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Background note: Think 20 Meeting

Introduction

Recognizing the value of the contributions that could be made by think tanks and experts for the Russia-2013 G20 year and following the initiative of the Mexican Presidency, the Russian Federation proposes to hold the Think 20 Meeting for maintaining fruitful and meaningful cooperation between government and academic circles. Russia strongly believes that think tanks have an important role to play in the G20 processes, therefore, ‘ideas bank' should be created to help transmit the main outcomes from research institutions to the global governance institutions.

The Russian Presidential Academy of National Economy and Public Administration (RANEPA) in cooperation with the Mexican Council on Foreign Relations and the Lowy Institute for International Relations (Australia) invites the representatives of the leading think tanks worldwide to convene and share their visions on the most pressing issues of the global agenda and their probable solutions. The Think 20 Meeting will take place in Moscow, on December 11th, 2012, followed by the G20 Sherpas' Meeting on December 12th, and the special Conference, where Russian Presidency's priorities, as well as the outcomes of the Think 20 Meeting, will be delivered to public.

The main topic of the Think 20 Meeting is "Fostering economic growth and sustainability" with the agenda covering the following issues:

- Reinvigorating economic growth: macroeconomic issues and fiscal sustainability
- Trade & FDI: tools to restore growth and pave the path towards convergence
- Enhancing sustainable development: finding enduring sources of shared global growth.

These will be the three key items for the panel discussion. But it is also intended to raise a wide range of issues, going within and at the same time beyond these tracks, which are, among others: future prospects of global economy; new approaches to financial regulation; food security; transparency and anti-corruption coordination; creation of quality and decent employment; inclusive green growth.

Participants will have a chance to highlight the burning issues of the moment and look for appropriate solutions in each specific area, which will be shared with the Russian Sherpa, thus making contribution to the agenda of the Russian G20 Presidency.

Reinvigorating economic growth: macroeconomic issues and fiscal sustainability

The recent trends of the development of the world's main economic centers have changed the view on grounds and factors of the global crisis of 2008-2009. Lack of up-to-date financial regulation, which would correspond to the level of market development, , global imbalances in trade and capital flows between the developed and the emerging economies are among the most important ones.

Anti-crisis measures of the economically developed countries have provoked new threats for reinvigorating economic growth. Ignoring budget discipline and accumulating public debt, they have moved far from prudent economic policy. And now, all the governments are to make efforts to restore fiscal sustainability. Fast-moving emerging economies and commodity exporters should also admit the burden of responsibility, as they accumulated international reserves facilitating debt overhang.

Tough budget situation and need for fiscal consolidation determine the increasing role of national central banks as the key actor for implementing anti-crisis policy. Monetary authorities, being formally independent, find themselves taking upon unusual functions, and turning to unconventional measures in their policies. The forthcoming exit of central banks from the anti-crisis mode should go in line with global liquidity management, mitigating the risks of large-scale monetary expansion.

It's time to emphasize, that short-term economic policy problems - fiscal consolidation and central banks' exit strategies - should not overshadow the problem of tackling long-term global economic imbalances. Both the developed and the developing countries are facing the need to reform the state social obligations and pension systems which will reshape the current global imbalances in a completely different way. Current global governance reform should foresee the long term changes and adjust accordingly.

The issues of the international monetary system reform are directly dependent on the future of the Euro zone. However, we see formulating the new approaches to financial regulation as a much more important topic for global financial markets. By now, it is right time for analysis and assessment of its possible - explicit and implicit - impacts on global financial market and banking system.

During the session within the Think 20 Meeting in Moscow the participants are invited to address the following issues:

- What are the prospects and scenarios of the development of global economy?
- Could emerging economies lead the new wave of economic growth?
- What are the exit strategies for central banks?
- Which long-term economic imbalances could dominate over next decades?
- What each group of countries can do to restore fiscal sustainability?
- Should we change our view on the international monetary system as European debt crisis is going on?
- What are possible outcomes of new approaches to global financial regulation?

