OPINION: New economic world order is emerging - and Brics will be at the centre of it
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The Brics countries have a lot going for them. Together they encompass more than 25percent of the world’s land coverage and 40percent of the world’s population and hold a combined gross domestic product of $18.5trillion (R216.5trln).
In October 2003, Goldman Sachs, the world’s leading global investment banking, securities and investment management firm, had published a paper predicting that, by 2050, the Bric economies would be larger in US dollar terms than the G-6.
The term "Bric" was coined in 2001 by its then-chairperson of Asset Management, Jim O’Neil, in a publication.
The Brics theory from Goldman Sachs believes that China will become the world’s biggest supplier of manufactured goods; India will become the world’s dominant supplier of services, while Brazil and Russia will become dominant as suppliers of raw materials.
From the year 2000 to 2008, the Bric countries’ combined share of total world economic output rose from 16 to 22percent. Together, the Bric countries accounted for 30percent of the increase in global output during the period.
With the global power balance slowly tipping towards the non-western world it was only natural that a new grouping would eventually emerge to advance mutually co-operative goals. The foreign ministers of the initial four Bric states (Brazil, Russia, India, and China) met in New York City in September 2006 on the margins of the UN General Assembly, beginning a series of high-level meetings and laying down the foundation of Brics.
Officially called Brics after the inclusion of South Africa, the bloc meets annually for summits to discuss global challenges and to co-ordinate their actions within and outside global institutions.
The Brics CCI
To further advance the broad agenda of Brics nations, the Brics Chamber of Commerce and Industry (CCI) was founded in the year 2012 by eminent professionals and entrepreneurs. It is a not-for-profit and non-governmental organisation and has been actively promoting commerce and industry in the Brics nations.
The chamber’s vision is to build an enabling ecosystem, especially for entrepreneurs and the small and medium enterprise segment from different parts of the country.
To this end, it organises trade fairs, exhibitions, seminars, symposiums, lectures and business campaigns from time to time to enhance institutional links and business relations between Brics countries and other friendly nations.
It promotes business interactions among members by organising regular visits and other forms of interactions in key areas of digital economy, food processing and agri business, manufacturing, rural and affordable health care, logistics and supply chain, skill development and entrepreneurship and social development.
While the Brics nations remain at the centre of all activities, the chamber has taken in its credo to reach out to and enable young entrepreneurs from other friendly nations too. It proposes to be the "voice" of young entrepreneurs and champion their business success.
The Brics grouping has been important in strengthening ties between its members, which have been traditionally weak.
The story so far
The bloc is an important mechanism to help correct that, through providing an institutionalised annual meeting between the presidents, ministers of foreign affairs, education, agriculture, health, national security, and many other areas.
In the same way, there are now regular meetings between think tanks, mayors and academics. Issues of economic reform, strengthening the rule of international law, development of counter terrorism strategies, co-operation on energy, giving more credit to Brics nations’ currencies over the US dollar have dominated the themes of the summits thus far, leading up to the establishment of the New Development Bank (NDB), the Contingency Reserve Agreement (CRA) and the Shanghai Co-operation Development Bank.
It offers the chance to transform the powerful symbolism of the group into a source of action, by empowering the Brics with the real capacity to apply their vision.
With steady steps, Brics is gearing up for the future by planning to set up a credit rating firm to compete with the western hegemony in the world of finance. The NDB, coupled with the CRA, forms the apex of inter and intra-Brics economic governance.
The CRA is generally seen as a competitor to the International Monetary Fund and along with NDB is viewed as an example of increasing south-south co-operation.
The initial total committed resources of the CRA will be $100 billion. It will provide support to Brics countries through liquidity and precautionary instruments as a response to economic crises.
With initial starting investment of $50bn, and a capital increase of $100bn over time, the NDB will mobilise resources for infrastructure and sustainable development projects in Brics and other emerging economies and developing countries, to supplement existing efforts of multilateral and regional financial institutions for global growth and development. With its focus on building infrastructure, it is one of the several new initiatives that will slowly help adapt global structures to the new reality of multipolarity.
The creation of the NDB thus points to a future with a larger number of important institutions that are not Western-led. India has been a key player in the attainment of the Brics goals. Prime Minister Narendra Modi recently attended the 9th Brics summit held in Xiamen, China, only 73 days after the Doklam stand-off.
However, at the summit, Beijing signed off on New Delhi’s initiative to name two Pakistan-based terrorist groups, Lashkar-e-Taiba and Jaish-e-Mohammad, in the Xiamen declaration, expressing concern on the security situation in the region and violence caused by these outfits. This is the first time that a Brics declaration has named these terrorist groups.
Prime Minister Modi also observed that India is rapidly transforming into one of the most open economies in the world, with an increasing ease of doing business.
He also highlighted programmes like Digital India, Start Up India, Make in India and Insolvency and Bankruptcy Code that are changing the economic landscape of the country.
In his intervention at the Dialogue with Brics Business Council, he also pitched the Goods and Services Tax in a big way, touting it as India’s biggest financial reform.
He spoke about furthering aspirations in key areas like agriculture, energy, environment, climate change, sports and culture, poverty eradication, better healthcare, food security, sanitation and education.
The Brics vision for 2025 is the institution of a new global financial system with a significant presence of the five nations, allowing the economies to support each other.
It also envisions increased humanitarian and cultural exchanges with improved infrastructure and better standards of living in the nations.
The long-term Brics vision is committed to exploring and shaping new models of global governance that shall strive to achieve more equitable development and inclusive growth.
It was a mutual desire for peace, security, economic progress and co-operation and a shared vision for future development that brought the Brics nations together. Brics is working together for a more equitable and democratic representation in the international political and economic order. This has been further reiterated by the establishment of the NDB and the CRA.
Signing of the agreement for the establishment of the NDB is expected to allow India to raise and obtain more resources for the much needed infrastructure development, the lack of which is coming in the way of inclusiveness and growth as of now.
Looking beyond and ahead of the current Brics agenda, steps will be taken to initiate dialogue with non-Brics countries and to embrace cultural diversity and promote people to people exchange to garner more popular support for Brics co-operation through traditional friendships.
Dr BBL Madhukar is the director-general of the Brics Chamber of Commerce and Industry.
The views expressed here are not necessarily those of Independent Media.
- BUSINESS REPORT