Pay attention G-20, the not-so developing world is close and nipping at your heels

April 2, 2009 by Chelsea Milko 

Shrinking global economy gives room to growing powerhouses

You’ve probably heard this popular quip by now: “When the U.S. catches a cold, the rest of the world catches the flu.” 

The current malady from which the world suffers is of the economic sort. This financial fever does not provoke the use of a rectal thermometer to gauge its high temperature. The signs are evident: world trade contracting, stock markets plummeting, commodity prices slumping and manufacturing hitting the brakes. All these chilling statistics make it really hard to maintain a strong constitution and an optimistic countenance. 

Miraculously, a few keystone nations will be able to weather this global recession a lot better than most. That is not to say that they will not feel the heat from the market meltdown. Deteriorating demand for natural resources and the falling price of oil will have drastic implications for some nations. Predictions read that the Third World, the developing world and the global south will face a severe domestic downturn and complicate tempestuous political environments. The continuum of economic ailments will intensify the scourges of Western-style development. 

The ground truth is that the interconnected world is resulting in a political, social and humanitarian drama. Homelessness in Japan, jobless migrant workers forced out of China’s manufacturing hubs, the collapse of European auto-making, declining housing prices in Ireland and a sputtering diamond market in South Africa – we can see what began in the U.S. has percolated everywhere. 

The world’s most powerful nations gather this week in London for the G-20 summit, which is usually a platform for smaller nations to spat with big ones for more power while everyone feigns interest in development and no consensus on a reform is ever achieved. This time things are a little different. Built as a cadre of industrialized kings, the one-day meeting will be a convergence of nations now marked with deep domestic gashes from the slowdown’s lashings.

At the top of the agenda is the matter of coordinating action to counter the global economic crisis. Heated debate will ensue about how best to regulate banks, prevent protections, restore lending and normalize markets again.

According to the World Bank, a further 53 million people will sink into poverty due to the global recession. Pulling back on pledges of foreign aid would effectively disembowel the global body politic. Why? Because the primary products exported by the world’s poorest nations have been greasing the gears of globalization way before the super-word “globalization” was coined.

It is they who have been the real pace setters. Blessed with a handsome investment culture, booming urban centers of innovation and a supple labor force, the forecast for many developing nations was promising. Close ties to wealthy superpowers, whose corporate tentacles reach deep into resources and technology, have turned their once off-the-chart growth rates into gloomy predictions.

But there is hope. Emerging market giants like India and Brazil may be in better shape than their foreign counterparts. Many of these countries have stumbled through financial perils before. They have experienced periods of robust development interrupted by periods of macroeconomic volatility. Response mechanisms are in place. Business models have been through stress tests. And they have the infrastructure, a crop of highly-trained, highly-flexible laborers and a competitive foothold on new technologies. 

Their time has come. Developing countries have been lurking in the shadows, waiting for the bloated, overstretched companies to be crushed by the impending doom of financial collapse. Many cash-strapped companies curb production and slice costs, the emerging market nations are replacing near-obsolete technologies and defunct energy-guzzling industries. They are in prime position to drive recovery by exercising their power as energy independent magnates and competitive innovators. 

The global economy may shine favorably on these nations once again. Before that can happen, they should be taken seriously as linchpins of the international marketplace. More urgently, the G-20’s deliberations should not be focused on mercurial markets. The human element needs a place at the discussion table too. Lesser developed nations are suffering in disparate ways. Societies feeling the pinch are that much more vulnerable to unrest. Economic instability leads to social exclusion, inattention and disempowerment which in turn breeds disease, poverty and urban squalor. 

The Group of 20 cannot succumb to the shriveling power of protectionism. Nor can they afford self-interested timidity when the times call for a comprehensive response. This is the time to reshape political objectives and recalibrate the polarity of international power with the developing nations at front and center. For the summit to be a true success, its cohorts should heed the advice of the White House’s chief of staff, who so glibly phrased it, “Never let a crisis go to waste.”