Explaining G8 Effectiveness in the Approach to the New Millenium

Professor John Kirton
University of Toronto
Toronto, Canada

3. Causes of G8 Effectiveness

The causes of the G7's growing effectiveness as a centre of global governance lie in the four foundations of the concert equality model of G7 performance – equalizing capabilities, intensifying interdependence activated by crisis, common principles and problems, and multi-level political control.

The concert equality model predicts, firstly, that Summit success emerges when America is rendered multilaterally-inclined and modest rather than egocentrically triumphant by the superior economic performance of its G7 partners. Thus, as Table H shows, high Summit success of the 1970's came as American growth was exceeded by that of commodity-rich Canada, Japan and Italy and equaled by that of France. The poor performance of the early 1980's came as the US moved toward its Reagan revival ascendancy from 1983 to 1985. But Summit success returned with the more modest America of 1986-1991. The return of American primacy in 1992 and 1993 may help explain the failure of Naples, while the equality of Halifax 1995 underlay the achievements of that year.

A similar portrait emerges more sharply by examining America's share of G7 capabilities measured by GNP at current exchange rates each year. As Table H indicates, the US share fell from 45.5% to 41.1% from 1975 to 1980, jumped to 51.7% by 1985, and then fell steadily from that peak to 38.2% in 1995. Since then the US has experienced a second if much milder "Clinton" restoration, increasing to 42.1% by 1997. This recent rise set the stage for the damaging triumphalism President Clinton displayed at Denver that year.

The importance of equal and equalizing capabilities is further evident through an examination of the specialized capabilities most relevant to the continuous core areas of the Summit agenda. While America has always led in absolute GNP and by a wide margin in virtually all financial indicators, it has not done so in either of the other two – trade and ODA. In trade, Germany has had an occasional lead. And by 1997, as Table J shows, even with the US again in first, there is substantial equality across the seven (who collectively, without exception, lead the world). It is in trade that the G7 has been highly successful, both in reaching co-operative agreements and above all in securing national compliance. In development, as Table K shows, equality is even more pronounced, as America's loss of primacy in the 1990's has set the stage for the G7's achievements in this area over the past decade. Similarly, successful Summit co-operation and compliance over the past decade in assistance to the former Soviet Union and the environment (as with energy before), can be explained by the leading capabilities deployed, respectively, by Germany (on a per capita basis) and Canada in these spheres. Thus, even at moments of overall US primacy, as at Denver in 1997, co-operative success tends to come in those areas – Africa, the environment, Russian participation – where America is most equal.

This issue structure model not only explains the pattern of Summit performance by individual issue area. It also provides a foundation for overall equality in a forum where the agenda is comprehensive and issues are often inherently, epistemically, or tactically linked. Carefully constructed tactical linkage can lead to the great package deals as featured at Bonn 1978. Other forms of linkage lead, more routinely, to member countries mobilizing different capabilities – market access, debt relief, financial assistance – to accomplish a shared objective.

These structural factors provide a powerful if crude underlying cause of high Summit performance. Activating this heterogeneous constellation of equalized capabilities is the high, broadening and equalizing interdependence and resulting intervulnerability among G7 members, at times rendered acute by crises within or without. Such interdependence is taking place on a global rather than regional basis, reinforcing the centrality of the G7. To be sure, the major moves in European monetary integration, APEC, NAFTA and the FTAA have provided a powerful thrust toward the regionalization of the world economy. (Kirton 1997a, Kirton 1997b, Weintraub 1997). However the members of the G7 remain heavily dependent on trade relations with one another, even as their economies generally become more open to international trade. As Table L indicates, from 1975 to 1990 G7 members trade with one another increased from about 50% to 75%. Despite a small decline since, especially for the EC, it has remained at levels much higher than those of 1975. As Table J shows, all G7 economies have become more internationally open and trade dependent over the past half decade, a component of G7-driven policy globalization which is transforming this transregional interdependence into intervulnerability. Such trends are highly likely to continue. In the case of the US, the share of GDP accounted for by trade rose from 10% in 1970 to 15% in 1980, 23% by 1996 and a projected 34% as the new millenium opens (USTR 1997). Reflecting the leadership by G7 members other than the US, even in some financial domains, and the effective equality in burden sharing on a transregional basis to prevent systemic crises (Kindleberger 1973), were the contributions in the Asian financial crisis second line of defense: Japan US$ 10 billion, the US $5 billion, each of the four European G7 members $1.25 billion, and Canada up to $1 billion.

