adminThe current economic order has long been dominated by traditional Western economic powerhouses like the United States and European nations, which have enjoyed a much bigger say at major global financial organizations, such as the International Monetary Fund (IMF) and the World Bank.
However, the creation of BRICS and its rapid development speak volumes for the gradual shift of the global economic balance from developed economies to emerging ones, the need to speed up the formation of a new international economic order, and the trend towards a multi-polar world to counterbalance the absolute power of industrialized countries.
BRIC was first coined as an economic concept in 2001 by Jim O’Neill, a senior Goldman Sachs economist.
Leaders of the BRIC countries, including Brazil, Russia, India and China, held their first summit in June 2009 in Russia.
The birth of BRIC, renamed BRICS after South Africa’s accession in late 2010, reflected the ascendant clout of the world’s major emerging economies and closer economic cooperation between them.
In the year 2011, BRICS members have made fresh and noticeable progress in promoting mutual cooperation.
In April, China played host to the third summit of the group in the southern resort city of Sanya.
The tightly scheduled one-day summit issued the Sanya Declaration, in which BRICS agreed to boost the reform of the existing international monetary and financial system and diversify the international reserve currency system, currently dominated by the US dollar.
The summit also worked out three action plans to review existing cooperation projects and deepen future inter-BRICS cooperation.
In November, BRICS leaders, including Chinese President Hu Jintao, met in France’s resort city of Cannes ahead of the Group of 20 summit. They discussed stronger cooperation among BRICS countries and exchanged views on the world economic situation and the European debt crisis.
As the five BRICS members grow economically more complementary and interdependent, coordination and cooperation within them serve as a strategic future step for the bloc.
According to the IMF, the cooperative quintuplet, with roughly one-third of the world’s total population and more than a quarter of the world’s land area, was estimated to have a combined nominal GDP of US$13.6 trillion in 2011, accounting for 19.5 percent of the world’s total.
Inter-BRICS trade volume grew at an average annual rate of 28 percent from 2001 to 2010 and reached US$239 billion 2010, taking a considerably larger proportion of the world’s trade.
O’Neill predicted in a 2003 Goldman Sachs report that the world economic structure would have been reshuffled by 2050, and BRIC would overtake most developed Western nations at that time.
Meanwhile, BRICS is becoming more appealing for international unemployed capital, a proof of its ascendant competitiveness.
Yuri Moseikin, deputy dean of Moscow’s Institute of Global Economy and Business, told Xinhua recently that “BRICS attracts ‘hot’ capital from other regions, where these financial resources currently cannot find an investment niche. BRICS markets are more attractive for businesses due to their cheaper work force.”
“Recent events show that BRICS growth impacts Western economies even more directly. BRICS works there through the IMF’s instruments, by increasing BRICS shares at the IMF,” he said.
According to Reuters’ investment outlook summit held last December, BRICS could become as big as the G7 (the United States, Japan, Germany, France, Britain, Canada and Italy) by 2027.
Long-term projections show BRICS will account for almost 50 percent of global equity markets by 2050, and its combined GDP will surpass that of the United States by 2020, according to figures from the summit.
BRICS, besides promoting economic cooperation, has also taken steps to ramp up inner political coordination to increase its profile and influence in the world arena.
On many occasions, the five nations have adopted a unified stand on major global issues. For example, the bloc reaffirmed in the Sanya Declaration the need for a comprehensive reform of the United Nations and its Security Council in an attempt to better present the voice and interests of emerging economies. On the Libya issue, the original BRIC members all abstained from voting on a UN resolution to approve a no-fly zone over Libya in March.
Tao Wenzhao, a senior researcher with the Centre for US-China Relations at the prestigious Tsinghua University, said in an article, “The most important influence that emerging countries like the BRICS nations have on world politics is their participation in global efforts for good governance.”
Two decades ago, the G7 industrialized countries accounted for more than 70 percent of the world’s economic output, but now they account for 50 percent.
Developed nations now have to face the fact that the global economic and political landscapes have changed and the traditional global economic order is giving way to a new one, which is fairer, more balanced and reasonable.
BRICS has been gradually institutionalized through organizing annual summits, expanding membership and deepening cooperation. It has evolved from a mere economic concept into a multilateral cooperation mechanism whose force can not be ignored.
A Goldman Sachs report in 2009 showed that, since the start of the 2007 global financial crisis, 45 percent of global growth had come from BRIC.
The IMF estimated economic growth in emerging countries, regardless of the global financial crisis’ impact, reached 7.1 percent in 2010 and is expected to be 6.4 percent in 2011.
The robust growth momentum from emerging markets, particularly BRICS, had “played a very important role in pulling the global economy out of what would otherwise have been a deep slump,” said Tsinghua University’s Tao.
Meanwhile, the European debt crisis this year and its snowballing effects did not have a very severe impact on the BRICS nations.
The BRICS economies enjoy such a robust growth momentum that some experts even predict they will eventually surpass the economic clout of developed nations.
With BRICS’ rise, the authority of the existing international economic order dominated by Western powers would certainly be transformed toward a more reasonable end.
Mariano Turzi, professor at Torcuato De Tella University of Buenos Aires, told Xinhua, “In the next 10 to 15 years, BRICS will restructure international economic and diplomatic relations, and within the period, its rise would be difficult to reverse.”
Confronted with dim economic prospects and slow recovery, developed countries and emerging economies, particularly BRICS, should cooperate more closely, work out their differences and achieve win-win results.
However, a lot of arduous work is needed to promote the cooperation, analysts say.
The Russian expert Moseikin said BRICS and developed countries had been so far developing independently of each other. “They have not found yet a workable tool designed to coordinate their policies on an everyday basis.”
“The only floor for some coordination is the G20 meetings,” he said.
Meanwhile, it is also worth noting cooperation here does not merely mean persuading dynamic emerging economies to unilaterally shoulder more responsibilities, such as purchasing more European and US sovereign debt.
To tide over the current crises, debt-ridden Western countries should increase trade and investment links with BRICS.
The United States and the European Union are urged to scrap protectionist measures, open their arms to investment from BRICS and export more advanced technologies to the latter.
All in all, BRICS’ rise brings good news for the world to set up a more just and reasonable economic order, in which emerging countries’ opinions and voices will be better heeded.
But a lauded new world economic order can’t replace the existing one overnight.
It will only take shape gradually through more frequent coordination and cooperation within BRICS members, between BRICS and other emerging economies, and between developing and developed countries. — Xinnua.
Online Reporter