The G-8 has its roots in the 1973 oil crisis and subsequent global recession. These troubles led the United States of America to form the Library Group, a gathering of senior financial officials from the United States, Europe, and Japan, to discuss the economic issues. In 1975 French President Valéry Giscard d'Estaing invited the heads of state of six major industralized democracies to a summit in Rambouillet and proposed regular meetings. The participants agreed to an annual meeting organized under a rotating presidency, forming what was dubbed the Group of Six (G6) consisting of France, West Germany, Italy, Japan, the United Kingdom, and the United States of America. At the following year's summit on Puerto Rico, it became the Group of Seven (G7), when Canada joined at the behest of U.S. President Gerald Ford.
Ford, I should add, wanted a country to balance out the Europeans. Since neither the Soviet Union nor China were capitalist economic powers--they were, in fact, hostile heavily armed powers--and Brazil and India and South Korea and Mexico hadn't begun or were just beginning their ascents, Canada was the only choice. The rationale for this is fading, since, taking a look at this chart of GDP measured at purchasing-power parities, South Korea and Spain come in just behind Canada, while among second-tier economies Brazil, Russia and Mexico come comfortably ahead. Arguably, all of these countries are more significant trading powers than Canada: Canada might be a major exporter, but almost all of its trade is with the United States. Compare the more diverse trade flows of the five non-G-7 countries I named. Were Canada to fragment, South Korea would have an excellent case for taking over Canada's membership, owing to its economic heft and respecting the principle of regional parity in representation in the G-7.
What all this demonstrates is that the G-7 is becoming less and less useful as a global economic executive. (The G-8 seems to serve little role apart from that of adjunct body to the OSCE plus Japan.) The continued growth of substantial new entrants into the club of First World countries like Spain and South Korea (and, hopefully, Argentina and Poland within a generation) and the rapid growth of the BRIC powers means that any such executive has to be truly global. It won't be, which is why its importance will doubtless shrink in the coming decades.