BRICS and Globalization

1. BRICS
Nicolas FOUCRAS Phd
University TEC de Monterrey
nicolas.foucras@itesm.mx

2. • Reflect an enormous success in the last 40 years in terms of
GDP:
– Their weight in the global GDP went from 5.6% to 25% in 20
years
– According to the IMF, in 2015, the group will represent 61%
of global growth
 it reflects a change in the international economic equilibrium
• More than 3 billion people (42% of world’s population)
• Cover more than 25% of the world’s land area
• Represents 4 continents
• Institutionalization since 2009 (1st Summit)  diplomatic
weight

3. New Development Bank (NDB) since 2014: refocus
financial flows
• Each country brings 10bnUSD: this
places it in the 7th position among
development banks (capital base
= 50bn.USD)
• 1st Chairman of the Board of
Directors is Brazilian
• 1st Chairman of the Board of
Governors is Russian
• 1st President of the Bank is from
India (Kamath)
• The HQ of the Bank is in Shanghai
• An “African regional center” will
be set up in Johannesburg

4. • Multilateral development bank operated by the BRICS
• Alternative to the existing US-Japan-EU dominated WB
and IMF
• The goal is to provide loans and liquidity to members
(but also outside)
• Each member will be assigned one vote (≠ WB-IMF: it
depends of the contribution)
• None of the members will have veto power (≠ WB-IMF)

5. Common characteristics:
• Are not members of the OCDE
• They condition their insertion into the
globalization: they want to preserve their
sovereignty (capacity to do, to decide, to act; to
control their destiny)
• Rapid growth over the last 2 decades (5.6%
GDP in 1995 and 25% in 2015)
• Strong domestic market
• Huge population and important territory

6. • Middle powers at the global level and regional
powers (regional leadership)
• Key role in the G20 (they are creditors)
• They realize strong infrastructure
investment (to consolidate [1] the domestic
market, [2] the political presence and [3] the
national unity)
• They accept FDI only if it generates “spill
over effects” i.e. if it helps the industrial
upgrading or “vertical differentiation”; they
condition FDI

7. • They Promote regionalism and the creation of regional
banks to finance regional infrastructure
– China:
• Asian Infrastructure Investment Bank (AIIB)
• ASEAN–China Free Trade Area (ACFTA)
• Regional Comprehensive Economic Partnership
Agreement (RCEP)
• Shanghai Cooperation Organization (SCO)
• Numerous FTAs
– Brazil:
• Mercosur/Mercosul
• Union of South American Nations (USAN)
• Latin American and Caribbean States Community
(CELAC)
• Bank of the South (Banco del Sur o Banco do Sul)

8. – Russia:
• Commonwealth of Independent States (CIS)
• Shanghai Cooperation Organization (SCO)
– India:
• South Asian Free Trade Area (SAFTA)
• ASEAN–India Free Trade Area (AIFTA)
– South Africa:
• Southern African Development Community
(SADC)
• African Union (AU)

9. South Asian Free Trade Area (SAFTA)
• Founded in 2004 in Islamabad
• 1.8 billion people
• Bangladesh, Bhutan, India, Maldives,
Nepal, Pakistan , Sri Lanka and
Afghanistan in 2011
• 4 members are listed as LDCs: Nepal,
Bangladesh, Bhutan and Afghanistan
• Objetive is primarily political rather
than economic

10. Bank of the South (Banco del
Sur, Banco do Sul)
• Monetary fund and lending organization
• Founded in 2009
• Members: Argentina, Brazil, Paraguay,
Uruguay, Ecuador, Bolivia and Venezuela
• Initial capital of 20 billion USD (largely
financed from the proceeds of petroleum
exports)
• Objective: To increase autonomy from
economic policies of the IMF and WB =>
to offer an alternative to IMF and WB

11. BRICS exports as porcentage of the GDP
1970-2010

12. The weaknesses of the BRICS
• China maintains the Yuan at a very low level
which affects Brazil’s economy (trade Brazil-China
is destroying the Brazilian manufacturing sector)
• Historical tensions between China and India over
the exact location of the border
• Russia:
– is important politically and militarily but its economic
weight is limited/weak/volatile (its economy depends a
lot on oil and gas=> depends on the price set by
Organization of the Petroleum Exporting Countries)
– the population is getting older
– its ambitions are only regionals

13. • India has not been able to impose itself in the region
(South Asia and Indian Ocean); it is much more inward-
oriented than outward-oriented
• Brazil
– Pretends to be a “global player” but it has limited influence
in Latin America (not all the countries recognize its
leadership; ex: Pacific Alliance)
– It suffers a process of primarization of its economy (more
and more specialized in export of primary commodities =>
affects the consolidation of the Nation)
– It suffers important inequalities (worse GINI Index between
LAC), corruption and violence (like others BRICS countries)
• China faces internal challenges that could threat its
national unity and it suffers environmental issues
• South Africa does not have a continental leadership.
It is still facing problems of important inequalities.