Version for the visually impaired
The report, supported by the ministries of finance and the central banks of the BRICS, focuses on synergies and complementarities between the BRICS economies, highlighting their role as growth drivers of the world economy. The emphasis is on best practices, areas of cooperation, and strengthening economic links so that the BRICS could collectively play a more important role in the ‘new normal’ of the post-crisis global economy. The report includes five chapters.
The first chapter provides an overview of the BRICS, their financial, government, and regulatory frameworks, and their share in the global economy. The authors note that the BRICS countries` share in the world GDP (in PPP terms) increased from 16 per cent in 2000 to nearly 25 per cent in 2010, and is expected to rise significantly in the near future.
The second chapter examines the impact of the global crisis, the resilience of the BRICS economies, their use of fiscal and monetary stimuli, the process of recovery, and their contribution to global growth. The authors come to a conclusion that the crisis inflicted significant loss in output in all of the BRICS economies. However, the banking sectors of the BRICS performed relatively well. The BRICS economies recovered swiftly with the support of domestic demand. The crisis revealed a need for the BRICS countries to allow domestic demand to serve as a durable source of growth, to institute financial sector reforms, to monitor and manage speculative capital flows, to create fiscal policy space on a sustainable basis as a central feature of their reform agenda, and to focus on infrastructure development and employment generation.
The third chapter looks at the best practices and institutions within the BRICS economies that contributed to their high growth rates. Many of these practices and institutions have relevance within the BRICS bloc for enhancing cooperation and creating synergies, so that the BRICS collectively could grow faster. For Brazil the authors provide such examples as the agricultural research, which has transformed the country into a major exporter, the use of bio-fuel for road transport, and the emergence of Embraer as a high-technology aircraft manufacturer. According to the authors, Russia’s major achievements include 1999–2009 reforms that promoted economic growth, lowered inflation, and led to a dramatic fall in the number of people living below the poverty line. The main showcase institution for India is private entrepreneurship which has been instrumental in achieving 8–9 per cent annual growth of the economy in recent years. The main China`s achievements are FDI attraction and utilization, as well as infrastructure financing. The reform and development of China’s banking industry and financial market is an important driver for rapid and sustainable growth. According to the authors, South Africa`s success is in its highly developed and well-regulated banking sector that escaped the worst effects of the financial crisis.
The fourth chapter examines the challenges that the BRICS could face in moving to a higher growth path. The authors highlight that the macroeconomic parameters and features of development vary within BRICS economies, and the challenges they face to make their growth process sustainable are also different. However, one common challenge that BRICS economies face is the need for institutional development without which sustainable growth cannot be ensured. The authors recommend the BRICS countries to harmonize and coordinate their policies with a view to sustaining their growth momentum and capacity to weather global turbulence. This may contribute to expanding their roles in global affairs.
The final chapter lists existing areas of cooperation among the BRICS, and explores new areas of cooperation including initiatives that could increase growth and development in BRICS countries and worldwide. The authors highlight such focus areas as: intra-BRICS trade and investment cooperation, cooperation in infrastructure financing, industrial development, transportation, food security, technical education, financial market development, research, cultural sphere and tourism, international issues, energy security, building of effective institutions, and collaboration within the international development bank for fostering south–south investment.
The authors conclude that the growing role of the BRICS is confirmed by the rapid recovery of these economies from the global financial crisis.
Full report