BRICS

Conti…• Started as BRIC -Coined by Jim O’Neil of Goldman Sachs in his

2001 paper entitled “Building Better Global Economic BRIC”.

• Represent the four rapidly developing countries of Federative Republic of Brazil, Russian Federation, Republic of India and the People’s Republic of China

• The motive was to symbolize the shift in global economic power away from the developed G7 economies

• The main finding by Goldman Sachs was that BRIC would play and increasing important role in the global economy looking at the emerging dynamics

Conti…• As such, political dialogue between the BRIC countries began in

New York in September 2006, as a side event to the 61st UN General Assembly with a meeting of the BRIC foreign ministers.

• BRIC Foreign Ministers at their meeting in New York on 21st September 2010 agreed that South Africa may be invited to join BRIC

• The inclusion of South Africa into the group expanded the acronym to BRICS in 2010 (John, 2012). This was despite economists advice at the 2011 Investment Outlook Summit held in December 2010 dismissing the prospects of South Africa’s success.

(Arkhansgelskaya, 2012).

AIMS OF BRICS• TRADE: Boost intra-BRICS trade in their local currencies to

increase trade cooperation and cope with the current international financial crisis.

• EDUCATION: To improve professional development and education amongst the BRICS countries.

• TECHNOLOGY: Promote the technological information exchange among the member states.

• ECONOMY: To enhance inclusive economic growth that will lead to an increase in the creation of jobs, fight against poverty and accelerate the economic transformation of members.

• PEACE AND SECURITY: Platform for the promotion of peace and security which is a shared desire for all member countries.

The achievements of BRICS

• Each of the four founding BRIC countries have already seen the tangible benefits of cooperation during the 10 years of the grouping's formation in the form of rapid economic growth and prosperity for their countries.

• Trade and investment ;Their membership acted as a catalyst for more positive positioning in the global marketplace amongst global investors and strategic investment partners

• There is a Fast growth rate in intra-BRICS trade, Russia, Brazil and South Africa supply commodities to China and India. China is major exporter of manufactures to all the other BRICS. When South Africa took up its seat as the fifth member of BRICS in 2011, export increased.

Conti…• Infrastructure and industrial development BRICS has been making significant headway in infrastructure

development plans .E.g. China build ‘40 000 miles of expressways, the world’s most extensive high speed rail system, futuristic airport terminals and massive hydroelectric dams

Research and development. BRICS member states are closing the gap between them and G7

nations on scientific research, Innovation and education

Conti…

Food security.Countries are promoting food security in their

territories through initiatives such as the creation of a basic agricultural information exchange system in BRICS countries, development of a general strategy for ensuring access to food for the most vulnerable section(s) of the population

Cultural exchange and tourism The hosting of the soccer world cup by South Africa in

2010, Winter Olympics by Russia in 2014 and the forthcoming 2014 world cup in Brasil.

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Benefits to other African countries

• Africa can benefit from the BRICS Bank through obtaining loans that they can use to develop their countries hence boost their economies.

• BRICS is connecting an undersea fibre optic cable system which is meant to improve communication between BRICS and the rest of the world. Africa will benefit from this cable through improved communication.

• Africa can also benefit from free trade enjoyed by South Africa in BRICS since they will in turn trade freely with South Africa honouring the agreement they have in African Union and SADC.

Challenges of BRICS• India, Brazil and South Africa produce similar goods and

compete for access to the same market (Sotero, 2009).• A lot of criticism has been expressed regarding the economic,

demographic and even territorial lag of South Africa from other BRICS members (Arkhangelskaya, 2010).

• The challenge that is common to all the countries of BRICS (except Russia) is that none of them are clearly identified and respected to the full as regional representatives. e.g, South Africa is challenged by Nigeria and Egypt in Africa.

Conti..oIndia and China, the two most important members of BRICS, have different political systems and different international political preferences.

oThere is a preserved and unresolved territorial issue between India and China.

oThough it is just a few years old, BRICS has not been able develop a charter spelling out the broad vision of the association. The BRICS should spell out in clear terms what their principles of global governance, terrorism, human rights and environment are.

o“temporary necessity cannot be the basis of permanent friendship” thus when the economic recession is over the need for BRICS may diminish, leading either to internal conflict among the members or to liquidation of the forum. www.asiapacific.anu.edu

Threat of BRICS to other international organizations• The proposed New Development Bank intends to offer loans

to countries in their original currencies, not in the US $ or the Euro like the IMF & World Bank is doing which benefits the US more.

• The fact that the BRICS are emerging economies means that they are likely to claim great power status in the global system long dominated by the west.

• Egypt, Mexico and Indonesia will be considered for inclusion into the block in the near future.

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Future Prospects for BRICS

Brazil

India

Canad

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an USA0

10

20

30

40

50

60

70

80

GDP PROJECTIONS BY 2050

BRIC G7 0

20

40

60

80

100

120

140 128.344

66.042

GDP PROJECTIONS BY 2050 in US$ trillions

Future Prospects for BRICS

• GDP of BRICS group may come up to the GDP of the G7 countries. This is likely to reach twenty to twenty-five Trillion dollars. The economy of China is expected to outrun the US economy and reach $129 trillion by 2050.

• create a self-administered currency reserve of base stock of $100 billion for emergency situations.

• BRICS plans to cooperate in the following New areas: BRICS Anti-corruption Cooperation, Energy, National Agencies responsible for Drugs Control and BRICS public Diplomacy Forum

Conti…• Intends to create a Development Bank to give competition to

World Bank and IMF. • Tourism amongst BRICS members is on constant growth

pattern. www.infoxin.com• Government of SA is keen to open exclusive offices in other

member countries to promote tourism in South Africa.• Aspire to Liberalize (relax) Visas by wrestling the issue of

individual visas for the citizens of the member countries.

conclusion• The BRICS countries have turned out to be a source of

global economic development essential for future generations. The centre of global economic activity is shifting from industrialized nations in the west to emerging economies in Asia, Africa, and Latin America. BRICS countries will need to work together closely to evolve strategies for the future. Cooperation in a wide variety of issues like energy, food security, and access to natural resources, climate change, global governance, as well as international trade policies is necessary. IF BRICS countries continues to have a stake in each other's economy by increasing trade and business relations among themselves, the relationship will turn out to be precious Bricks for reinforcement of the notion of a global village.