The Evolution of Global Oversight Institutions: From the Library Group to the Group of Twenty

During the past decades, the Group of Seven (G7) leading industrial democracies and the Group of Twenty (G20) comprising the G7 countries and systematically important emerging economies have established themselves as the twin global steering committees overseeing the functioning of the global economic governance architecture. The G7 process began in 1973 with a group of finance ministers from the United States, the United Kingdom, France, and West Germany meeting privately at the White House library to coordinate monetary policies following the Nixon Shock. It was upgraded to summit-level meetings in 1975 and incorporated additional members of Japan, Italy and Canada, making it the G7. For the period of 1998–2014 when the grouping was referred to as the G8, Russia was a member. A major enlargement of the grouping occurred in 1999 in the aftermath of the Asian Financial Crisis. Financial and central bank technocrats from developing and emerging economies started to meet with their counterparts from the established G7 powers, paving the way for the establishment of the G20. The G20 became a leaders’ forum in 2008 at the height of the Global Financial Crisis and gradually expanded its agenda from the pre-established set of economic and financial issues to other aspects of global governance. This chapter traces the historical evolution of the global oversight institutions from the quadripartite Library Group to the G20 through the G7/8. The G7/8 and G20 as self-select elite governance groups suffer from varying degrees of substantive, input and output legitimacy—components of what can be referred to as “whole-process legitimacy”. Proposals are advanced to enhance the effectiveness-legitimacy nexus for the two institutions. The chapter concludes by arguing that the two G-groupings should refocus and reposition themselves as global oversight bodies and come up with a division of labour to promote functional complementarity between the two, and between them and a wide range of functional international governance institutions.