Sluggish global growth, frequent currency crises, and huge trade imbalances all reveal the failure of the Group of Seven industrial nations to provide effective leadership of the world economy. The G-7 has played this role in the past and must do so again to assure global prosperity.
Part of the G-7's decline is due to continuing policy differences among the United States, Germany, and Japan. The bigger problem, however, is a new "consensus for inaction" based on fears of trying to counter the huge flows of international private capital, the existence of large budget deficits, and the resistance of central banks to coordination by anyone.
The study offers a comprehensive analysis of all these changes in the world economy and reaches an optimistic reading of the prospects for effective G-7 leadership. It proposes an action program that includes reforming the exchange rate regime, instituting an early warning system to prevent new monetary crises, augmenting the resources of the IMF to deal with private capital flows, and institutional reform of the G-7 itself.
The study deserves credit for aiming to revive interest, for describing the present arrangements with great clarity and for its zeal. The authors explain why the G-7 has gone wrong, and what to do about it.
The clarity and perceptiveness of the analysis are truly remarkable. I very much agree that the G-7 should be revitalized along the lines that you have so cogently set out.
Jacques de Larosiere, European Bank for Reconstruction and Development
This is an important book. [Its] analysis of the decline of the G-7 ... is disturbingly accurate. Restoring G-7 cooperation is essential to strengthening world growth without inflation or currency instability.
David C. Mulford, Chairman, CS First Boston and former Under Secretary of the Treasury for International Affairs
The G-7 is fast becoming a ceremonial artifact. So it is timely that [this book] explains why, and offers ideas of what could be done to revive international economic cooperation among the major players.
Robert B. Zoellick, former Under Secretary of State for Economic Affairs
Bergsten and Henning provide more than an overview of the [G-7] policy coordination process; they also cogently address the tough political issues and how the much-needed cooperation among the major economic powers can be revived.
Stephan Haggard, University of California, San Diego