// ADVOCACY
Article 6 can lower the cost of capital in emerging markets to address global imbalances
G7 leaders should leverage Article 6 of the Paris Agreement to lower the cost of capital in developing countries and address global macroeconomic asymmetries
A t the height of the 1970s oil embar- goes, the world’s industrialised nations founded the G7 as a forum to coordinate on global economic chal- lenges. At the time, stagflation loomed. Since then, the G7 has dealt with finan- cial crises, war and pandemics. Today the buzzword is imbalance, whether in China’s inflated net exports, Europe’s underinvestment or the United States’ consumption mix. As an influential group, the G7 can address a key imbal- ance in developing economies as a powerful means of reducing global mac- roeconomic risk: tackling the high cost of capital in emerging markets.
followed, real global GDP growth more than doubled as rising incomes in emerg- ing markets created significant demand for western goods and services. Ameri- can farmers, German automakers, and French luxury brands all benefited from a wealthier Asia. Central to the post–Cold War Asian growth model was the ability of these economies to borrow at low rates. Domestic savings rates across East Asia were extraordinarily high, often 30 to 40 percent of GDP, providing a deep pool of local capital. Governments in South Korea, Taiwan and Singapore used state-directed lending and development
To understand why lowering the cost of capital for the world’s develop- ing nations is so important, we can look to the history of global growth since the Cold War. When the Berlin Wall fell, governments across Asia and the former Soviet bloc opened their econ- omies in a model that gave rise to the ‘Four Asian Tigers’: South Korea, Singa- pore, Hong Kong and Taiwan showed that combining educated workforces with export-oriented industry could pro- duce extraordinary growth. As others Ely Sandler, Managing Partner, Article Six Group
106 // G7 FRANCE: THE ÉVIAN SUMMIT 2026
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