Advantage BRICS
The
Future Nations
BRICS,
originally "BRIC" before the inclusion of South Africa in 2010, is
the title of an association of emerging national economies : Brazil, Russia,
India, China and South Africa.
With
the possible exception of Russia, the BRICS members are all developing or newly
industrialised countries however they are distinguished by their large,
fast-growing economies and significant influence on regional and global
affairs.
As
of 2013, the five BRICS countries represent almost 3 billion people, with a
combined nominal GDP of US$14.8 trillion, and an estimated US$4 trillion in
combined foreign reserves.
In
2012, Hu Jintao, who at the time was President of China, described the BRICS
countries as defenders and promoters of developing countries and a force for
world peace. However, some analysts have highlighted potential divisions and
weaknesses in the grouping, such as India and China's disagreements over
territorial issues, slowing economic growth rates, and disputes between the
members over UN Security Council reform.
The
acronym was coined by Jim O'Neill in a 2001 paper entitled "Building
Better Global Economic BRICS". The acronym has come into widespread use as
a symbol of the shift in global economic power away from the developed G7
economies (Presently G8) towards the developing world. It is estimated that BRICS
economies will overtake G7 economies by 2027.
BRICS
countries represent 43 percent of world’s population, 18 percent of global
trade, attract 53 percent of the foreign capital, accounts for about 25 percent
of global gross domestic product on purchasing power parity basis and are
currently generating about 45 percent growth of the world economy.
BRICS
Trade and Economics Research Network (BRICS-TERN) has been established as a
platform of non-governmental groups from among Brazil, Russia, India, China and
South Africa. Its purpose is to assist the on-going cooperation between and
among the BRICS countries with network-based policy research and advocacy on
contemporary developmental issues.
The
objective of the network will be for research organisations in BRICS countries
to work together on issues of trade and investment, and jointly produce outputs
which can assist policy making in BRICS countries. The following can be seen as
the strategic objectives of the network
- Sustainable development
- Inclusive growth
- Promotion of fair markets
- Peace and stability
The
BRICS Forum, an independent international organisation encouraging commercial,
political and cultural cooperation between the BRICS nations, was formed in
2011. In June 2012, the BRICS nations pledged $75 billion to boost the lending
power of the International Monetary Fund (IMF). However, this loan was
conditional on IMF voting reforms. In late March 2013, during the fifth BRICS
summit in Durban, South Africa, the member countries agreed to create a global
financial institution which would rival the western-dominated IMF.
The
G8, otherwise known as the Group of Eight, is an assembly of world leaders who
meet annually to discuss global issues.
Each year, the G8 holds a Leaders’ Summit, in which Heads of State and
Government of member countries meet to discuss and attempt to reconcile global
issues. Although the G8 is best known
for its annual summits, it works throughout the year to tackle important
contemporary topics such as the economy and climate change. The G8 discusses and creates global
policies. However, adherence to these
policies is not obligatory, and other countries can decide whether or not to
obey.
The
G8 is made up of heads of government from Canada, France, Germany, Italy,
Japan, the Russian Federation, the United Kingdom and the United States. The European Union is also represented at
meetings by both the president of the European Commission and the leader of the
country that has European Union presidency.
All
G8 members originate from the developed, industrialised world. The G8 excludes China and India, despite
their rapid economic growth, and fails to represent countries in Africa and
Latin America. This has led to accusations
that the G8’s priorities fail to represent the majority of the developing
world.
Indian
finance minister, Mr P Chidambaram says that the five BRICS nations hope to
complete preparations for their proposed joint development bank by their 2014 summit
in Brazil.
The
emerging powers group - Brazil, Russia, India, China and South Africa -
announced their intention to set up their own development bank to reduce their
reliance on Western financial institutions like IMF and World Bank.
The
BRICS finance ministers met in Washington and reiterated their commitment to
the BRICS bank.
The
officials from the five countries - who represent a fifth of global Gross
Domestic Product and have high geopolitical importance in their separate
regions - would refine the plan and work out technical details for leaders to
sign next year in Brazil.
Questions
of where the bank will be located and respective contributions of member
countries would be made by the leaders.
Before
we meet in Brazil for the next summit, that is one year from Durban 2013, we
hope to complete our homework. We hope that we can complete our work in 12
months. It's an ambitious agenda, but we are going to work hard on that, said
Chidambaram.
Global
investors should welcome the proposed $100bn Contingent Reserve Arrangement and
the planned Development Bank backed by the leaders of Brazil, Russia, India,
China and South Africa. The BRICS shareholders have yet to work out the details
of these institutions however the political resolve is clearly in place.
Given
the increasing frequency and magnitude of global financial crises since the
collapse of the Bretton Woods system, the addition of another fund that major
countries can rapidly mobilise in times of crisis is welcome. And a new
development bank that promotes much-needed infrastructure investment is timely
and can increase global aggregate supply. This is a positive development for
global consumers and investors.
It
is clearly evident from this that the developed nations have majorly worked
towards their interests instead of viewing things from a bird’s eye view at
macro level. How there can be only a few developed nations in global village
and how far they can sustain the developed status without depending on
developing nations.
It
is said that growing from a developing stage to developed stage is not that
tough however maintaining the already attained development is the biggest
challenge. Undoubtedly the future nations - BRICS will work towards world peace
and economics stability with complete cooperation as it is the right step
towards a bright future ahead.
Some Useful Links :
BRICS - Latest News
BIMSTEC
Keywords: Brazil, Russia, India, China, South Africa, BRICS, BIMSTEC, Vladimir Putin, Xi Jinping, Narendra Modi
