G7 Countries

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G7 Countries

In the 1970s, declining economies and a worldwide recession sparked a series of informal meetings among leaders of the world’s major economies. In April 1973 the finance ministers of France, the United Kingdom, West Germany, and the United States met in Washington, D.C., to discuss ways to stabilize their economies and the failing international economic order. Two years later, in 1975, as the Western nations faced an oil crisis, trade deficits, unstable national currencies, the proliferation of weapons of mass destruction, threats of war, and chronic unemployment, the president of France requested a gathering of leaders from the industrialized nations. The meeting, intended to discuss ways to circumvent the bureaucratic conflict and economic nationalism hindering international economic cooperation, took place in Rambouillet, France, in November 1975. Present were the heads of government of France, Italy, Japan, the United Kingdom, the United States, and West Germany. The group became known as the Group of Six (G6). The following year, Britain, Canada, France, Germany, Italy, Japan, and the United States met as the Group of Seven, commonly referred to as the G7. The subsequent annual meetings of the G7 provided a forum in which leaders of the seven nations could discuss and coordinate actions on economic and commercial matters.

FROM THE G7 TO THE G8

The G7 became the G8 in 1998, when Russia was admitted formally to the group (it had been participating in summit meetings since 1994). Since 1998, G8 summits have extended their agendas beyond discussions of macroeconomic issues to include wider discussions of global economic concern, including microeconomic issues and regional security, transnational issues such as the environment, drug trafficking, and human rights. The G8 was criticized by emerging nations for forming an elite and undemocratic alliance in which policies were formulated by wealthy nations and then imposed upon the rest of the world. Developing nations protested that their interests were not addressed during the G8 meetings. These criticisms resulted in the formation of the Group of 20 (G20) in 1999. The G20 consists of finance ministers and central bank governors from nineteen industrialized and emerging market countries plus the European Union. The International Monetary Fund and the World Bank also participate in G20 meetings on an ex-officio basis. The G20 nations include the G8 plus Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea, and Turkey. The establishment of the G20 was intended to open up an informal dialogue on international financial affairs among a broader group of countries than the G8 alone.

Despite its noninclusive nature, defenders of the G8 contend it has promoted the global economic good. From this perspective, the G8 is responsible for stabilizing the international monetary system after the collapse of the limited gold standard. Some observers, including the former U.S. president Ronald Reagan, believe the G8 underwrote capitalism’s victory in the cold war. The topic upon which the G8 has had the greatest influence is trade. During summit meetings leaders are able to collaborate on political and economic decisions. The influence of the G8 on multilateral trade negotiations resulted in the formation of the General Agreement on Tariffs and Trade 1994 (GATT 1994) and the creation of the World Trade Organization (WTO) in 1995. The G8’s primary role is to expand the realm of capitalism, and one of the most enduring legacies of the G8 is the expansion and maintenance of mutual trust among the member nations. The G8’s stated goal has shifted over time from a forum dealing essentially with macroeconomic issues to an annual meeting with a broad-based agenda that addresses a wide range of international economic, political, and social issues.