Opinion - News Analysis   

G8 and prescriptions for emerging economies

K. Venugopal

They are intended to help enterprises in the rich countries sustain their pre-eminence in world markets.

— PHOTO: AFP

G8 heads of state, representatives of the top five developing nations, and leaders of African countries at Heiligendamm, northeastern Germany, on Friday.

THE INFORMAL group of industrialised nations that make up the G8 knows when it is in a spot of bother and how to manoeuvre out of it.

They once produced 80 per cent of the world's output, fuelling their factories, homes and cars with petroleum energy imported cheap from oilfields in West Asia and Africa. But in the wake of the oil crisis — prices quadrupled from $3 a barrel in 1972 to $12 in 1974 — and the collapse of the fixed exchange rates for their currencies, six of them banded together as the G6 in 1975. The club has been meeting every year ever since then to address their problems in a coordinated way. Canada joined in 1976 and Russia was co-opted in 1998 to make them the G8.

They still consume almost half the world's oil, and have been responsible for most of the greenhouse gas emissions that are said to be contributing to global warming.

That extravagance is beginning to tell. They face commitments under the Kyoto protocol to cut back on energy consumption that most of them have been unable to fulfil.

Their share of global economic output has fallen to 60 per cent as emerging economies such as China and India expand fast and compete with the rich nations for natural resources and markets for manufactured goods and services.

Leaders of the G8 know they need help to hold on to their high perches. Over the past few years they have been inviting leaders of five rising economies: India, China, Brazil, Mexico, and South Africa to their annual meetings, giving them the heady feeling of being at the high table.

Now the five are being shown the price tag on those seats.

Even though they are home to nearly half the world's population, and most of its poor, these five nations produce less than 12 per cent of global output and consume less than a fifth of the energy. Per capita incomes though rising in recent years are still a fraction of what they are in the developed world. They are convinced they need to consume more energy to sustain their growth.

Instead, the G8 is telling them to reduce it. Using the threat of climate change, the declaration issued at the end of the G8 deliberations on Thursday called on the emerging economies to reduce the carbon intensity of their economic development, which in effect means lowering the consumption of fossil fuels.

India knows that it does not use energy efficiently; it uses as much crude oil as Germany but produces less than a third of the output. But it also knows that it cannot countenance any plan that will put the brakes on economic growth.

There are other demands as well in the Heiligendamm declaration. The G8 knows its strengths in technology, but is recently finding that leadership under some threat from the developing world. Some of that assault may be fair but others are foul, namely piracy of intellectual property. So the G8 is calling on the emerging economies to help stamp out piracy.

The G8 wants emerging economies to move away from protectionism and lower barriers to foreign investment. "Companies from G8 countries investing in emerging economies expect to find the same open investment environment as companies from such countries investing in G8 countries," the declaration noted.

These prescriptions are intended to help enterprises in the G8 sustain their pre-eminence in world markets. Will the emerging economies swallow them?

Printer friendly page  
Send this article to Friends by E-Mail

Stories in this Section

A mature relationship
A compromise in Goa
Nuclear deal: on the brink of disaster
G8 and prescriptions for emerging economies
The west must accept there is no military solution
Corrections and Clarifications
Nothing strange
New front
Gujjar agitation
Helmet rule

Copyright © 2007, The Hindu. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu