Volume 44, Number 175,
October-December 2013
The G20 in Los Cabos:
A Lost Opportunity for Much-Needed Change
Carlos Rozo and Aleida Azamar
THE ACHILLES HEEL OF EMPLOYMENT

The disease afflicting the global economy resides in its incapacity to generate employment. G20 member countries need to create nearly 20 million jobs just to return to pre-crisis levels and 15 million more to absorb those that will join the labor market in the period from 2012 to 2015, according to the International Labor Organization (ILO) and the oecd. Argentina, Brazil and Mexico are the nations that have had the best performance in this area, but in 2012 their economies started to slow down significantly. The G20 has spoken a lot about creating the conditions for strong, sustained and balanced economic growth, but very little about where to direct efforts so that this result is obtained in the logic of inclusive economic and social development. Although the G20 has argued that “social inclusion is at the center of its actions,” it is relevant to wonder: Will growth be enough to achieve the goal of inclusion? The oecd (2012) has correctly ascertained that it will be necessary to drive employment and not growth, because there are 200 million unemployed people around the world as a consequence of the crisis, mainly young people, of which 45 million live in member countries of the organization. Even if this number of jobs were created, this would not guarantee that sufficient steps for inclusion would have been taken. The structural changes required to achieve inclusion do not appear in G20 proposals. What is truly needed is structural change in the distribution of income and wealth. And very little has been said on that topic.

ONCE AGAIN, THE MAGIC SOLUTION OF FREE TRADE

The G20 in Los Cabos once again highlighted the importance of free trade and the urgency of not opting for protectionist policies. This interest in trade was complemented by the argument, driven by the Mexican representation starting in preliminary trade meetings, that emerging countries should be integrated into global value chains, both of supply and production, to achieve greater development. Arguing that international trade is fundamental for employment, it can be deducted that the more value chains there are, the more jobs are created. However, not all G20 members agree on the importance of commercial liberalization. The BRICS5 countries argued that merely opening trade is not enough to ensure growth, development and greater inclusion.6 Furthermore, it must not be forgotten that the costs of implementing measures to facilitate trade are a significant challenge for many less developed countries due to the levels of financing and technical knowledge required. Nor can commerce flourish without a stable financial environment.

The G20 insists on maintaining global free trade as the ideal path to strengthen recovery, but it has been the industrial countries that have led the initiative to protect their markets during this crisis. Only Brazil and Argentina refused to support the proposal to remove the commitment began in 2008 of not eliminating protectionist barriers until 2014. Why accept this proposal when the United States and the Europeans continue granting immense subsidies to their agricultural workers, while their refusal to eliminate these barriers made the Doha Development Round a failure? A different institutionality in the context of the high concentration of international commerce in a few countries and the preponderance of the cgvs would be that the success of international trade be measured in terms unlike those that have been used up to the day in absolute values. More relevant would be to evaluate the contribution of these chains to the added value created at each of the stages of production, and as such, in different geographic locations. The added value method could also contribute to measuring the commercial competitiveness of each country.7 What the G20 should negotiate are the measures to maintain external balances at sustainable levels, because if commercial instability returns in the absence of an ambitious regulatory pact, the imbalances experienced up to now would be a mere preview of what is to come. The imf has estimated that the negative balance of 2009-2010 in the commercial balance could double.

5 The BRICS are a group of nations made up of Brazil, Russia, India, China and South Africa, which have stood out on the global stage for their dynamic economies and achieving the highest gdp growth rates.

6 Mexico may be the most obvious example of this dilemma. See Mold and Rozo (2006).

7 This is feasible as long as there is homogeneity in information.

Published in Mexico, 2012-2017 © D.R. Universidad Nacional Autónoma de México (UNAM).
PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 48, Number 191, October-December 2017 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
CP 04510, México, D.F. Tel (52 55) 56 23 01 05 and (52 55) 56 24 23 39, fax (52 55) 56 23 00 97, www.probdes.iiec.unam.mx, revprode@unam.mx. Journal Editor: Alicia Girón González. Reservation of rights to exclusive use of the title: 04-2012-070613560300-203, ISSN: pending. Person responsible for the latest update of this issue: Minerva García, Circuito Maestro Mario de la Cueva s/n, Ciudad Universitaria, Coyoacán, CP 04510, México D.F., latest update: Nov 13th, 2017.
The opinions expressed by authors do not necessarily reflect those of the editor of the publication.
Permission to reproduce all or part of the published texts is granted provided the source is cited in full including the web address.
Credits | Contact

The online journal Problemas del Desarrollo. Revista Latinoamericana de Economía corresponds to the printed edition of the same title with ISSN 0301-7036