The world is currently witnessing a prolonged conflict in Ukraine, a global food shortage is imminent, oil prices are on the rise, and an economic downturn and cost of living crisis are on the horizon. Ambitions to deal with climate change are also being thwarted, and concerns about disruptions in the food supply are dampening optimism about a speedy recovery from the pandemic. In a nutshell, the world is in a state of chaos and uncertainty. At a time of great uncertainty for the global economy and politics, the G7 countries proposed a 600-billion-dollar development program, which they believe will resolve the global economic and political struggle. The ongoing global crisis, as well as the G7 countries’ political and economic struggles, were exacerbating the situation, and the G7 was losing its position as the world’s most powerful group. The pandemic and the conflict in Ukraine are the final nails in the coffin of Western globalization. The G7 sanctions against Russia and military aid to Ukraine have created a world of uncertainty. The rise of China, India, and other great powers, on the other hand, poses a challenge to the G7 in almost every sector. All of these activities call into question the G7’s global dominance.
Losing ground in international trade
Loss of global market share, especially to China but also to other emerging countries like India, Poland, South Korea, and Mexico, is another factor contributing to the slowdown in globalization in the G7. This is due to the fact that these nations have made substantial gains in international production and trade flows over recent decades. China has evolved into the “factory of the world,” while India has become the “back office of the world.” As a result, competition on a global scale has heated up considerably. China has gained market share at the expense of the Group of Seven (G7) countries because the G7 has become less competitive over the past decade.
Losing positions of leading economies
There is a serious problem with representation in the G7. When the G-7 was first formed in the 1970s, the new grouping did in fact control the global economy. In 1980, the gross domestic product (at constant international prices) of the G7 countries was 51% of the total, while the developing countries of Asia contributed only 8.8%. In 2021, the G7’s share of global GDP fell to about 31%, while Asia’s share reached 32%, marking a dramatic shift in the situation after only two decades. Contrarily, the economic conditions of the G7 countries over the past five years show a consistent deterioration. If we take a look at the G7 countries’ combined inflation rate over the past five years, for instance, we can see that their economies are struggling. The G7 is no longer the dominant economic player in the world, with its share of the world economy dropping to about 30 per cent, a steep fall from the 70 per cent it enjoyed till about three decades ago. Subsequently, the glue which binds together the seven countries is no longer wealth, but the ideology of democracy.
Debt crisis and G7
When COVID-19 arrived two and a half years ago, nearly 60% of the world’s poorest countries were already in or on the verge of debt distress. Since then, the pandemic has increased this cohort’s total debt to a 50-year high, putting more than a dozen countries at risk of default in 2022. In 2022, global sovereign debt is expected to rise by 9.5 percent to a record $71.6 trillion. The G7 countries, on the other hand, are facing economic challenges as their debt-to-GDP ratio continues to rise. The G7 leaders expressed concern about the growing debt crisis at the most recent summit.
Facing political challenges
So far, the G7’s future is uncertain, despite the fact that the group has attempted a global assistance and cooperation initiative. However, the history and current socioeconomic status of these G7 countries indicate an internal crisis that these countries are currently facing. These countries’ political cultures are rapidly changing, which has a direct impact on the G7 decision. For example, the Trump administration was dissatisfied with the majority of G7 decisions, and he also claimed a proper and equal contribution from member states. He also disagrees with the G7’s decision on climate change. On the other hand, France and the UK are facing domestic political crises and leaders are struggling in recent time to get majority support in a rapidly changing political culture.
Facing Chinese BRI initiative
G7 countries provide only 0.32 percent of their gross national income in development assistance, less than half of the 0.7 percent promised. China, on the other hand, has spent $843 billion on bilateral aid since 2000. That works out to about $39.5 billion per year. Furthermore, China has funded more than 13,427 bilateral aid projects in 165 countries over the last two decades, making it the most significant new player in this domain. As a result, it appears odd not to include the country, which, as of 2021, accounts for 18.78 percent of global GDP.
The rise of the G20 and BRICS
The G7 still claims a global leadership role, but its relevance in a rapidly changing global economy is rising. There is also a suggestion of a revised G7 group that would replace Germany, France, and Italy with a Eurozone representative, swap Canada for Brazil, and add China and India, making it more representative economically and in population terms without adding more seats. The G7 countries now account for 43 percent of the global economy, down from nearly 70 percent three decades ago. The bloc is even less representative in terms of population, with its member countries accounting for less than 10% of the world’s population.
Struggling to keep the funding promises
Due to their own difficult economic conditions, the G7 countries are finding it difficult to keep the funding promises. The most important fact is the G7’s attitude toward the developing world. The G7 leaders’ summit in 2022 promised 600 billion dollars in investment assistance, a friendly approach toward the developing world that could improve the socioeconomic conditions of these countries. However, the G7 failed to grasp the full context of the situation or appreciate the significance of the aid for what it would accomplish. As a counter-measure to BRI, they opted for this alternative program. The very methodology raises serious red flags. It will not be effective on its own if the G7 takes a noncooperative stance against China, as this would drive a wedge between the group and many developing nations. The G7 must therefore rethink its strategy and membership if it is serious about creating a cooperative global order.
To summarize, the G7 countries are indirectly challenging the world’s second-largest economy while also acting as an alliance of front-line Western powers who still believe ideological differences will result in a better world order. The G7 is undeniably a modern powerhouse, controlling the majority of the world’s economy and security. However, the world is currently facing an unprecedented crisis, and the G7 is partially to blame. Furthermore, the victims of this crisis are the general public who have no connection to power politics. As a result, the G7 has an opportunity to earn credibility and solve the global problems by taking bold steps. However, the G7’s recent approach does not demonstrate a cooperative stance with their adversaries. This attitude will undermine the G7’s relevance and dominance because rising powers will not choose the path of non-cooperation. Instead, these countries will only participate in a unified joint cooperative platform. If the G7 truly desires global economic and political dominance, it must join various regional and international cooperative movements, abandon the dream of hegemonic rule, and work with rising superpowers to create a truly unified global order.
*S. M. Saifee Islam is a Research Analyst at the Center for Bangladesh and Global Affairs (CBGA), Dhaka, Bangladesh. The views and opinions expressed in this article are those of the author.