system (the IMF, World Bank and other agencies), the G20 was formed to integrate beneficial policies for global relations between industrial and emerging economies.
Map of sub-Saharan Countries

These Emerging-Market Economies (EME's) have members all across the globe but are predominantly found in East Asia and sub-Saharan Africa. Hit hardest by the economic times is sub-Saharan Africa, a section of countries that houses more than three quarters of the world’s poorest(4). In 2005, the World Bank estimated that over 384 million people were living below the extreme poverty limit of $1.25 a day (5). This is an astounding number and the G20 in cooperation with the IMF and World Bank seeks to eradicate this dilemma.

At its most recent meeting in London this April, the G20 decided on a set of policies and procedures to end the financial distress and embolden the struggling Emerging-Market Economies with much-needed resources. The main goal of these policies was to provide developing markets with enough financing to enable them to navigate out of this global recession while maintaining their Millennium Development Goals (MDG’s) (6). The Millennium Development Goals are a set of eight tasks that “form a blueprint agreed to by all the world’s countries and all the world’s leading development institutions” to galvanize “unprecedented efforts to meet the needs of the world’s poorest” (7). Created in 2000, these goals address some of the world’s most pressing problems such as eradicating poverty, ending gender inequality, creating universal education and halting the spread of HIV/AIDS. The deadline for these goals is 2015 and the G20 in accordance with the IMF, the UN, and many other institutions have designed policies to provide adequate opportunity to accomplish these goals by their aggressive deadline.
G20 Members at the 2009 London Sumitt

The G20 convened to discuss the proper way to allocate funds and create growth policies for the EME's. The response was the infusion of resources on an unprecedented scale. The G20 committed over $1.1 trillion in support and concessional lending to the poorest developing countries. In addition, the G20 also bestowed $750 Billion on the IMF to support growth in Emerging-Market Economies “to finance counter-cyclical spending, bank recapitalization, infrastructure, trade finance, balance of payments support, debt rollover, and social support” (8). These funds will be used to restore confidence and create opportunity for these struggling nations.

The allocation of this funding to the developing countries is based on new lending schemes and policies. The G20, IMF and World Bank has pioneered a flexible set of rules, known as the Debt Sustainability Framework (DSF), which provide various types of lending to low-income countries without endangering their financial sustainability (9). This framework will provide lending opportunities for developing nations while allowing them to maintain their nationalistic plan of growth.

Another infusion of funding by the G20 is to contribute $100 Billion to Multilateral Development Banks (MDB’s) (10). MDB’s are “institutions that provide financial support and professional advice for economic and social development activities in developing countries” (11). These banks provide much needed funding to emerging market countries and recently there has been an easing of lending standards enabling more funding to reach these nations.
Poverty Level Comparison with and without China

The implementations of these plans have been effective from a global perspective over the past decade. Poverty rates have consistently fallen in emerging market economies from 42% in 1990 to 26% in 2005 (12). The near halving of poverty rates is due in large part to the formation of the G20 and its interaction with the Bretton Woods Institutions. These numbers signify progress in the right direction yet upon closer inspection; the results are not as impressive. The main catalyst for poverty reduction from 1990 to 2005 was the emergence of China as an up and coming world power. During this period, its poverty rates have fallen 60%. China’s dominant emergence and poverty eradication accounts for the majority of the decrease in global poverty rates. On the other hand, even with all the policies put in place from the G20 conventions, sub-Saharan Africa poverty rates have remained constant at 50% throughout the period. From an economic perspective, this is an enormous problem. Years of funding and aid policies have had minimal effect on reducing poverty rates in the most heavily populated impoverished nations.

Analysts believe that the main driver behind this lack of progress is due to the increased responsibility and allocation to the IMF without consideration of the long-standing policies used by them (13). The G20's reliance on the IMF over the years has created a narrow portfolio for them to disperse their funds. This dependence increased their risk and some analysts believe that improper diversification contributed greatly to the current crisis and is an extremely inefficient means of navigating out of the turmoil (14). A main source of dilemma is the top-heavy approach of allocation and policy. The EU and US are the main contributors to the G20 and it is with these contributions comes the greatest power. The ability of these powers to assert their influence on developing nations through asset allocation and recovery funding instead of redesigning the policies of the implementation of these funds is a substantial problem and main reason why minimal poverty reduction has occurred in sub-Saharan Africa in the last decade.
World Consumption Levels

Amidst this financial crisis, the G20 has taken measures to restore global confidence, increase global cash flows, and to provide much needed funding to developing low-income nations. Their multi-pronged approach incorporates the use of multiple concessional lending policies distributed throughout many institutions and intermediaries. Their attempt to achieve the Millennium Development Goal to eradicate poverty in developing nations is a constant objective in both their short and long-term economic policies. Progress has been made in some areas while in others poverty rates have remained stagnant. Analysts claim many reasons as to why this is yet few can create effective policies to combat these problems. The world is a global marketplace and global problems require global solutions. The G20 attempts to offer these solutions in a fair and efficient manner yet is this really the case?

Theological Analysis

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