BRICS in the Contemporary Global Economy: Prospects and challenges

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This paper examines the rapid growth of the ‘emerging economies’ of the BRICS countries (Brazil, Russia, India, China and South Africa) in the global economic and geo-political arena. It challenges some of the celebration of BRICS’ achievements by highlighting remaining issues within their economies. Even after several BRICS Summits and after establishing Development Banks and an Action Plan for 2012-2016, unresolved issues for the grouping include: large regional disparities
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  i   Oxfam India working papers series May 2013OIWPS - XVIII PRAVEEN JHA AMIT CHAKRABORTY BRICS in the Contemporary Global Economy: Prospects and Challenges  The rise of the countries that constitute BRICS is significant in the contemporary global economic and geo-political arena. The ‘new pack’, Brazil, Russia, China and South Africa who form the BRICS are some of the fastest growing ‘emerging economies’ that are being talked about as the new drivers of the global economy, in a context where the US and Europe are in the midst of a serious economic crisis.Celebrating the relatively high growth witnessed in the BRICS countries needs to be tempered by the fact that these economies are riddled with large regional disparities, growing inequalities, substantial unemployment and significant levels of poverty. Contrary to popular perception, this paper argues that neoliberal growth is not the solution to these problems; rather, the very nature of accumulation in these economies aggravates these fundamental economic problems. The current obsession with growth distorts the priorities that these developing countries should focus on – essentially, greater autonomy and co-ordinated efforts to defend the well-being of their citizens. A growth process driven by a neoliberal policy regime is also inherently fragile, short-sighted and exclusionary. Authors: Praveen Jha and Amit Chakraborty Praveen Jha  is on the faculty of the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi, India and Amit Chakraborty  is a research student at the Centre. We express our gratitude to the participants of the panel discussion organised by Oxfam on 27 March 2012, at the India International Centre (IIC), New Delhi - particularly Neera Chandoke, Sachin Chaturvedi and Rajeev Malhotra, for their valuable comments and inputs. Abstract Disclaimer: Oxfam India Working Paper Series disseminates the finding of the work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusion expressed in this paper are entirely those of the authors. They do not necessarily represent the views of Oxfam India. Published by: Oxfam India  Contents Introduction 2BRICS in the contemporary global economy 2BRICS – From an acronym to an alliance? 5Rich countries, poor people - Is growth the solution? 7Challenges and Priorities for India 9BRICS and G20 vis-à-vis the dominant global economic and geo-political order: 10Conclusion: 10Appendix 12References 15  2 Introduction In the last three decades, the overall macro-economic policy regime and associated development agenda in the global economy has seen a significant shift. The dominant prescription has been to rely on free market forces, with an increasing reorientation of the role of the state in economic affairs. In this context, the BRICS nations – Brazil, Russia, India, China and South Africa (which became member of the group in 2011) – have drawn global attention as the new drivers of growth, especially after showing signs of early recovery in the aftermath of the global financial crisis in 2007-08. The acronym was srcinally coined as BRICs by Jim O’Neill of Goldman and Sachs in 2001. 1  This was followed by a defining report from the same organisation, which argued that large emerging economies such as Brazil, Russia, India and China have a growth potential that could potentially replace the European economy in terms of market size, and that China would replace the US as the leader of the global economy by 2050. 2 Yet, there were reservations, which were expressed around the time of the first BRICs Summit (2009). Apart from the fast growing economy and large population, the regional alliance shared no significant regional, cultural or political basis for an alliance. However, the perception that these countries had been able to bear global, economic shocks enabled the idea of BRICs to gain acceptance.This paper argues that the neoliberal growth strategy followed by these countries is not the solution to the problems of unemployment, poverty, regional disparity and inequality. Rather, the nature of accumulation in these economies tends to put pressure on a whole range of basic well-being indicators of the masses, for instance, mean years of schooling, life expectancy, inequality index, hunger index and poverty and malnutrition. In other words, a growth-led strategy which places market fundamentalism at its centre, has taken precedence over a development-focused agenda that prioritises equity and social justice, in the BRICS countries.The first section  of this paper locates the BRICS within the changing global economic and geo-political context, and provides an analysis of their economic performance, particularly after the global economic crisis. In the second section , an overview of their respective development trajectories is provided. The third section  presents an overview of recommended policy priorities for the BRICS to pursue in the future. In the fourth section,  challenges and opportunities for BRICS are analysed, within the particular framework of the BRICS Summits. In the final section,  we analyse the possibility of the BRICS working alongside other emerging economies to articulate an alternative development strategy, which prioritises equity, well-being and social justice. BRICS in contemporary global economy At least 43 per cent of the world’s population lives in the five BRICS countries 3 . They also account for 17 per cent of global trade and about 25 per cent of global GDP, computed on the basis of purchasing power 1  Jim O’Neill 2001, ‘Building Better Global Economic BRICs’, Global Economics Paper No. 66, Goldman Sachs, 30 November, http://www.goldmansachs.com/our-thinking/topics/brics/brics-reports-pdfs/build-better-brics.pdf 2  Wilson and Purushothaman, 2003 3  BBC NEWS Business, 26 March, 2013, www.bbc.co.uk/news/business-21923874,
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