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Emily J. Blanchard, Dartmouth College
(THE CONVERSATION) The Group of 7 is an informal group of seven powerful democracies: Canada, France, Germany, Italy, Japan, United Kingdom and United States. The Presidents of the European Commission and the European Council also attend G-7 meetings as several of Europe’s largest countries are also members.
Membership, decided internally, has not changed much since the creation of the group in 1975. At the time, it only included six countries, all of which are still part. Canada joined a year later. Russia joined as the eighth member in 1998, temporarily changing the group’s nickname to G-8, but Russia was ousted after annexing Crimea in 2014.
Together, these seven wealthy nations form the foundation of the modern global economy and the rules-based cooperative system on which it is built.
Why the G-7 is important
The G-7 countries represent around 40% of the world economy, up from nearly 70% a few decades ago.
Despite the decline, the economic power of the G-7 countries remains undeniable, in particular because of their collective position as countries at the forefront of technological innovation and industrial know-how. Additionally, the G-7 economies are inextricably linked to global supply chains, which means that a policy change or economic shock in a G-7 country will, for better or for worse, have serious consequences. ripple effects around the world.
Ultimately, the G-7 may be the best hope for swift, decisive and meaningful political action on pressing global issues.
While the G-7 does not have the institutional weight of the United Nations, the World Trade Organization, or NATO, it also does not have its bureaucracy or institutional bureaucracy.
And while the G-7 is a subset of the bottom-up G20 – which also includes the rising economic powers of China, India and Brazil – the G-7 has another advantage: it’s much easier to achieve consensus in an intimate group of nations similar than it is. find common ground among various nations with very different economic and political priorities.
What the G-7 does
The world faces profound challenges, from the devastation of the COVID-19 pandemic and climate change, to authoritarianism and attacks on democracy.
None of these questions color perfectly within national boundaries. Countries need to work together to find solutions that don’t just kick their neighbors.
An example of significant action by the G-7 is its announcement on June 5, 2021, of an agreement on global minimum corporate tax rates, which marked a turning point in international taxation. If successful, the deal could spell the end of tax havens and a radical change in the way companies report their profits around the world.
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This article is republished from The Conversation under a Creative Commons license. Read the original article here: https://theconversation.com/whats-the-g-7-an-international-economist-explains-162586.