brics
TRANSCRIPT
• Reflect an enormous success in the last 40 years in terms of GDP:– Their weight in the global GDP went from 5.6% to 25% in 20
years– According to the IMF, in 2015, the group will represent 61%
of global growth
it reflects a change in the international economic equilibrium
• More than 3 billion people (42% of world’s population)
• Cover more than 25% of the world’s land area
• Represents 4 continents
• Institutionalization since 2009 (1st Summit) diplomatic weight
• Its purpose is to take place into the international institutions to impact the global order = Counter-power of the G7
New Development Bank (NDB) since 2014: refocus financial flows
• Each country brings 10bnUSD: this places it in the 7th position among development banks (capital base = 50bn.USD)
• 1st Chairman of the Board of Directors is Brazilian
• 1st Chairman of the Board of Governors is Russian
• 1st President of the Bank is from India (Kamath)
• The HQ of the Bank is in Shanghai
• An “African regional center” will be set up in Johannesburg
• Multilateral development bank operated by the BRICS
• Alternative to the existing US-Japan-EU dominated WB and IMF
• The goal is to provide loans and liquidity to members (but also outside)
• Each member will be assigned one vote (≠ WB-IMF: it depends of the contribution)
• None of the members will have veto power (≠ WB-IMF)
Common characteristics:• Are not members of the OCDE
• They condition their insertion into the globalization: they want to preserve their sovereignty (capacity to do, to decide, to act; to control their destiny)
• Rapid growth over the last 2 decades (5.6% GDP in 1995 and 25% in 2015)
• Strong domestic market
• Huge population and important territory
• Middle powers at the global level and regional powers (regional leadership)
• Key role in the G20 (they are creditors)
• They realize strong infrastructure investment (to consolidate [1] the domestic market, [2] the political presence and [3] the national unity)
• They accept FDI only if it generates “spill over effects” i.e. if it helps the industrial upgrading or “vertical differentiation”; they condition FDI
• They Promote regionalism and the creation of regional banks to finance regional infrastructure – China:
• Asian Infrastructure Investment Bank (AIIB)• ASEAN–China Free Trade Area (ACFTA)• Regional Comprehensive Economic Partnership
Agreement (RCEP)• Shanghai Cooperation Organization (SCO)• Numerous FTAs
– Brazil:• Mercosur/Mercosul• Union of South American Nations (USAN)• Latin American and Caribbean States Community
(CELAC)• Bank of the South (Banco del Sur o Banco do Sul)
– Russia:• Commonwealth of Independent States (CIS)• Shanghai Cooperation Organization (SCO)
– India: • South Asian Free Trade Area (SAFTA) • ASEAN–India Free Trade Area (AIFTA)
– South Africa:• Southern African Development Community
(SADC)• African Union (AU)
South Asian Free Trade Area (SAFTA)
• Founded in 2004 in Islamabad
• 1.8 billion people
• Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan , Sri Lanka and Afghanistan in 2011
• 4 members are listed as LDCs: Nepal, Bangladesh, Bhutan and Afghanistan
• Objetive is primarily political rather than economic
Bank of the South (Banco del Sur, Banco do Sul)
• Monetary fund and lending organization • Founded in 2009
• Members: Argentina, Brazil, Paraguay, Uruguay, Ecuador, Bolivia and Venezuela
• Initial capital of 20 billion USD (largely financed from the proceeds of petroleum exports)
• Objective: To increase autonomy from economic policies of the IMF and WB => to offer an alternative to IMF and WB
BRICS exports as porcentage of the GDP 1970-2010
The weaknesses of the BRICS
• China maintains the Yuan at a very low level which affects Brazil’s economy (trade Brazil-China is destroying the Brazilian manufacturing sector)
• Historical tensions between China and India over the exact location of the border
• Russia:– is important politically and militarily but its economic weight is
limited/weak/volatile (its economy depends a lot on oil and gas=> depends on the price set by Organization of the Petroleum Exporting Countries)
– the population is getting older – its ambitions are only regionals
• India has not been able to impose itself in the region (South Asia and Indian Ocean); it is much more inward-oriented than outward-oriented
• Brazil – Pretends to be a “global player” but it has limited influence in Latin
America (not all the countries recognize its leadership; ex: Pacific Alliance)
– It suffers a process of primarization of its economy (more and more specialized in export of primary commodities => affects the consolidation of the Nation)
– It suffers important inequalities (worse GINI Index between LAC), corruption and violence (like others BRICS countries)
• China faces internal challenges that could threat its national unity and it suffers environmental issues
• South Africa does not have a continental leadership. It is still facing problems of important inequalities.