G20 Legitimacy and Policymaking

Project Information

G20LAP

Grant agreement ID: 845121

DOI

10.3030/845121

Project closed

EC signature date 11 April 2019

Start date 1 September 2019

End date 31 August 2022

Funded under

• EXCELLENT SCIENCE - Marie Skłodowska-Curie Actions

Total cost

€ 319 400,64

EU contribution

€ 319 400,64

Coordinated by

THE UNIVERSITY OF SHEFFIELD
United Kingdom

Periodic Reporting for period 1 - G20LAP (G20 Legitimacy and Policymaking)

Reporting period: 2019-09-01 to 2022-08-31

Summary of the context and overall objectives of the project

This project has examined whether the shift in global economic policymaking from the G7 to the G20 has increased the democratic legitimacy of global governance as well as its ability to address global challenges. While some hailed the inclusion of a broader range of states with the shift to the G20 as a boon to the legitimacy of global governance, others pointed to the continued exclusion of most states in the world. This begged the question whether the more inclusive approach to global economic governance has been successful (or not) and why. In formal terms, the project sought to explain the relation between more inclusive inputs to policymaking and outcomes in terms of global financial governance. Understanding this relation provides policy-relevant insights into how to design the role of the G20 in global governance in such a way that democratic legitimacy and efficacy are maximised.

The key objectives of the project were:
1. To analyse whether the more inclusive approach to global economic governance has been successful (or not).
2. To develop a framework that explains when new inputs into the G20 policymaking process lead to new outcomes and when new input is ‘captured’ by existing dynamics.
3. To make a large set of interviews with financial elites available to the wider research community.

Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far

The project traced several G20 policymaking processes through content analysis of elite interviews and policy documents of the G20 and other governance institutions. In addition, the project analysed a range of indicators to put the institutional features of the G20 in a global perspective and assess its democratic legitimacy.

Analysis of the membership of G-groups demonstrated that the G7 at its establishment and the G20 currently dominate the global economy on various financial and economic indicators. The shift to the G20 seems to have been driven by the G-group role of accommodating rising powers. For example, if its role as financial regulator would have driven the shift, inclusion of financial centres like Hong Kong, the Netherlands and Switzerland would have been warranted. Nevertheless, there was no specific country that consistently ranked better on the various economic and financial indicators. Therefore, we may conclude that the G20 does have the rightful membership in the economic and financial domain to legitimately play its central role.

However, the remit of the G20 has evolved far beyond the economic and financial domain. The project analysed the position of the G20 membership on various indicators related to the main environmental challenges of today, and distinguished countries that are most relevant in terms of responsibility and those that are most vulnerable to detrimental consequences. The G20 membership mirrors the global ranking of relevance with respect to the responsibility quite well. However, the set of countries with the most vulnerability is significantly different from the current G20 membership. In other words, it is more challenging for the G20 to legitimately play a central role in global environmental governance.

These project results indicate that the current institutional setup of the G20 faces challenges in legitimately performing its central role in global governance. To further investigate the implications of this, the project analysed global policymaking processes, focusing on the relations of the G20 with private actors and the ideas and norms underpinning G20 deliberations. When it comes to the relation to private actors, an analysis of sovereign debt crisis resolution demonstrated how the G20 has a structuring effect on private financial associations. The Institute of International Finance restructured its organization, expanded its membership, and took on private governance roles to remain the key interlocutor of the G20 and technical forums of governance. It subsequently was able to develop a private governance mechanism for sovereign debt restructurings which was endorsed by the G20.

To analyse the role of ideas and norms in the G20, the project investigated the development of governance patterns to tackle climate risks to financial stability. The complex nature of the climate system has created uncertainty for policymakers which opened up the discussions to, for example, civil society organizations. However, the ideational default in the G20 (a remnant of G7 preferences for light-touch market-based financial regulation) has led the supervisors and authorities in the G20 to stick to market-based solutions such as increasing transparency through disclosure of climate-related risks.

A key result of the project is the FINEPINT (‘FINancial Elite Policymakers INTerviewed’) thematic collection of interview transcripts held under an open data arrangement at the Data Archiving and Networked Services repository of the Royal Netherlands Academy of Arts and Sciences. This database is a valuable resource for researchers from International Political Economy, Political Science, and Contemporary History.

All results and outputs of the project are open access and can be found at the dedicated webpage at https://jasperblom.eu/?page_id=170

Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far)

The project has delivered a number of contributions advancing our understanding of global governance beyond the state of the art, thereby meeting the objectives of the project.

First, the project developed and operationalized a framework of ‘rightful membership’ as a new analytical lens to assess the legitimacy of selective governance institutions. Important amendments to the literature are the link of rightful membership to the different roles that the G-groups play in global governance and the distinction between member states with responsibility for and vulnerability to global challenges. The granular framework developed in this project creates new insights into membership of global governance institutions as a source of legitimacy.

Second, the project advanced the state of the art by linking G20 inputs and outputs in the field of global financial governance. The case studies demonstrate how the dynamics in the G20 limit the ability of ‘new’ actors in the policymaking process to express and satisfy their preferences and achieve substantive change. The G20 has a strong norm of market-based patterns of governance as the way forward to solve global challenges. Emerging topics can be pushed onto the agenda by new actors, but the interaction with the normative consensus leads to market-based patterns of governance.

The findings of the project have important societal implications. The empirical assessment of the G20 in in terms of rightful membership demonstrates the one-sided nature of G20 claims to legitimacy in the environmental domain. They therefore open up the debate on appropriate selection and representation strategies in selective governance forums that are central to global governance. In addition, the projects points to the importance of opening up policy discussions to a wider range of views to break the path-dependency created by strong norms.

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