BRICS: Rise of New Super Power


By

Dr. Pavnesh Kumar
Associate Professor
IILM - Academy of Higher Learning
1, Viraj Khand, Gomti Nagar, Lucknow
 


Back ground Note

BRICS groups consists of  Brazil, Russia, India, China and South Africa, with the name being the initials of the five countries. The group was known as  BRIC before the entry of  South Africa in December 2010.  This term was coined by Jim O'Neil in 2001 and  was used in the investment bank Goldman Sachs report titled Dreaming of Brics in 2003.

The combined territories of the BRICS countries account for nearly 30 percent of the world's total land area and  42 percent of the world's total population . In 2010, the group contributed 18 percent of the world's GDP and 15 percent of world  trade.  As per the projections made ,the five countries' combined population will peak at 44 percent of the world total by 2015 but is expected to fall to 37.1 percent by 2030. Their continuous GDP growth and falling population (after 2015) will help in increasing  their per capita income and  to improve the living standards of their peoples. BRICS is playing an increasingly important role in world economy. From 2001 to 2010, inter-BRICS trade shot up with an average annual growth rate of 28 percent and  total trade among the five countries stood at 230 billion U.S. dollars in 2010. As emerging economies, the BRICS countries share similar views on many regional and international issues. Over recent years, dialogue and cooperation among the countries is  strengthening, as evidenced by frequent exchanges of opinions on important issues concerning international economy and development.

Growing Prestige and influence

Among the BRICS members, China has been the "world factory" for many years, Brazil is a globally important "raw material base," Russia is an important world "petrol station," India is the world's well-known "office," while South Africa is "Africa's resources reservoir."

According to  the Russian top diplomat Lavrov "the cooperation mechanism under the BRICS framework was maturing and its influence was going up and  now the alliance is expanded, with the joining of the leading African country, South Africa. Thus, BRICS obtains a real global scale".He also highlighted the notable progress of BRICS countries  that they had made joint efforts in the reform of the international financial-economic architecture, such as the World Bank and the International Monetary Fund.  According to him  the bloc should advance its cooperation in international economic and political affairs, this  will accelerate the process of overcoming the influence of global crises and facilitate the creation of a more democratic and just financial system .He  also called for the BRICS countries to actively cooperate within the United Nations and push the development of relations with other leading developing countries and some international organizations, such as the Shanghai Cooperation Organization and ASEAN. Within BRICS,   he  said the cooperation mechanism provided the member states with a very good possibility for economic and technological cooperation based on complementing one another's advantages.  The economic and trade relations between China and Russia overall was positive, with bilateral trade in 2010 exceeding the pre-crisis level of 2008 to reach nearly 60 billion U.S. dollars. China had also become Russia's largest trade partner, with notable progress in energy cooperation. The two countries were on improving the quality of economic and trade cooperation, with a view to rendering their cooperation a strategic one.

Recent Summit :- Focus on economic issues and  global challenges

BRICS summit is the third one which was held  in  China although it is the first for South Africa. The previous two BRIC summits were held in Russia in 2009 and in Brazil in 2010. The leaders -- Chinese President Hu Jintao, Brazilian President Dilma Rousseff, Russian President Dmitry Medvedev, Indian Prime Minister Manmohan Singh and South African President Jacob Zuma were representative of their countries.The meeting, was  chaired by  Chinese President Hu Jintao, is expected to strengthen coordination and mutual cooperation among BRICS members on reform of the international currency system, commodity price fluctuations, climate change and sustainable development.

Issues and challenges for BRICS

The leaders  of the BRIC countries have to deal with five domestic problems.

1. They have to take measures to narrow the large income gap in their countries, although they are already implementing social policies to this end.

2. The BRICS economies have to increase the pace of industrialization.  To become countries with high per capita income, they have to transform themselves into skill-intensive and knowledge-intensive economies.

3. The five economies have to improve their social security systems. They are indeed trying hard to do that, but they have to intensify their efforts.

4. They have to take steps to control inflation. In the past 10 years, Brazil has successfully implemented macroeconomic control. The other countries need to think on this front.

5. The five countries have to stem the flow of hot money into their economies.  It is a difficult job , because their fast development and investment opportunities offer high returns and in return attract overseas investors.

The BRICS economies have a lot to benefit from their relationship with developed countries, and vice-versa. Their cooperation can result in a truly win-win situation. The BRICS economies import a huge amount of equipment from developed countries to meet their urbanization and industrialization demands. Their combined demand and the developed countries' capital and technological superiority can drive global economic growth, and help the developed economies to emerge from the global economic crisis. The BRICS economies' relationship with other developing countries is again a mutually beneficial affair. The expansion of BRICS' markets will especially help countries in Africa, Latin America and Southeast Asia, which can increase their exports. In return, BRICS can take advantage of the rapid development of other developing countries' markets to increase their own exports and growth.The BRCIS economies are increasing their overseas investment, especially in developing countries. For example, China is the biggest investor in Brazil. Besides mutual investments, the BRICS economies are also investing in other developing countries, helping increase local employment and economic development. The global financial crisis was created because some individuals in major developed countries abused their national credit system and issued excessive amounts of currencies, which resulted in the proliferation of financial products. Now, all countries are mulling ways to reform the international financial and monetary system to stabilize the world economy. The BRICS economies are more or less the victims of the global financial crisis and, therefore, should cooperate to the fullest extent to reform the international financial and monetary system. Climate change is another common challenge for the BRCIS economies. Industrialization in the developed countries began a couple of centuries ago, and they have been emitting greenhouse gases since then. So they should take the major responsibility of fighting climate change. Besides, they should also transfer environmentally friendly technologies to the developing nations at low costs, if not for free, to help the latter adapt to and fight against climate change. But some developed countries are using the transfer of green technologies to make profits. This is to sabotage the development of emerging economies

Conclusions

In future we will see the changing landscape of the world economy and the fall of dollar as well. The developing countries are trying their best to convert their economies in  the developed one .On the other hand LCD's are also leaving any stone unturned to make their presence notable. The world will now not will be  unipollar  for more time.

References

http:// www2.goldmansachs.com/ideas/brics/index.html

http://en.wikipedia.org/wiki/BRIC

http://articles.timesofindia.indiatimes.com

http:// www.thehindubusinessline.com/opinion/editorial/article1696894.ece

http://www.globalresearch.ca/index.php

http://www.investopedia.com

http:// www.hindu.com/2011/04/15/stories/2011041561250100.htm

http://www.thepicky.com/.../brazil-russia-india-and-china-bric-larger-economy-by-2050/ -

http://news.xinhuanet.com/english2010/china/2011-04/20/c_13837967.htm
 


Dr. Pavnesh Kumar
Associate Professor
IILM - Academy of Higher Learning
1, Viraj Khand, Gomti Nagar, Lucknow
 

Source: E-mail April 20, 2011

          

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