The decision has taken China and India many notches higher in the world of economic diplomacy.
The White House announced the dramatic decision as United States President Barack Obama hosted his first major summit in Pittsburgh.
The statement released by the White House said, 'Today, leaders endorsed the G-20 as the premier forum for their international economic cooperation. This decision brings to the table the countries needed to build a stronger, more balanced global economy, reform the financial system, and lift the lives of the poorest.'
Developing countries like Argentina, Brazil, Indonesia, Mexico, South Korea and Turkey would also benefit with more weight given to their voice.
For many years now the global economic power and future potential has shifted away from the West.
The G-8 had become redundant because it was not a representative of the world. It included only wealthy nations like Britain, Canada, France, Germany, Italy, Japan, Russia, and the United States.
According to John Kirton, director of the G-20 and G-8 research group at the University of Toronto, the decision has been taken to enable the seats in the International Monetary Fund and the World Bank to be shifted to developing nations.
At the two-day summit in Pittsburgh, Chinese central bank officials were quoted as saying that there should be a move on IMF voting rights.
The White House statement said the decision would strengthen financial institutions.
'It builds on the decision made in April to expand the Financial Stability Board to include all G-20 countries and to add all the G-20 members to the Global Forum on Transparency and Exchange of Information. The Financial Stability Board is central to our efforts to develop and implement sweeping reforms to transform the system of global regulation. The Global Forum is the primary vehicle in the G-20's effort to promote greater tax transparency,' the White House statement noted.
