G7 – Group Of Seven

Article byWallstreetmojo Team
Reviewed byDheeraj Vaidya, CFA, FRM

What Is Group Of Seven (G7)?

A Group of seven, or G7, is an informal alliance (association) of seven countries, including France, Germany, the United Kingdom, Italy, Japan, the United States, and Canada. The main purpose of this Group is to address monetary and economic issues and provide solutions to socio-economic problems.

Group of Seven (G7)

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It provides a platform for non-communist nations to discuss their issues. In addition, G7 helps reduce the number of wars and conflicts within the member nations. Furthermore, it addresses various social and climatic issues. However, some economists consider it a mere theoretical discussion, and not a problem-solving platform.

Key Takeaways

  • Group of seven consists of seven countries, namely Italy, Japan, Canada, the United States, the United Kingdom, Germany, and France.
  • G7 originated in 1975 when influential countries met to discuss the oil crisis. They aim to solve their member nations’ economic, social, and monetary issues.
  • Every year, in June, G7 summits are held, where all countries attend two days-long meetings. Every country gets a chance to host the summit as Presidency at regular intervals.
  • Russia withdrew from G7 forum membership in 2014 due to conflict with Ukraine.

How The Group Of Seven (G7) Works?

Group of seven is an integrative collaboration and cooperation alliance of seven powerful countries. They contribute ideas and solutions to deal with internal and external crises. Since G7 is not an official forum or office, they do not have a permanent headquarters. Likewise, no official flag of the G7 forum serves as its emblem. As a result, the Group of seven summits represents the flags of its member nations.

The process of G7 summits consists of a one-year process. Every year, the G7 members hold a summit rotationally. Each Group of seven countries gets a chance to represent themselves as Presidency at the summit. For example, in 2022, Germany hosted a group of seven summits. In 2023, Japan will take on the G7 Presidency. The summit consists of two days where other member nations discuss the agendas for international policy formation. The Presidency will be responsible for hosting, organizing the meetings, preparing drafts, and taking the lead in the discussions.

Apart from the Group of seven leaders, heads of the European Union, World Bank, International Monetary Fund (IMF), and the United Nations will also participate in the program. In addition, the environment, energy, employment, justice, and security ministers should also attend the meeting.

The Presidency prepares a draft of issues discussed in the session. Then, the head representatives of other nations, take control of the meetings. They constantly communicate with each other to keep track of agendas and solutions. Finally, based on the recommendations and solutions, the G7 adopts the Final Communiqué, i.e., the final report.

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G7 History

The history of G7 dates back to the 1970s when popular, modernized countries suffered from the global crisis. In 1973, a huge oil crisis prevailed in those nations. At the same time, the fixed exchange rate system had collapsed. So, in 1975, French President Valéry Giscard d’Estaing and Chancellor Helmut Schmidt hosted an informal meeting between the nations. And that is how the Group of seven came into force.

The first G7 meeting was in Chateau de Rambouillet, southwest of Paris. The early group members were Japan, West Germany, the U.S, the U.K, and France. Thus, it was named G6 as there were six countries. Later, in 1976, Canada added its name, making it a group of seven members. The initial summit recommended 15-point solutions and decided to meet next year with a rotating presidency.

In the 1980s, the G7 forum also started security and foreign issues.

G7 Countries

Initially, there were eight countries part of the G7 alliances. In 1991, the G7 summit invited Russia to discuss the issues after the east-west war. Russia joined the G7 Group seven years later during the Birmingham summit, which turned into G8. But, in 2014, Russia violated the regulations of the forum by invading the Crimean Peninsula of Ukraine. Thus, the G7 forum refused to attend the 2014 G8 summit in Sochi, Russia. As a result, in 2014, Russia officially announced its quitting, which came into effect in 2018. At present, Russia cannot attend G7 summits.

However, after Russia resigned, the number of members dropped to seven. Currently, Italy, Japan, France, the U.S, the U.K, Germany, and Canada are the Group of seven members.

Besides, G7 countries have contributed around 44% to financial institutions for the past two decades. According to the reports, the Group of seven countries accounted for 31-32% of GDP (Gross Domestic Product). Also, the carbon emissions of these nations were 21% and contributed 10% to the world population. However, major G7 nations have already crossed a high level of debt. For example, Japan has a debt of 263% of its GDP, followed by Italy (151%) and the U.S (133%).

Importance

G7 summits hold special importance in world politics. Before its formation, countries faced various political, economic, and financial issues. As seven influencing countries are a part of it, their recommendations affect the rest. Thus, a group of seven leaders discusses the global agendas on the table to promote peace and harmony. It helps in strengthening international policies. Also, they address important issues related to climate, gender, inequality, race, and similar things. Through this alliance, the GDP increases and global trade boosts.

For example, the G7 has eliminated the risk of the Chornobyl nuclear power plant meltdown over the years. Also, they have arranged funds for medical emergencies like AIDS, HIV and Covid-19 virus, and many others.

BRICS vs G7

Although G7 and BRICS declare themselves as informal forums, there is a huge difference between them. The former aims at solving security and economic issues, while the latter tries to solve the issues in the global south. Whereas the former consists of seven countries, the latter has only five nations. While Italy, Japan, Canada, the U.S, the U.K, Germany, and France form the G7. In contrast, Brazil, Russia, India, China, and South Africa rule the BRICS.

Basis of Comparison G7BRICS
MeaningG7 is an informal forum with seven member countries.BRICS is also an informal group of five countries.
Full Form Group of Seven – G7Brazil, Russia, India, China and South Africa – BRICS
PurposeTo discuss issues and provide solutions to them. To discuss problems of the global south. 
Origin1975June 16, 2009
Members Seven countries along with the European Union. Five countries

Frequently Asked Questions (FAQs)

Which country is not a permanent member of Group of Seven?

Many countries are not a part of the G7. However, Russia got suspended in 2014 for violating the forum rules and conflicting with Ukraine.

Where are the headquarters of Group of seven?

There are no headquarters of G7 as it is an informal forum. Also, it has no secretary office. However, the Presidency (host country) organizes yearly meetings of the G7 summit.

Is the European Union part of the Group of Seven?

No, the European Union is not a member of the G7. However, the G7 summit does invite the EU to attend the yearly summits.

What is the difference between a Group of seven and a Group of twenty?

The main difference between G7 and G20 is that the former has seven influential countries like Italy, Japan, the U.S, the U.K, Germany, Canada, and France. In contrast, the latter has 20 countries. It includes Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, and the European Union.

This has been a guide to Group Of Seven and its Explanation. Here we have discussed Group Of Seven in detail such as its Working, History, Countries and Importance. You may also find some useful articles here:

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