There will be an eerie familiarity to this weekend's G-20 meetings. Disagreements between the United States and Europe on two important issues—macroeconomic policy, and specifically the timing of withdrawal of policy support, and financial regulation—will characterize these meetings. Resolution of these issues seems unlikely. The verdict will be that the G-20 has failed, reinforcing the creeping cynicism about its role and effectiveness.
But that would be harsh and also (as a teenager might put it) "soooo yesterday." Yesterday because of the involuntary impulse to view the world from the perspective of industrial countries. In two of the major G-20 economies—China and India—this G-20 Summit has already had an impact. As I argue here, the G-20 process had an important effect in influencing China's recent announcement to move toward greater currency flexibility. Similarly, India's announcement today to deregulate its petroleum pricing and consumer subsidy regime, which was called for at the Pittsburgh Summit and which has important implications for greenhouse gas emissions, is not unrelated to the G-20 process.
Of course, a healthy dose of skepticism is warranted in both cases. China may yet fail to convert intent into actual upward movement of the renminbi. And India's deregulation might lapse back into interventionism if oil prices soar above $100 per barrel.
But it is undeniable that both these countries are taking their international responsibilities seriously. And the contrast between a West that bickers and a Rest that is beginning to act is noteworthy.