Promoting economic prosperity has been a focus for every G7 summit since its inception in 1975. As early as the 1978 Bonn Summit, the G7 recognised that global economic growth was necessary for the well-being of all economies. In preparation for the 2018 Charlevoix Summit, the Canadian presidency prioritised ‘investing in growth that works for everyone’ and ‘preparing for jobs of the future’ in response to new technological demands in the labour force. An overview of the G7’s performance on these issues would help shape expectations for the future.
Commitments on growth
From 1975 to 2017, G7 leaders made 854 commitments on economic growth: 333 on trade, 259 on macroeconomic policy, 121 on financial regulation, 75 on labour and employment, 37 on reforming international financial institutions (IFIs), 21 on microeconomic policy and eight on infrastructure. Of those commitments, 276 – almost a third – were made between 2011 and 2017. In this period, the G7 prioritised trade and macroeconomic policy with 94 and 78 commitments made, respectively, and paid intermittent attention to financial regulation (60) and labour and employment (35). Very few were made on IFI reform, microeconomic policy or infrastructure. The substantial growth in the number of commitments made during this period suggests an increased focus on economic growth.
Sticking to pledges
There has been solid compliance with the commitments on economic growth assessed by the G7 Research Group. Compliance on 70 assessed commitments averaged 70%. One commitment on infrastructure led with a score of 88%, followed by an 85% average for the 15 commitments on macroeconomic policy. There was lower compliance across eight financial regulation commitments (76%) and three labour and employment commitments (74%). The 39 trade commitments had the lowest compliance with 63%.
From 2011 to 2017, compliance with economic growth commitments averaged 82%, an increase from the overall 70%, and compliance within each issue area except infrastructure, which remained the same, also increased considerably. → The commitment assessed on labour and employment received the highest score at 89%, with the one on infrastructure following closely at 88%. The four commitments on financial regulation averaged 87%, whereas the 10 on macroeconomic policy averaged 86%. The eight assessed on trade received an average of 74%, above the overall average from 1975 to 2017. The European Union and Canada led with overall compliance scores of 91% and 89% respectively – well above the average of 82% for 2011–17. On trade, the EU led with 92%, followed by Canada with 85%. This pattern is reversed for macroeconomic policy: Canada took the lead with 93%. The EU followed with 90%.
On financial regulation, Canada, Germany and the United Kingdom each achieved a complete score of 100%. France, Italy and the EU tied for second place at 84%. All G7 members had complete compliance with the commitments assessed on labour and employment. Germany, Italy, Japan, the United Kingdom, the United States and the EU also had perfect compliance on infrastructure commitments.
The impact of the increase in the number of G7 commitments and compliance performance from 2011 to 2017 may have had a positive effect on members’ economies as reflected by the overall expansion of growth. All G7 members experienced increases in their gross domestic product, although income inequality, on average, remained unchanged. The trend on a global scale is similar.
There are several low-cost measures that the G7 can implement to improve compliance. First, the G7 should consistently hold finance ministerial meetings before and after the summit. Finance ministers translate leaders’ commitments into country-specific actions that are ready to be implemented. They declutter the summit agenda, allowing leaders to focus on the most pressing issues. Second, when constructing commitments, the G7 should reference a wide range of institutions with larger memberships, include specific deadlines and connect inclusive economic growth with other issues such as climate change and gender. These tools have been shown to improve performance over a variety of issues. Third, the G7 should increase data transparency. Institutions lack the necessary data to accurately assess inequality. By making such data accessible, the G7 may feel more accountable and pressured to act.