India and the G7

On June 2, Indian Prime Minister Narendra Modi and U.S. President Donald J. Trump spoke by phone. According to the Indian government’s call readout, the president “conveyed his desire to expand the ambit of the [G7] grouping beyond the existing membership, to include other important countries including India. In this context, he extended an invitation to Prime Minister Modi to attend the next G-7 Summit to be held in USA.”

This confirmation from the Indian government builds upon the president’s remarks, reported on May 30, about his plans to convene a larger G7 summit including Australia, India, South Korea—and Russia; in his words, to “discuss China’s future.” Predictably, Trump’s invitation to India has generated substantial interest within India, as has the invitation to Australia similarly received coverage there. In the United States, more attention appears to be directed toward the president’s plans to include Russia in this enlarged grouping.

There’s little economic logic to a grouping that would include Russia, no longer among the world’s top ten economies at market exchange rates, while excluding China, the world’s second largest economy (largest if using purchasing power parity terms). But the G7 has never professed to be a gathering of “developed and developing economies from every continent” along the lines of the G20.

The G7 was created as a consultation of industrialized economies, all of which have been democracies since the grouping’s origins in 1975. The original G6 included the United States, Japan, Germany, France, the United Kingdom, and Italy, with Canada joining to make the G7 by 1976. Russia participated in the G8 from 1998 to 2014 until its invasion of Ukraine’s Crimea caused the group to eject it.

In the decades since the G7 formed, emerging markets have grown to become far more important to the global economy—and large emerging markets like China and India have become crucial to every issue of collective action that the G7 is preoccupied with, such as climate change, clean energy, and health pandemics. Both countries participate in the G20 but have not been part of the G7.

Should the criteria of “advanced industrialized” still apply as a threshold for G7 inclusion when countries still in the middle-income or lower-middle-income categories have become so central? My answer to that is no, and I argued in my book that it’s time to consider Indian membership in an expanded G7 given the size of its economy and the fact that, for all its troubles, India is a democracy.

Democracy sets India apart from China, so it could be a conceivable and logical expansion to include India in an enlarged G7, but not China. But using this yardstick, the selection of Australia and South Korea spurs questions about other democratic economies around the same size not on the list. What about Brazil and Mexico? Or Indonesia? A ranking of the ten largest economies that are also democracies—using market exchange rates—would suggest inclusion of Brazil, India, and South Korea in a “D10” grouping along with all members of the existing G7. That same ranking using purchasing power parity would include India, Indonesia, Brazil, Mexico, and South Korea—but not Italy and Canada, core G7 members. All of this is food for thought on the purpose and design of any expansion of this consultation.

Countries in bold are current G7 members. Sources: Market exchange rate data (2018, latest available) comes from the World Bank. Purchasing power parity data (2020, estimated) comes from the IMF.

Most of all, it’s clear that the twentieth-century institutions of global governance have not reformed to reflect the established importance of emerging economies to the world. In his own way, Trump was right to call the G7 an “outdated group of countries,” because it is. What we need, however, is a logical and consistent way to create a more relevant group for the challenges currently facing us. The invitees to the Trump G7 summit do not, as a group—and especially with the inclusion of Russia—provide that clear, coherent case for an enlarged institution.