Since the BRIC acronym was first coined in a 2001 paper by Goldman Sachs chief economist Jim O'Neill, the leaders of Brazil, Russia, India and China have made major strides in developing political, economic and social ties. But after numerous declarations of support and pledges of agreement, there is still much that this group of fast moving nations needs to accomplish together.
Annual summits for the group - later expanded to BRICS with the inclusion of South Africa - have been held since 2009. These meetings regularly provide forums for discussions of important topics, such as international economic reforms and energy security. Given their dominance at the bottom of the global value chain, BRICS countries have realized the importance of mutual cooperation and understanding.
In March 2013, the five countries reached an agreement to establish a development bank with a mandate to provide loans for infrastructure projects throughout the developing world. The creation of this institution was seen as a landmark event in the financial world, which has long revolved around the interests of wealthy developed nations.
The potential for future cooperation between the BRICS countries remains enormous given their collective position in the world economy. In 2012, the five nations were home to nearly 3 billion people, accounting for roughly 43 percent of the world's total population. Their combined GDP also equaled nearly 21 percent of total world production during that year as well. And during 2013, GDP growth in these countries is expected to hit an average of 6.9 percent, compared with the projected global average of 3.6 percent, according to Goldman Sachs research.
With the BRICS members now accounting for nearly half of global economic growth, these countries are well-placed to protect the interests of the developing world as a whole. Although their national interests occasionally put them in competition with one another, the group's successes rest on the principle that real results will only come through cooperation.
Over the past several years, political and economic pressure from the West has been pushing BRICS members closer together. This trend toward unity must continue in order to carry the group through the important trade, investment and financial objectives that lay ahead.
First of all, BRICS countries should start free-trade negotiations as soon as possible to counter the effects of regional economic deals such as the Trans-Pacific Partnership (TPP), the Regional Comprehensive Economic Partnership (RCEP). The bloc should aim to reach free-trade agreements within two years' time in order to advance their position in the global market. Ideally, each country should leverage its own advantages as it moves toward a trade pact - China and India can offer their low-cost labor while Brazil, Russia and South Africa can put forward their abundant natural resources.
Second, the group should work together to establish simplified investment procedures which keep tax and administrative barriers at a minimum. All of the five countries could benefit dramatically from more investment. India, for instance, needs funding to modernize its infrastructure and telecommunications networks. Meanwhile, Brazil and Russia need money to improve their manufacturing and energy sectors.
Thirdly, BRICS nations need to become more adept at protecting themselves in the international financial market. The bloc is particularly vulnerable now to capital outflows being recorded across emerging markets in response to monetary policies in the West.
As nations with emerging economies, BRICS members need strong bilateral and multilateral ties to protect their interests from the challenges presented by the US and other developed Western countries.
This Article is written by Anbound research team and translated by the Global Times, original publication please visit:
http://www.globaltimes.cn/content/822741.shtml#.Unw6ZLKcFkk
