The discussion has come up again due to some people wanting to exclude Russia over the Ukrainian gas business, gaoling of Khordukovsky, press suppression, etc. The advocates of this point of view argue that the G8 members are the largest economies that are also liberal democracies. The Russian counter-argument is that it is a grouping of the world's most influential economies. Both are right in a way, but in order to preserve the safety of all of us, I'd rather lean towards the Russian view.
The G8 was once the G7, originally set up to manage the consequences of the 1970s oil shocks in the capitalist part of the world economy. Since neither Russia nor China were then capitalist economies they could, by definition, not participate. The extent to which the group operated as an instrument of US economic power is illustrated by the fact that Bill Clinton could, virtually unilaterally, invite Russia to join during the latter's early post-Communist phase. In this earlier format, while the G7 was always about attempting to generate economic co-ordination, it was at the same time an exclusive club of basically like-minded politicians - a method by which they could negotiate with each other over the solutions to their inevitable economic tensions. Thus the 'largest industrial democracies' argument is right up to a point.
However, the situation has changed somewhat since the early 1990s. China has emerged as an economic superpower and, if its current growth rates continue, is likely to overtake France, the UK and even Germany within the space of a decade or two. Moreover, it is by now the world's 4th largest trading power. These facts would suggest that, from an economic co-ordination point of view, China should be included in the G8 (or whatever number is chosen). But then China is scarcely a lickspittle of the US - the like-mindedness of the old G7 would be out the window. Life would get more uncomfortable, as it already is with Russia about to take up the presidency of the group. Arguably a new kind of Cold War is already beginning - between the dominant western economies (the 'old' imperial economies) and the newcomers like China.
Russia is in the group, probably because the Clinton administration assumed that shifting from an authoritarian, centrally planned economy to a market democracy would be a simple thing and therefore underestimated the extent of the Russian economy's post-Soviet collapse. While Russia has begun to recover and Putin is obviously anxious to flex economic muscle - the only muscle they have left to flex is the natural resources one - it hardly qualifies as one of the world's largest industrialized economies, let alone democracies. I searched 16 countries in the World Bank's database and Russia came in last on the size of its Gross National Income (same on GDP). Other non-G8 countries ahead of it in economic size are Spain, India, Korea, Australia and the Netherlands. Anyway, it's economy is only half the size of Canada's (the next smallest in the G8). Moreover, while it exported 35% of its GDP in 2002, it ranked 11th in terms of the total volume and the share of exports in its GDP has declined since then. Russia does, perhaps, have a disproportionate influence on European energy supplies - which means the Europeans will be keen to keep them in, at least while the current energy scares continue. But as in 1914, it seems the weakest of the current group by a long way.
Canada has recently been overtaken by Spain on GDP, but not yet on GNI. The reason is that GNI includes external resources (e.g. foreign capital inflows and outflows) which increase the size of the US and Chinese economies relative to GDP, but reduce those of all the others. GNI is a better measure to use for G8 purposes because it reflects the external clout of the economy, rather than just its domestic production. Spain is, as yet, a slightly less influential international economic player than Canada. In 2002, for example, exports of goods and services amounted to 28% of GDP compared with 42% for Canada. Then, if you look at the growth rates of these economies, there is much more growth in the bottom half of the list than in the top half (excepting China). Canada might be overtaken, not just by Spain, but by Mexico, India and Korea in the next decade (assuming continuation of current growth - which is always problematical).
My prediction is that the G8 will expand its numbers in the coming years. China may push to get in, but then it may also decide that the East Asian Summit is a better way to promote its global influence against the 'old' imperial powers. That would not, on the whole be a helpful development, especially if the like-minded ones (the US' political allies) decided to start up smaller, more exclusive, club too. Imperial blocs are generally not conducive to world peace.
Gross National Income (Atlas method) 2004 (trillion USD)*
1. United States 12150.93
2. Japan 4749.91
3. Germany 2488.97
4. United Kingdom 2016.39
5. France 1858.73
6. China 1676.85
7. Italy 1503.56
8. Canada 905.63
9. Spain 875.82
10. Mexico 703.1
11. India 674.58
12. Korea, Rep. 673.04
13. Brazil 552.1
14. Australia 541.1
15. Netherlands 515.1
16. Russian Federation 487.34
* The Atlas method gets rid of changes that are just due to exchange rate fluctuations.
Exports of goods and services, 2002 (trillion USD)
1. United States 1042.9
2. Germany 715.0
3. Japan 436.9
4. United Kingdom 406.4
5. France 388.0
6. China 368.6
7. Italy 320.2
8. Canada 304.5
9. Korea 191.5
10. Spain 183.4
11. Russia 120.8
