Kevin Lynch is former Clerk of the Privy Council and vice-chairman for BMO Financial Group.
The global "summit season" is once again upon us, and, while economic issues are often on the agenda, business has lagged in getting involved in these international policy conversations despite their obvious interest in an era of pervasive globalization.
Much of the summit focus is now on the Group of 20, which originated among finance ministers in 1999, with Canada's Paul Martin as a key architect, and was transformed into a leaders-level gathering in 2008 in the crucible of the global financial crisis.
G20 finance ministers typically kick off "summit season" in late summer with a meeting to update key economic policy priorities. They then gather again in early October at the International Monetary Fund's annual meetings to fine-tune their views on the global economy prior to the annual November meeting of G20 leaders.
Surprisingly, national business associations have been slow to organize international alliances, notwithstanding the enormous expansion of international trade, investment and global value chains. And where such alliances do exist, they are largely along sectoral lines. One effort to provide a broad-based business voice on global policy priorities has been the development of the "B20" – a group of business leaders from the G20 countries that the Australians championed when they held the G20 chair last year.
The 2015 B20 summit, which coincided with the G20 finance ministers' meeting in Turkey, attracted more than 1,000 participants. And the B20 advice to G20 leaders was refreshingly longer-term in nature, relatively brief (certainly by international standards), and organized thematically around implementation, infrastructure and inclusive growth.
Their key recommendations to G20 leaders were as follows:
Implementation: It's time to stop adding to the G20 agenda and to start implementing what has already been agreed upon, and do so at a pace consistent with today's rapidly changing world. Three such agreed-upon policies that were flagged for expedited implementation were: financial sector reforms that increase certainty of application; transparency policy to assist anti-money-laundering efforts; and trade liberalization initiatives to spur growth.
Infrastructure: It's needed in most advanced countries to boost growth. G20 countries committed last year to significant, multiyear, efficient spending on "economic infrastructure." To improve investment outcomes, the B20 urged the development, for each G20 country, of "a coherent, evidence-based, national strategic vision for infrastructure investments to address investment gaps," and this should include the development of infrastructure as a true asset class.
Inclusive growth: It's required to spur economic growth as well as strengthen social cohesion. Again, there were three areas for G20 focus: helping small- to medium-sized enterprises (SMEs) grow and be more competitive (trade, technology, training and financing); helping youth find employment (co-op, dual vocational programs, skills training); and helping women integrate fully into the work force. In demographically challenged countries, these measures would increase labour-force growth, encourage entrepreneurship, increase competition and create jobs.
The B20 also championed, with support from the G20, IMF and World Bank, a new World SME Forum. This is a substantial undertaking, headquartered in Turkey, which is intended to be part meeting convener (a Davos for SMEs), part SME advocate to international bodies and part virtual network/resources centre for globally orientated SMEs.
The interactions between business leaders and policy-makers at the B20 summit had real value, and ranged from the escalating financial market volatility to the uncertainty about the transition from export-driven and commodity growth in China to the underperforming recovery in most Western economies.
What was most striking was the common theme that many economies are stuck in a rut of persistently low real interest rates, persistently low employment rates for youths and persistently low rates of business investment – and that what's needed is a "structural shock" to get out of this low-growth lethargy.
While there was no consensus on what the precise structural shock might be, the dialogue was nicely summed up by Christine Lagarde, head of the IMF, who argued that G20 countries need to more aggressively deploy structural and fiscal policies to revitalize productivity performance to escape her fear of a "new mediocre" growth trap.