At the handover from the T20 Saudi Arabia to T20 Italy on November 30, while acknowledging the critics addressed to the G20 as being ‘too small’ or on the contrary, ‘oversized’, the vice president of the Italian Institute for International Political Studies (ISPI) Paolo Magri argued that the G20 was nevertheless the only ‘colour picture’ of today’s world.
If growth has been the primary purpose of the G20, ever since it was first incorporated as a roundtable of finance ministers in the aftermath of the economic crisis in Asia in 1997-1998, infrastructure investment issues have been part of the discussion ever since the first meeting of the heads of governments. In 2020, while the world was experiencing lockdowns at unprecedented scale in human history – there were as many people in lockdown and confinement situations during the spring of 2020 than the total population living on earth in the early 1970’s at the time of the first report of the club of Rome on the Limits to Growth – infrastructure issues were brought up as a priority again. While logistics and supply chains were brutally interrupted, there has been rising calls for long term investment choices to accelerate the transition to lower carbon pathways along a ‘rescue to recovery, to transformation and growth’ narrative (Stern and Bhattacharya, and Stiglitz Stern et al., May 2020). A few months later though, nothing much seems to have changed, only that economic forecasts are more volatile and reversals of fortune are deeper than expected (World Bank, Oct. 2020).
The conclusions of the G20 presidency of Saudi Arabia show a world that is still very much mid-way between rescue and recovery and certainly far from ‘transformation and growth’. Infrastructure investments reflect this situation.
While the 2020 Leaders’ Declaration quotes infrastructure investment as a ‘driver of growth and prosperity and critical to promoting economic recovery and resilience’ this is only illustrated by two rather technical reports, one on infrastructure and digital technology and the other one on the collaboration with institutional investors and asset managers. Contrary to the G20 Japan, which has issued the Quality Infrastructure Investment principles, the G20 of 2020 has not been the occasion of another institutional breakthrough regarding infrastructure but we argue a closer outlook would show many signs that reform opportunities might be at hand in the coming months.
A decade ago, it had to be the 5th summit of the G20 of Seoul in 2010 to launch globally coordinated initiatives for a ‘multiyear action plan on development’ starting with comprehensive actions plans from multilateral and regional development banks and the establishment of a high- level panel for infrastructure investment (Seoul development consensus for shared growth). This came well after the beginning of the global financial crisis, but the G20 has continuously built on the 2010 foundations. It was the launch of the ‘global infrastructure initiative’ in 2014 at the Brisbane G20, the ‘Global Infrastructure Connectivity Alliance’ in 2016 at the G20 in Hangzhou, the issuance of the ‘Roadmap to Infrastructure as an Asset Class’ in 2018 under the G20 Argentina presidency…
While infrastructure has clearly been utilized to support a growth narrative through enhanced connectivity, a process which was disrupted by the Covid-19 pandemic, the G20 macro-economic agenda has been supplemented by a development agenda rising in importance since it was incorporated in the G20 Action Plan on the 2030 Agenda for Sustainable Development in 2016. The G20 Saudi Arabia has also built upon the 2030 Agenda and hence referred to infrastructure by focusing on ‘ensuring an inclusive recovery that tackles inequalities’ and not only on ‘building a resilient and long-lasting recovery.’ From the finance track, that is the group of finance ministers and central bank governors to the Infrastructure Working Group (IWG) to the Development Working Group (DWG), infrastructure investments issues have also benefited from rising interest and increased levels of expertise from within the civil society.
Infrastructure has been a recurrent research topic ever since the inception of the T20 under the Mexican G20 presidency in 2012, either in conjunction with climate action and development as during the T20 Argentina or as a standalone issue as during T20 Japan in 2019, T20 Saudi Arabia in 2020 and as announced for T20 Italy in 2021. The development of the T20 has been supported by the continuous engagement of many major research organization over the years. Therefore, the T20 has incubated refined analysis and proposals, including on the valuation of nature-based solutions or resilience in 2020, a process that has culminated during the T20/G20 Japan and allowed for the wide recognition and acknowledgement of the Quality Infrastructure Principles.
As the Covid-19 crisis marks the end of a decade of unequal but continuous growth strategies, the responsibility of the think-tank community is unprecedented to address immediate recovery but also to rebuild a new, more sustainable economy and reconsider infrastructure investment strategies. To do so, it is time to make the case for G20 action on urbanization which, along with digitalization has been a rising mega-trend accelerating in the past decade, only that unlike digitalization, urbanization has been consistently overlooked.Back at the time of the 2008 global financial crisis, urbanization was something rather new on the global stage but while focusing on financial and banking prudential measures, the G20 overlooked how much the subprime crisis that initiated the global financial crisis was also linked to massive oversupplies of ‘bull-shit housing and real estate’. A decade afterwards, as there has been an additional one billion urban dwellers across the globe, especially in emerging and developing countries, the G20 cannot afford to overlook urbanization again.
It is hard to find convincing evidence of urbanization in the G20 scope but there is indications of some slow but real progress over the years. However marginal a topic, urbanization has been identified at the first meeting of the T20 in 2012 featuring ‘livable cities’ in the G20 Infrastructure action plan, with an emphasis on mass transit, which was echoed in 2013 by the G20 Saint-Petersburg to ‘promote development for all.’ In 2016, one has to look down into an annex of the new ‘G20 action plan on the 2030 Agenda’ to find references to cities, and the G20/T20 Germany then largely bypassed the issue. In 2018, the G20 acknowledged the High-level principles on sustainable habitat through regional planning’, while both the G20 Japan and G20 Saudi Arabia are referring to ‘smart cities’ and even to the well-being of communities for the latter, along with G20 smart mobility practices.
Change is on the way. The designated Urban 20, a new engagement group of cities within the G20 was created lately in 2018, before it was officially recognized by the G20 under Tokyo’s presidency and significantly developed under Riyadh’s presidency. In 2021, as this group will be co-chaired by Rome and Milano, there are also indications that the T20 Italy will also address urbanization while being co-chaired by ISPI and IAI.
Action could be taken in three directions in 2021 and pursued in 2022 under the G20 presidency of Indonesia, 1) strengthening the convergence between the macro-economic (growth) and the development side (sustainability) of infrastructure investments, 2) improving the dialogue between think-tanks and cities, namely between the T20 and the U20 starting with the issues of mobility, smart cities and regional connectivity, and 3) creating a G20 Urban Platform focusing on the delivery and (re)building of the 2030 agenda, tackling C02 emissions and aiming at fostering carbon neutral circular economy, in light of the planned summit of the environment and energy ministers under the Italian G20 presidency. In addition, a fourth cross-cutting priority would be to address informality in labour and spatial organization in support of people empowerment and inclusion, a reflection of the Global Solutions Dialogue on ‘Urbanization (and infrastructure): sustainable responses to the Covid-19’.