Powerful Economic Groups (HL IB Geography)

Intergovernmental Political & Economic Forums

• Global organisations and groups hold major influence over international affairs

• They have major impacts on economic, political and social landscapes

• The G7 (Group of Seven) is an elite group of 7 industrialised and high-income countries that represent more than 60% of the global net wealth

• Members consist of:

  • United Kingdom

  • United States

  • Italy

  • Germany

  • France

  • Japan

  • Canada

• In 1998, Russia was allowed to join the group as the only communist country, which gave rise to the G8

• However, Russia was expelled in 2014 with its annexation of Crimea

• They meet annually to discuss:

  • Global economic concerns, from debt crises to environmental policies

  • Issues of global governance

  • Addressing financial crises and economic downturns

  • International security and global health crises

The Group of Twenty (G20)

• The G20 represents a mix of the world's largest economies and emerging nations, accounting for about 85% of gross world product (GWP) and 75% of international trade

• Countries include Argentina, Canada, France, China, South Korea, Mexico and Saudi Arabia

• Established in 1999 with the responsibility of creating policies to further international financial stability and addressing global issues requiring the responsibility of several countries to solve

• They also address issues relating to global security, the increasing role of Asian economies in world economic development and the role of IMF and the World Bank in stabilising global financial markets

• The G20 also focuses on wider issues such as sustainable development, anti-corruption, and climate change mitigation

• Many have criticised the G20 as not being transparent, as it does not have a charter and meetings are usually held behind closed doors

• 171 countries are not represented

Organisation for Economic Co-operation and Development (OECD)

• The OECD is an international organisation where the governments of 38 countries work to develop policies for sustainable growth, equality, opportunities and well-being for all

• The organisation is funded by its member countries and contributions are based on the size of the member's economy

• The OECD originated from the Organisation for European Economic Co-operation (OEEC) which was formed when Canada and America provided foreign aid to help rebuild Europe after World War II

• Recognising the continued need for cooperation between countries, the OECD came into being in December 1960

• Since then, the OECD has helped to advance reforms and multilateral solutions to global challenges such as:

  • Improving education systems through the Programme for International Student Assessment (PISA)

  • Promoting local and regional development

  • Combating international tax avoidance by multinational corporations

  • Promotion of health and safety through testing and sharing of quality standards

  • Guiding economic reforms such as making telecommunications and broadband more competitive

  • Promoting responsible business conduct by producing guidelines for multinational enterprises, such as ethical supply chains and incorporating social and environmental considerations into standard business practice

• Its stated aim is to 'build better policies for better lives' by:

  • Restoring confidence in markets

  • Re-establishing healthy public finances

  • Ensure that people of all ages develop skills to work productively

  • Working towards strong, sustainable, green, inclusive and resilient growth for future generations

  • Prioritising climate resilience and energy transition towards achieving net-zero greenhouse gas emissions

Organisation of the Petroleum Exporting Countries (OPEC)

• OPEC describes itself as:

• Others describe it as a cartel with considerable power to fix the worldwide supply and price of oil

• Founded in 1960 in Baghdad to tackle oil price cuts by American and European oil companies

•  The 5 founding members were:

  • Iran (the second-largest producer in the Middle East)

  • Iraq (currently the sixth-largest oil producer in the world)

  • Kuwait (the fourth-largest crude oil producer in OPEC)

  • Saudi Arabia (the world's largest oil producer)

  • Venezuela (has the largest oil reserves in the world)

• OPEC's objective is to:

  • Manage the supply of oil

  • Stabilise the price of oil

  • Ensure profitability for member states

• Since the 1970s, more oil-producing countries joined, and OPEC has continued to increase its influence over oil production and prices

• In 2016, when oil prices were low, OPEC+ was formed between all OPEC members and 10 other oil-producing countries

• This alliance has provided even greater control over the global oil market, as it now controls over 55% of oil production

• Russia plays a significant role in the alliance, with the country being the world's second-largest oil producer

• OPEC+ can keep prices high by reducing supply or they can lower the price by adding supplies into the market

• The importance of oil means that countries need to maintain a good relationship with OPEC and OPEC+

• Even as the world moves towards cleaner energy sources, oil and its derivatives will still be needed in the future

• Therefore, OPEC will continue to remain the most important supplier of oil for the energy industry