Build­ing BRICS

Enterprise - - World view -

The sphere of the ‘de­vel­op­ing world’ has ac­quired new di­men­sions af­ter the in­clu­sion of South Africa in the BRIC (Brazil, Rus­sia, In­dia, and China) bloc. The ex­panded BRICS is be­ing termed as sig­nif­i­cant due to its po­ten­tial po­lit­i­cal ram­i­fi­ca­tions on a global scale. Im­por­tantly, South Africa’s en­try has drawn from China but the ini­tial com­ment came from Jim O’ Neill him­self who pro­posed the con­cept of BRIC.

Jim’s crit­i­cism is based on the de­scrip­tion of orig­i­nal BRIC coun­tries in his 2003 Gold­man Sachs re­port, ac­cord­ing to which BRIC coun­tries’ size in terms of raw ma­te­ri­als, pop­u­la­tion and econ­omy to­gether have the growth rate to be­come the world’s dom­i­nant economies by 2050. How­ever, South Africa de­vi­ates from Jim O’ Neill’s orig­i­nal the­sis with only 50 mil­lion peo­ple, GDP of $350 bil­lion and cov­er­ing a mere 0.8 per­cent of the world’s land mass.

Eco­nomic ex­perts re­fer to the mar­ket­ing ef­fec­tive­ness of South Africa which is sig­nif­i­cant in pre­sent­ing it­self as a po­ten­tial re­gional can­di­date for in­clu­sion in BRICS. South Africa has a rel­a­tively weak econ­omy against the grow­ing economies of Tur­key, In­done­sia, South Korea and Mex­ico. Ex­perts ar­gue that the keen­ness to in­vite South Africa to the fold is mainly driven by the in­ter­est of BRIC mem­bers to ac­cess the lu­cra­tive mar­ket of Africa, us­ing South Africa as a gateway.

Africa of­fers a mas­sive 800 mil­lion pop­u­la­tion, 20 per­cent share in global eco­nomic strength and com­mod­ity pro­duc­tion, In­dia’s pi­o­neer­ing role as an out­sourc­ing in­dus­try leads in the ser­vices sec­tor and Brazil’s stand­ing as a lead­ing ex­porter of agri­cul­ture prod­ucts and con­struc­tion raw ma­te­rial. China’s suc­cess in achiev­ing econ­omy of scales in the pro­duc­tion of high tech prod­ucts and in other high value in­dus­tries is also a great ad­van­tage.

The strength of BRIC economies is surely ap­pre­cia­ble at the G-20 plat­form, but its chances of ac­tu­ally im­pact­ing the sta­tus of de­vel­op­ing world is rather hazy due to wide po­lit­i­cal dif­fer­ences be­tween the mem­ber coun­tries. Brazil, In­dia and South Africa are vi­brant democ­ra­cies, with close ties to the United States, while China has low tol­er­ance for po­lit­i­cal dis­sent and its re­la­tions with the US con­tinue to be brit­tle.

China and In­dia, de­spite a warm­ing re­la­tion­ship, also share a dis­puted mil­i­ta­rized bor­der, along with con­cerns from In­dia over China’s strong friend­ship with Pak­istan. Brazil has ex­pressed con­cerns over China’s Yuan cur­rency be­ing main­tained at an un­fairly low level, fu­elling a flood of cheap im­ports into the coun­try, while China is adamant over not in­clud­ing the Yuan is­sue as a sub­ject of dis­cus­sion.

The con­cerns of the global econ­omy over the fu­ture direc­tion of BRICS are well re­flected in the state­ment of an In­dian gov­ern­ment of­fi­cial, “There is a lot of co­op­er­a­tion in di­verse ar­eas such as cli­mate change and trade to name a few. Even in the G20 the BRICS for­mu­la­tion is a very strong group­ing. But it can­not be a blan­ket or a de­fault south-south po­lit­i­cal for­ma­tion.”

Ja­cob Zuma, Pres­i­dent of South Africa a $1 tril­lion econ­omy. By serv­ing as a gateway, South Africa will have the op­por­tu­nity to lever­age its cor­po­rate gov­er­nance, fi­nan­cial ser­vices and tech­ni­cal skills on an el­e­vated growth scale.

De­spite the asym­me­try of trade re­la­tions be­tween the four BRIC coun­tries, they have unan­i­mously agreed to group with South Africa. It is an­tic­i­pated that this group­ing will pro­ject BRICS strength in G-20, thus pos­i­tively im­pact­ing fi­nan­cial re­forms in favour of the de­vel­op­ing world.

Brazil, Rus­sia, In­dia and China them­selves de­vel­oped the group­ing into an or­ga­ni­za­tion, de­signed to pro­mote the in­ter­ests of de­vel­op­ing coun­tries as G-7 does for the economies of de­vel­oped coun­tries. What adds to the force of the BRIC coun­tries is Rus­sia’s global lead­er­ship in

Heads of BRIC coun­tries join hands.

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