Developing Economies

The G8 Still Exists!

French President Nicolas Sarkozy, right, and his wife Carla Bruni-Sarkozy, center, welcome US President Barack Obama to Le Ciro's Restaurant, during a dinner meeting for the G8 summit in Deauville, France.
Alexander Zemlianichenko/AP

President Obama is in France for the G8 summit in Deauville. The annual summit of the world's major industrial nations will include discussions about shoring up democracy in the Arab world, and dealing with the financial crisis in Europe. (source)

There was a time when the G8 included basically everybody you needed to make big decisions about the global economy: France, the United States, the U.K., Russia, Germany, Japan, Italy and Canada.

Today, China has a bigger economy than seven of the G8 countries. And if you really wanted to make big, global decisions, you'd probably want to get Brazil, India and a handful of other countries in the room, too.

That's why we now have the G20, which includes both the old economic powers and the big developing economies. This fits the big global narrative of the moment: The rise of the developing world and the corresponding shift in economic power toward Asia.

But the persistence of the G8 points to the fact that the old order hasn't vanished yet. The big, global institutions are still largely run by G8 nations — a point that's causing some tension at the moment in the search for a new IMF chief.

The IMF has always been run by Europeans, and the Europeans want to keep it that way. They've largely united behind Christine Lagarde, the French foreign minister.

Several developing world nations have said it's time for a non-European to hold the job. But Europeans hold a disproportionate share of voting rights in the IMF (and put up a disproportionate amount of the IMF's capital), Bloomberg notes.

The U.S. hasn't taken an official position on succession at the IMF. But, according to Reuters, here's what Hillary Clinton said today, when she was asked about Lagarde:

"Unofficially, let me say we welcome women who are well qualified and experienced to head major organizations such as the IMF."

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