today G20 it is in crisisbut remains an important forum for global economic and financial cooperation. Comparing today's data with those of thirty years ago, we observe the exponential growth of China, while the European Union and Japan have experienced a reduction and the United States despite everything they are still in first place, accounting for about a quarter of the world economy. In comparison between countries, large and persistent differences stand out on key variables such as population ageing, female employment, the share of public expenditure in GDP, the share of public debt in GDP. Some of the G20 countries record large and persistent current balance of payments surpluses (Germany, China, Japan, South Korea, Russia), others record chronic deficits and have often faced situations of financial crisis. But according to theObservatory for Italian Public Accounts of the Catholic University led by Giampaolo Galli perhaps it is still legitimate to hope that these differences do not turn into opposition between blocks and it is possible, sooner or later, that the dialogue between the world's big names will resume to address problems - such as energy transformation and the rules of globalization - which can only be addressed by individual countries. But what matters is that in the last 30 years the world has changed. And with him also the economy.
G20 in crisis: the great changes of the last thirty years
The G20 is in crisis today because of the tensions between the United States and Russia on the issue ofUkraine and more generally due to the progressive loss of confidence, both in the West and in China and Russia, regarding the prospects of international cooperation, globalization and multilateralism. However, the group of 20 remains one of the most high-level meeting places. To grasp the big trends, the Observatory, in its latest analysis, compares the current situation with that of 1990.
Two facts stand out. The first, well known, is the China boom which passes from 1,8 to 18% of world GDP. Beijing's growth in weight has occurred to the detriment of almost all the other countries, but above all of the EU (which has lost almost 11 percentage points of GDP, from 27,4% to 16,6%) and Japan (which has lost almost 10 points). Very few countries, apart from Beijing, have increased their weight on world GDP: India (from 1,4 to 3,4%), Indonesia (+0,7 points), Saudi Arabia (+ 0,6 points), South Korea (+0,4) and Australia (+0,3).
The second striking fact is the resilience of the US economy, whose weight on world GDP has decreased slightly, from 26,4% in 1990 to 25,4% today. What counts is the fact that per capita GDP has grown more than that of almost all other countries. Only 5 countries have reduced the distance compared to the United States: India (from 4,1 to 10,9%), Australia (from 78,0 to 82,1%), South Korea ( from 31,4 to 70,4%), Indonesia (from 10,8 to 19,2%) and Turkey (from 30,5 to 51,5%). All other countries, including Germany, France, the United Kingdom and especially Japan, have lost ground. For Italy, the fall is dramatic, from 91,5 in 1990 (ie almost equal to the United States) to 67,9 today.
Convergence or divergence? The big differences between countries
On the basis of per capita GDP at purchasing power parity, it is interesting to note the existence of a process of economic convergence in which the countries considered at the time poorer (China, India, Indonesia, South Korea and Turkey) are the ones that have most narrowed the gap with the United States. Conversely, many of the countries that increased this gap were among the richer.
If one takes into account that the "old" poor countries represent over 40% of the world's population, one can appreciate the enormous reduction in global inequality that has characterized the thirty years of globalisation. At the other extreme are the countries that started from positions of advantage and have reduced their GDP per capita (in relative terms). This particularly applies to theItaly (which lost nearly 24 percentage points) and the Japan (-17,3%). The convergence in terms of per capita GDP is not unique. There are also poor countries that have even increased the income gap. This is especially the case with South Africa (-7,3) Mexico (-7) and Argentina (+ 0,1).
Overall, the regression analysis confirms that convergence prevailed, but the statistical significance is not high.
On many crucial axes of society, as well as the economy, the study highlights the differences between large countries that remain enormous.
The aging of the population
A variable of great importance is the share of the elderly population (over 65) on the total population. The mean of this variable increased from 5,0 to 7,4%. The increase concerns all countries, but in some of them the variation is much stronger than in others and this generates divergence: in Japan (29,8%), Korea (16,7%) and China (13,1%). The increase was also considerable in the EU (+7,4 points to 21,9%) and in particular in Italy (+8,7 to 23,7%). In almost all emerging countries, however, the increases were modest: in South Africa (2,1 points), Indonesia (2,8), Argentina (3,1) and Turkey (3,7). It is clear that the problem ofpopulation ageing (with all its consequences) is much more intense in advanced countries than in emerging ones, with two exceptions: China, where due to the one-child policy the share of elderly people has increased significantly (more than in "old Europe" ) and the United States, a country where, due to immigration and higher birth rates than elsewhere, the share of the elderly has increased by only 4,4 percentage points.
As a result of these divergent trends, the standard deviation of the share of elderly people between countries increased from 4,6% to 7,1%.
Unemployment and female employment
Another crucial factor in assessing the level of social development is unemployment. A chronic problem in many emerging countries and a few advanced countries, including Italy. The unemployment rate is 2,6% in Japan, 3,1% in Germany, 3,6% in the US and 3,7% in the UK. Conversely, it is over 33% in South Africa and between 7 and 11% in Turkey, Brazil, India and Argentina.
