Group of 7

Group of 7 (G7) is an assemblage of leading industrialized states. These states convene annually to discuss world economic problems. The grouping emerged in 1975 as the G5—France, Germany, Japan, United Kingdom, and the United States. It subsequently [Page 399]expanded to include Canada and Italy. In 1998, Russia was included; since then the G7 has often been referred to as the G8.

The group first met in response to the global economic difficulties of the 1960s and 1970s. The period had witnessed economic stagnation and rising inflation, which precipitated the breaking down of the system of capital controls and fixed exchange rates that had been institutionalized in the post–World War II period. The major currencies were floated and international private and public financial flows grew considerably, creating global capital markets. The major industrialized states convened with a view to discussing how to manage such changes in the global order.

G7 government leaders meet in annual summits. These summits are for semiformal collaboration in which the member-states exchange views and seek to coordinate policy; they have become an institutionalized set of intergovernmental conferences. Each year, the summit is hosted in a different member's country. The G7 has developed a network of supporting ministerial meetings, which allow ministers to meet regularly throughout the year to continue the work set out at each summit.

The issues discussed at the meetings relate to major economic and political issues facing the member's domestic societies and the international community as a whole. Summits have consistently dealt with macro-economic management, international trade, and relations with developing countries. Questions of energy, the environment, human rights, and terrorism have also been of recurrent concern. Such issues might previously have been regarded as “domestic”; G7 thus represents an attempt to govern those aspects of political life that escape the control of any single state. In contemporary governance, G7 forms part of an expanding institutionalization of global politics and economics. While it cannot enforce compliance with its decisions, it gives direction to the international community by setting priorities and defining new issues, thus steering global governance.

The G7 arrangement raises questions about inclusion and accountability. First, given that there are more than 190 states in the world, G7 is often criticized for being an exclusive club. Yet, proponents of G7 argue that the grouping should be at the helm of decision making because they have the biggest economies and thus the greatest impact on the global political economy. Proponents also highlight that G7 has made efforts to include more countries through the separate convening of the Group of 20 (G20) Finance Ministers; established in 1999, G20 comprises the G8 plus various developing countries such as Brazil, China, and India. However, certain critics rejoin that this still excludes too many other countries, not to mention nonstate actors such as nongovernmental organizations, and that new members have merely been included on G7 terms. Second, representative democracies typically hold their leaders to account. However, the countries excluded from G7 talks have no mechanisms by which they can hold the G7 to account, even though G7 decisions often have a marked global impact. These points highlight the difficulty of governing the global economy in a just and democratic manner while recognizing that the majority of economic transactions either take place in or originate from the G8.

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