Political Science Project On BRICS

8/9/2019 Political Science Project On BRICS

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Damodaram Sanjivayya

National Law

University

Political Science Project

BRICS

Brazil,Russia,India,Cina,Sout

!"rica

#u$da %omar

Sec & B

'(1')*


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IInd Semester

!c+nowled$ement

I would like to thank our Political Science teacher Dr.T.Y. Nirmala Devi for

giving me such a wonderful opportunity to make a project on the !I"S.The

whole topic of project making helped me in enhancing my knowledge on the

topic.


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"ontents

Introduction############# $ rief %istory############# $ &irst !I" Summit##########. $ ' ( )ntry of South *frica########## ( Developments############# (

!I"S Summit############... + asic Information on !I"S "ountries###. + ' , Salient &eatures of !I"S )conomies#### , Impact of &inancial "risis on !I"S####... ,-/ 0onetary 0easures Taken to 0anage "risis## -1 est Practices##############. 1-$ "hallenges to !I"S as a 2roup####### (-+ 0utual "ooperation############ +-3 "onclusion###############.. 4 i5liography############### 6/

Introduction

BRICS7 originally 8!I"8 5efore the inclusion of South *frica in 6//7 is the title of an

association of emerging national economies9 Bra:il7 R ussia7India7China and South*frica. ;ith the possi5le e


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newly industrialised countries7 5ut they are distinguished 5y their large7 fast-growing

economies and significant influence on regional and glo5al affairs. *s of 6/17 the five

!I"S countries represent almost 1 5illion people7 with a com5ined nominal 2DP of

=S>$.4 trillion7and an estimated =S>$ trillion in com5ined foreign reserves.Presently7 India

holds the chair of the !I"S group.

In 6/67 %u ?intao7 the President of "hina7 descri5ed the !I"S countries as defenders and

promoters of developing countries and a force for world peace.%owever7 some analysts have

highlighted potential divisions and weaknesses in the grouping7 such as India and "hina@s

disagreements over territorial issues7the failure of the !I"S to esta5lish a ;orld ank-analogue development agency7 slowing growth rates7and disputes 5etween the mem5ers

over =N Security "ouncil reform.

rief %istory

The foreign ministers of the initial four !I" states Ara:il7 !ussia7 India7 and "hinaB met

in New York "ity in Septem5er 6//+7 5eginning a series of high-level meetings. * full-scale

diplomatic meeting was held in Yekaterin5urg7!ussia7 on 0ay +7 6//3.6

&irst !I" Summit

The !I" grouping@s first formal summit commenced in Yekaterin5urg on ?une +7 6//47

with Cui: Incio Cula da Silva7 Dmitry 0edvedev70anmohan Singh7 and %u ?intao7 the

respective leaders of ra:il7 !ussia7 India and "hina7 all attending.The summit@s focus was on

means of improving the glo5al economic situation and reforming financial institutions7 and

1 www.wikipedia.org

' www.wikipedia.org


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discussed how the four countries could 5etter co-operate in the future.There was further

discussion of ways that developing countries7 such as the !I" mem5ers7 could 5ecome

more involved in glo5al affairs.

In the aftermath of the Yekaterin5urg summit7 the !I" nations announced the need for a

new glo5al reserve currency7 which would have to 5e @diversified7 sta5le and

predicta5le@.*lthough the statement that was released did not directly criticise the perceived

@dominance@ of the =S dollar ' something that !ussia had criticised in the past ' it did spark a

fall in the value of the dollar against other major currencies.1

)ntry of South *frica

In 6//7 South *frica 5egan efforts to join the !I" grouping7 and the process for its formal

admission 5egan in *ugust of that year.South *frica officially 5ecame a mem5er nation on

Decem5er 6$7 6//7 after 5eing formally invited 5y the !I" countries to join the group.The

group was renamed !I"S ' with the 8S8 standing for South *frica ' to reflect the group@s

e


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6/67 the !I"S nations pledged >,( 5illion to 5oost the International 0onetary &und@s

lending power. %owever7 this loan is conditional on I0& voting reforms.(

!I"S Summit

The grouping has held annual summits since 6//47 with mem5er countries taking turns to

host. Prior to South *frica@s admission7 two !I" summits were held7 in 6//4 and 6//. Thefirst five-mem5er !I"S summit was held in 6/. The last summit took place in New

Delhi7 India7 on 0arch 647 6/6.The !I"S summit is scheduled to take place in Dur5an7

South *frica7 in 0arch 6/1.+

asic Information on !I"S "ountries

In the past few decades7 some large economies such as ra:il7 !ussia7 India7 "hina7 andSouth *frica A!I"SB have acFuired a vital role in the world economy as producers of goods

and services7 receivers of capital7 and as potential consumer markets. The !I"S economies

have 5een identified as some of the fastest growing countries and the engines of the glo5al

recovery process7 which underscores the changed role of these economies. )ven in the 2-6/

countriesG forum7!I"S are playing a formida5le role in shaping macroeconomic policy after

the recent financial crisis. *t present7 these five countries encompass over $/ per cent of the

worldGs population and account for nearly 6( per cent of total glo5al 2DP in terms of PPP. If

one compares the 2DP in PPP terms7 four economies figure among the top ten7 with "hina7

India7 !ussia7 ra:il7 and South *frica in 6nd7 $th7 +th7 3th7 and 6+th places7 respectively.In

terms of contri5ution to growth of PPP-adjusted glo5al 2DP of the world7 these five

economies accounted for (( per cent during6///'37 and their contri5ution is e


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The !I"S comprise a huge land share of the world ATa5le .6B and7 as a result7 own vast

natural resources. "hina7 which has a land area of a5out 4.+ million sF. km7 is the third-

largest country in land si:e7 after only !ussia and "anada. !ussia accounts for around 6/

per cent of the worldGs oil and gas reserves7 while "hina has a5out 6 per cent of the worldGs

mineral resources. In terms of agricultural land7 !ussia has 6.( million hectares of ara5le

land. ra:il covers $, per cent of South *merica and is the fi fth-largest country in the world

A3.( million sF kmB7 surpassed only 5y !ussia7 "anada7 "hina7 and the =nited States of

*merica.