More importantly, over the long term, as market opening extends to deeper integration behind borders, and involves microeconomic and social policy in the 1990's, the interdependence among G7 members is increasing (Lawrence et al. 1996). As Table M shows, from the early 1980's to 1994, the share of the stock of G7 member's FDI within the group rose rapidly, particularly after 1990. The largest 1990's gains were not regional but trans-oceanic, as the US-Canada share decreased substantially, the US share to the EU, Germany, France, Italy and, above all, Britain grew, and as Japanese, German, British, French and Italian shares to the US increased.

More broadly, the growth of G7-guided globalization in the 1990's has increased the exposure of G7 governments and citizens to inflows from abroad of several new human security threats– infectious disease, illegal migration, money laundering and drugs, other transnational crime, and environmental stressors (Kirton 1993). In some cases, such as transnational crime, the sources, recipients and flows of the threats are largely intra-G7. In many other cases they involve outside members. In all cases, however, it is difficult to envisage autarkic border defenses by G7 members to defend against these new threats to human security. And it is the G7 members collectively who alone have the capacity to lead a co-operative international response.

The intervulnerabilities created by cascading G7-centered globalized interdependence are often dispersed and incremental, and hence politically invisible, in their impact. Proactive and preventative G7 agreement is thus often difficult to achieve. It is only when such process acquires acute attention, urgency and force at times of crisis or shocks that a strong and effective reactive G7 response is forthcoming. Moreover, effective G7 action is most likely in the face of a second shock – a crisis highly similar to one experienced by G7 members in the proximate past, but to which the G7 did not respond with a co-ordinated action, with costly consequences for all (Kirton 1989). It is these second shocks, such as the 1973 and 1979 oil crises, rather than the old consensus of a more than half-century distant depression, war and embedded liberalism, that provide the catalyst and reference point for collective action, and overcome the traditional differences or false new consensus that might otherwise prevail (Putnam and Bayne 1987, Bergsten and Henning 1996). Thus, the 1997-8 Asian economic crisis has received a substantially more effective collective response than the 1994 Mexican peso crisis that preceded it.

Reinforcing the ease of communication consensus formation and co-operation, providing a core reference point and theory for the form co-ordination should take, and offering a powerful catalyst for G7 agreement is the profound reservoir of common principles that G7 members share. The crisis-bred commitment to defend the values of a democratic polity and market economy within the G7's core area, and to extend these principles as the dominant form of domestic governance globally was and is the ultimate raison' d'être for the G7's creation and continuation. These have been reinforced by additional values, such as international openness, human rights, and environmental protection. At present they are further strengthened by a common commitment to providing a floor of social welfare and equity among their citizens in the face of common policy problems, such as the burden on public pension systems caused by aging populations.

A final feature fostering high levels of G7 performance is the effective use of the unique feature of the G7 as an institution controlled by popularly and democratically elected political leaders. These features allow leaders to create the cross-issue and cross-regional linkages that create Summit solidarity on the basis of diffuse reciprocity. At the same time the proliferation of ministerial forums engenders the detailed management of once domestic but now transnational issues. It further enhances the implementative and surveillance capacity that increase national compliance with leaders' commitments (Kokotsis 1998, Kokotsis and Kirton 1997).

Most generally, as in the case of crime and employment, they allow the lateral integration of long separated functions, and, as in infectious disease, the integration of international and deeply domestic practices. Promising a major advance in this feature of growing political control is the Birmingham model of Summit reform, with its leader's only format, prior individual and joint meetings of finance and foreign ministers with both a stand-alone and preparatory agenda, meetings of the ministers with the heads of the three major multilateral organizations, and a serious meeting of G7 leaders immediately prior to the opening of the new G8.