While for the presence of women in the labor market a clear improvement trend can be observed in all the advanced countries and in many of the emerging ones, such as Mexico, Brazil and Argentina. However, there is a strong decline, at least according to data from the International Labor Organization in China (where it drops from 70,4 to 63,4%, a high value in any case on the international scene) and in India (where it drops from 29,6 at 27,6%, by far the lowest value among the G20 countries). Among the Muslim-majority countries, female participation is high in Indonesia (56,5%; much better than Italy which stands at 43,3%), while it is very low, albeit growing strongly in Turkey and Saudi Arabia .
Investments and expenditure in R&D
Two critical variables for the future development of a nation are the investments (public and private) and the spending on research and development. As regards the first, the differences between countries are abysmal. The investment/GDP ratio of China is 43,9%, double that of the United States and in general of other advanced countries, including Italy which stands at 21.%, and many emerging countries. Investments from Turkey, South Korea, India and Indonesia are also very high. These data may lead, erroneously, to think that emerging countries invest more than advanced ones and that this is the engine of a possible future convergence. Many of the large emerging countries (including South Africa, Argentina and Mexico) have very low investment rates and in any case lower than those of advanced countries; this is partly due to the public component which has been strongly compressed in response to the risk of debt crises.
Even the data on R&D does not show a trend towards convergence. The standard deviation between countries is higher today than in the 4,8s and, above all, advanced countries are the ones that spend the most on R&D. At the apex we find South Korea (with an expenditure equal to 3,5% of GDP), then the USA (at 3,3%), Japan (at 3,1%) and Germany (at 1 %). The poorest countries (Mexico, South Africa, Indonesia, Argentina, India) spend less than XNUMX% of GDP. It is clear that these countries have very different interests from advanced countries and that their chances of improving productivity growth they crucially depend on the ability to imitate innovations developed elsewhere, as Japan and Italy did with considerable success in the first post-war decades.
The public accounts
Important differences between countries are also found in the role of the state in the economy, in the public accounts and in foreign accounts. In the United States, despite the enormous spending increases since 2020, the ratio between public administration expenditure and GDP is 38,5%, while in the EU it reaches 50% (in Italy it is 56,8% and in France to 58,5%). Instead, in China the ratio is 33,1%, in South Korea 27,9%, in Indonesia only 17,5%, while in Russia it is 36,6%. According to the Observatory it is not easy to find a common denominator to explain these differences but it is true, in general, that poor countries spend little because they cannot afford to tax populations that are often on the verge of poverty. The United States also spend little, because the state is seen more as the cause than as the solution to problems. On the contrary, in Europe, almost all countries believe that the state must offer a solution to the many problems of the people.
In any case, in the last three decades there has been a sharp increase in spending, deficits and public debts of almost all countries. The G20 deficit/GDP ratio went on average from 2,8% in 1990 to 4% and the debt/GDP ratio from 49,4 to 78,5%. The latter data is the synthesis of very different trends between countries. Large debt increases have taken place in Japan (at 261,3% of GDP, gross of pension surpluses), the United States (at 121,7%), Argentina (at 84,5%), China ( at 77,1%) and Italy (at 144,7%). Very substantial increases were also recorded in Australia and South Korea, which however started from very low levels and today have a more "sustainable" public debt than ours, around 55%. In only four countries (Indonesia, Russia, Turkey and Saudi Arabia) are public debts lower today than in 1990; in Russia, the debt/GDP ratio at the end of 2022 was only 19,6%. Here a great difference should be noted between advanced countries and emerging or developing countries. THE financial markets they place more trust in advanced countries and are willing to finance much higher debts than in poorer countries. Probably, this difference is explained by the fact that in the poorest countries governments find it much more difficult than elsewhere to raise the tax burden to the level that is needed to make high debts sustainable.
The balance of payments
As for the current account balance balance of payments, this shows some regularities. One, for example, is what Valery Giscard d'Estaing defined as the "exorbitant privilege" of the United States which, since the dollar is accepted as a reserve currency in almost the whole world, can afford to have large and above all lasting external deficits. A second regularity is the apparent "propensity" for external surpluses of some countries: Germany, Japan, China, South Korea and Russia. This regularity is matched by an apparent "propensity" for external deficits, not only of the United States, but also of the United Kingdom, Turkey, South Africa, Brazil, Canada and Argentina. Some of the latter countries have gone through repeated inflationary and currency crises which required the financial intervention of the International Monetary Fund (IMF). The G20 therefore finds itself having to reconcile the opposing needs of countries that tend to be creditors and countries that tend to be debtors. This is the normal task of the IMF (and of the Paris club), but a forum like the G20 can be useful where heads of state and not just the ministers of the economy meet in a narrower club than that of the United Nations .
