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The G7 is a group of finance ministers which deal with the economy and related issues representing industrial countries from around the world. The G7 should not be confused with the G8, which is its sister organization. It is independent of the G8, though the two may often share the same goals, especially relating to the economy.
The G7 contains representatives from the United States, Japan, Germany, Britain, France, Canada and Italy. These are considered among the most industrialized nations in the world and all have a spot at the G8 as well. The only member of the G8 that is not a part of the G7 is Russia, a fact that has evoked considerable debate over the years.
The G7 evolved as a spin-off of the G8 when it was determined, in 1982, that a more focused approach was needed on the economy, especially in situations which could result in a global economic crisis. Therefore, these countries got together in order to cooperate more fully on the economy. As the world has become increasingly interconnected in terms of economic progress, the influence of the G7 has expanded exponentially.
The G7 acknowledged their own growing importance, and the importance of all nations to cooperate with each other, when they released a report in 1996. That report stated, "The dramatic increase in trade and capital flows in the world has deepened economic and financial integration among all countries." Thus, simply put, there is value in ensuring all countries have a stable economy, especially those involved in the G7.
One major criticism of the G7 deals with its membership list. It excludes at least two primary players in the global marketplace with the exclusion of both China and Russia. China, which has the world's fourth largest economy and holds more than $1 trillion in foreign reserves, is one of those countries that could eventually be included. Russia, as already mentioned, is also a perennial consideration for a sheet and has lobbied hard for inclusion in the past. To help avoid some of those criticisms, the G7 has an "outreach" program, which regularly invites those countries, along with a handful of others, to participate in the discussions.
Another criticism of the G7 deals with the amount of power it has -- or lack thereof. Some say the finance ministers have very little power as national central banks set interest rates and terms by which other countries may borrow. However, while the G7 countries may not be able to set monetary policy, they may help shape political policies relating to finance and the economy. These include helping shape tax policies, regulations and international commerce policy.
@Terrificli -- China isn't the only nation excluded -- two that should arguably be members are India and Brazil. It would appear that emerging economies need not apply for membership. Whether excluding them is a mistake is a question that will likely remain unanswered for some time.
Meanwhile, the aforementioned nations with emerging economies will probably want a say in the shaping of the global economy. We can only sit back and watch events unfold.
Of course, one must wonder how effective groups like the G7 and G8 actually are. In the United States, for example, the Federal Reserve has more control of monetary policy than any international group likely will in the near future.
G7 is rightly criticized for excluding China. The mistake of not including China will only grow more apparent as that economy continues to grow in size.
By the way, isn't Russia effectively part of the G8 which is, essentially, the nations that were members of the G7 plus the former Soviet Union? With that addition, how relevant is the G7, anyway?