)ach of the !I"S countries has multiple and different attri5utes and thus each has a huge

potential to develop. ra:il is e


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income group in each country is growing at varying rates 5ut the future direction is clear7 that

is7 the middle class will 5oth 5roaden and deepen7 providing a solid 5ase for the growth and

development of the economies.3

Impact of &inancial "risis on !I"S

The recent glo5al financial crisis that engulfed almost all economies marked a painful

adjustment at the macro level coupled with micro level distortions and incentives created 5y

past policy actions. This included e


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During the initial phase of the crisis7 the financial shock was transmitted to the real economy7

primarily through the eFuity price channel and7 in a more differentiated fashion7 through the

credit channel. The shock to international confidence had an immediate and sharp eff ect on

capital flows to emerging markets7 as investors reassessed risks and glo5al capital fl ows

collapsed. In addition to poor confidence and wealth effects7 the fall in eFuity prices led to a

rise in the cost of capital and dampened investment confi dence. In terms of real linkages7 the

collapse in demand from advanced economies was transmitted through the integrated supply

chain to developing economies7 with dramatic eff ects on trade in these countries.

*mong the !I"S7 the glo5al fi nancial crisis erupted after the collapse of the =S-5ased

investment 5ank Cehman rothers in Septem5er 6//3. Th e 5anking sectors of the !I"S

economies performed relatively well. In ra:il7 the local currency and stock market saw huge

fluctuations as foreign investment dwindled7 demand for commodity e


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+./ per cent in the second half of 6//37 amplifi ed 5y a sharp contraction in the performance

of the manufacturing sector. The significant e


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turned to large net outflows7 although overall net private fl ows remained positive as South

*frican 5anks ran down foreign assets. oth e


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nancing transactions and e


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-year central 5ank liFuidity lending rate was cut from $.+3 per cent to1.11 per cent. Th e

rediscount rate was cut from $.16 per cent to .3 per cent. *t the same time7 the P"

eliminated Fuantitative ceilings for financial institutionsG credit lending and promoted greater

support for S0) lending to increase their credit supply and optimi:e the credit structure.

South *frica

South *frica In response to the fi nancial crisis during Decem5er 6//37 the 0onetary Policy

"ommittee of S*! reduced its policy rate 5y (/ 5asis points. &urther cuts worth +// 5asis

points reduced the repo rate to an all-time low of (.( per cent 5y Novem5er 6//. Interest

rate reductions were facilitated 5y an improved inflation outlook against the 5ackdrop of

slowing economic growth Aincreasing output gapB and declining commodity prices./

est Practices

est practices refers to the practices which that have made significant differences to these

economies and contri5uted to their high growth rates.

0ajor showcase areas for ra:il include agricultural research7 which has transformed the

country into a major e


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powers7 and the introduction of a fl at personal income ta< rate of 1 per cent that ensured

improvement in compliance.

The main showcase institution for India is private entrepreneurship which has 5een

instrumental in achieving 3'4 per cent annual growth of the economy in recent years. Private

initiative has 5een responsi5le for the e


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development and reali:ation of the continentGs potential as a growth pole in the glo5al

economy. Hutwardly oriented South *frican companies are among the largest sources of &DI

in *frica and the countryGs development financing institutions are playing an increasing role

in the funding of regional infrastructure investment.

"hallenges to !I"S as a 2roup

In the years to come7 it is e


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enough for their optimal com5ination. In this conte


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countries.Nowadays7 even the !I" countries operate glo5ally7 strengthening their position

in the world even more. *n e


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The !I" cooperate actively with the =N ' they 5ecame co-authors of the =N 2eneral

*ssem5ly resolutions on the prevention of any types of weapons deployment in outer space.

*t the last !I" summit A*pril 6/B on the island of %ainan the mem5ers passed a joint

declaration on mutual dialogue and cooperation in the area of politics7 5usiness and economic

relations and mutual cooperation in the sphere of science7 healthcare and ecology. The !I"

face the same tasks connected with economic development7 technological moderni:ation and

the social system development. These priorities open further space for cooperation where5y

these countries can reach their o5jectives faster.

*nother e


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5ut as for their standard of living these countries still lag 5ehind the developed economies.

Smaller areas of prosperity sharply contrast with areas of poverty. It will pro5a5ly take

decades 5efore these countries solve their most critical and pressing social and economic

pro5lems7 such as poverty7 criminality or unemployment.

* decade of rapid growth A6///-6//B is not sufficient for the !I" countries to pick up the

5aton from the present glo5al economic leaders ' the =S* and the ;estern )urope. The

!I" countries may surprise the world with their development within ten years provided

there will 5e a Fuality improvement and further economic growth. 0oreover7 there are other

countries in the world with fast growing economies. They are referred to as the 0IKT

countries - 0e


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i5liography

. The !I"S !eport ' * Study of ra:il7!ussia7India7"hina and South *frica with

special focus on synergies and complementarities - 0inistry of &inance72overnmentof India ' H

Political Science Project On BRICS

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