The recent G20 meetings in February and April have showed that the G20 works. The achievements are not dramatic, but the forward progress is visible, if at a measured pace. Last year, the US had been pressing for rebalancing?basically asking mostly China, but also other current account surplus countries, to adjust their macroeconomic policies to increase their domestic demands and reduce their relative export focus. Those countries argued that the US?s own macroeconomic policies?fiscal and monetary?needed to adjust drastically. Rather than drifting into confrontation and stalemate, this issue has been tackled relatively effectively by the G20.

In November 2010, at the Seoul Summit, the G20 agreed that it would develop ?indicative guidelines to resolve the global imbalance,? as South Korea?s President stated at the time. This task was delegated to the G20 framework working group, headed by India and Canada, with technical support from the International Monetary Fund. In February of this year, the nature of the indicators was spelled out: ?(i) public debt and fiscal deficits; and private savings rate and private debt, (ii) and the external imbalance composed of the trade balance and net investment income flows and transfers, taking due consideration of exchange rate, fiscal, monetary and other policies.? Apparently France and Germany persuaded China to agree to the mention of exchange rates in this language?the pressure from the US for China to appreciate its currency being the most contentious aspect of global rebalancing.

Most recently, in April, the latest G20 communiqu? translated the indicators into the promised indicative guidelines. Earlier demands from the US for simple numbers, such as levels of current account surpluses, for triggering action have been replaced by a multi-pronged approach that takes account of history, levels of development and economic structure.

So far, no specific numbers have been fixed, since the economic modelling and data analysis remain to be done. The only number that gets mentioned is the cutoff of 5% of G20 GDP?countries above that threshold will face more scrutiny, on the theory that larger countries have larger potential spillovers. One can quibble with that logic (a larger country in GDP terms may have less international trade than a smaller one, for example), and with the fuzziness of the overall approach, but the point is really that some way forward has been agreed to by all.

Will the guidelines lead to real changes? Will action follow agreement? That remains to be seen. But it is noteworthy that what seemed last year like an acrimonious, mostly bilateral argument between the US and China has begun to be subsumed in a more multilateral process, with a framework that promises to be more nuanced than initial individual country postures. The G20 is indeed serving as a forum for progress in addressing global economic issues.

The work on imbalances will dovetail nicely with proposed efforts, also articulated in the April communiqu?, to strengthen the international monetary system. For example, work on how to manage capital flows, strengthen global financial safety nets, and understand the drivers of accumulations of international reserves will be able to inform the economic modelling of the drivers of global imbalances. Many of the other aspects of the G20?s statement involved other international organisations, with specialisations and special expertise, and the G20 is emerging as a place where these different and disparate efforts, on financial stability, food security, climate change and so on are reviewed and considered in a manner that may ultimately lead to coordination across issues as well as countries.

Only the Doha Round of trade negotiations gets no mention in 2011?after being highlighted in the 2010 G20 meeting. The trade negotiations are about to take place, and there is much pessimism on this front. Ernesto Zedillo, ex-President of Mexico, blames G20 leaders for not trying harder to reach a trade deal, but trade may be one of those areas where a larger forum with strong rules and history makes the G20 less influential. As Colin Bradford has put it, the G20 in 2011 is not a place for ?grand bargains,? and technical work should take centrestage for now.

What does India get out of all this? It has done well as co-leader of the framework group. It does not have a direct major stake in rebalancing, but has established its gravitas in this forum. It will host the 2012 summit. As Suman Bery has put it, ?India?s fundamental policy challenge is less one of external adjustment than of internal adjustment.? But, as he also notes, India needs a global economy that is growing, and will support India?s own growth. Longer term issues such as food security, energy security and climate change will also matter greatly for India. The progress being made in the G20 will be vital to India?s future.

The author is professor of Economics at the University of California, Santa Cruz