Trade & FDI: tools to restore growth and pave the path towards convergence

Though having a remarkable progress in tackling the problem of protectionism through international organizations focusing on world trade liberalization (the WTO in its Uruguay and Doha rounds), hardly could anyone doubt that the problem of protectionism remains acute. Last crisis has demonstrated once again that the governments can turn to protectionism, even in case such measures could worsen consumers' welfare. Broad implementation of trade barriers and protective measures contribute to a global rise in food prices.

The object of lowering national protectionism and trade barriers levels is the key priority for the G20. Over the following years we foresee new trends in global trade, as well as redirecting traditional trade flows, with energy and food flows in the first line. This trend should evolve in presence of competitive trade policies, not distorted by myopic policy decisions. The G20 members commit to overcome the tendency to diffusive replacement of tariff barriers by non-tariff measures, which are out of regulation within the bounds of international agreements.

Reinvigorating economic growth in different regions of the world is associated with free, non-violent trade and capital flows. Broad participation in multilateral cooperation on infrastructure projects development, with the goal of mobilization and utilization of the best effective practices is an important factor of economic growth for the emerging economies.

FDI assure the shortest way for the developing countries to modernize their economies and increase the competitiveness of their economic models. To provide for real investment financing across the world, aimed at global economic development and convergence among the developing and the economically developed countries, the global capital market should be cleaned out of the nowadays prevailing "hot money".

During the session within the Think 20 Meeting in Moscow the participants are invited to address the following issues:

- Why protectionism in international trade is still growing?
- Could a peer review of protectionist measures become a credible mechanism to ensure further trade liberalization?
- Which initiatives could the G20 adopt to address the growing role of non-tariff measures in international trade?
- Could investment in infrastructure stimulate wider international cooperation and trade?
- Should be the global capital market regulated to provide more incentives for FDI and financing investment in real projects?
- Does globalization facilitate economic convergence?
- What are future prospects of configuration of global energy trade flows?
- How trade policies in different countries affect global food market?

Enhancing sustainable development: finding enduring sources of shared global growth

Sustainable development of the G20 economies is a permanent priority for its members. Following the tradition laid during the Korean Presidency, we emphasize the importance of the issue and reaffirm the interrelation between sustainable development and fostering green growth. And we call for moving towards practical actions to form economic, institutional and financial conditions for inclusive green growth in the G20 member economies.

The quality of institutions and investment climate in developing countries raise barriers to sustainable economic development. There are numerous examples of how corruption and low transparency of the economy disrupt the business activity within country, and consequently, the competitiveness of the national economy.

The G20 countries should also take all the necessary steps to remove the food security problem from the global top-priority agenda over next years. This issue is relevant not only to the trade policy, but also to the development and transfer of food production technologies.

Furthermore, the global financial markets have become even more complex over last decades, becoming much closer to the society than it used to be. Financial inclusion is a basic skill in the new world, which gives people both a powerful tool for prosperity and a source of dangerous risks. We should emphasize the responsibility born by the G20 governments for facilitating diffusion of financial literacy among our populations.

Finally, the role of human capital quality and its implications for economic activity and global mobility are constantly growing. That's why all the member economies are bound to pay more attention to the quality of their domestic educational systems, as well as to interaction between them in order to unify global standards and requirements to education.

During the session within the Think 20 Meeting in Moscow the participants are invited to address the following issues:

- What are the priorities for the G20 on the issue of fostering sustainable development?
- How could G20 facilitate to stronger global food security?
- What kind of multilateral coordination is needed to increase transparency and to fight corruption as a basis for sustainable development?
- Could we really improve financial literacy in a world of globalized finance?
- How could the G20 economies contribute to promoting green growth?
- What should be done globally for improving quality and decent employment in the developing countries?

Summary

The main goals of the Think20 meeting are:

- transparent, comprehensive view on current world challenges;
- providing innovative and competing ideas for improving inclusive economic growth;
- further cooperation with global government in term of monitoring current economic environment and how well G20 governments delivered on their commitments.

The main outcomes of the Meeting are expected to be delivered in the form of practical recommendations to Sherpas on the issues of global governance, improving G20 working process and facilitating inclusive economic growth in each area of the Russian Presidency's agenda.