04
Co-operation
RUSSIA INDIA REPORT
BOOKMARKS www.ln.mid.ru Ministry of Foreign Affaires
www.investopedia.com/terms/b/bric.asp BRIC countries
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en.fondsk.ru Strategic culture foundation on-line magezine
THE ECONOMIC TIMES WEDNESDAY_JULY 08_2009 http://seekingalpha.com Read more on BRIC
Opinion: Trends The Yekaterinburg summit was an important event for the BRIC
BRIC-built future:
countries. How will their future co-operation develop?
the global economy
shake-up
JAMES DOWEY
Dvorkovich:
ECONOMIST, NEPTUNE
INVESTMENT MANAGEMENT
Four's company
Just as a plant’s leaves grow in a formation
that bends towards the sunlight, economies
grow towards the strongest sources of de-
mand for what they can potentially produce.
NIKOLAY KOROLEV
In this way, over time, economies come to be
shaped by the desires of their markets, wher-
ever they may be: at home or abroad. Analysts are taking different cused and specifi c. BRIC pro- craft construction. We’ve price but also product qual-
This helps to determine what firms look like, views of the BRIC grouping. vides a framework for work- been engaging in dialogue
what types of workers are in demand and who Some say Russia and China
RIR Dossier
ity.
ing out common approaches with our Brazilian colleagues
is getting rich. But the sources of demand want to take advantage of the to issues concerning the de- for some years about region- Is it possible to talk of some kind
that come to dominate and bend the economy international crisis in order to velopment of the global fi- Born on March 26, 1972, in try of Finance, adviser to Min- al aircraft. Brazil has the Em- of division of roles between the
towards them are not always sustainable. “push aside” the USA; others nancial architecture and the Moscow. In 1994, he graduat- ister of Economic Development braer company, which builds four?
When they run out, economies have to adjust think the new venture will world economy as a whole. ed from Moscow University with and Trade. aircraft in this category, and No, our countries have a
and find a new way to grow. come to nothing – the We can also discuss a wide a degree in economic cyber- 2001–2004: Deputy Minister Russia recently launched its wide range of possibilities.
We are currently experiencing such a shake- interests of the countries range of issues concerning netics and from New Economic of Economic Development and own Superjet project. They Russia has not just raw ma-
up of the global economy. Over the past dec- involved are too diverse. co-operation between our School (Moscow) and in 1997, Trade. are competitors in one sector terials but also a wide spec-
ade, the strongest source of demand in the Arkady Dvorkovich, aide to the countries – in energy, agricul- from Duke University (USA) as a 2004–2008: Head of the Presi- of the market, but Embraer trum of interests in other
world has been the US personal expenditure. Russian president, shares his ture and high technology. master in economics. dential Experts’ Directorate of also produces other planes areas, including advanced
By 2007, loaded with debt, America’s 300 mn views on prospects for the The fi rst summit has shown 1994–2001: Adviser to and the Presidential Executive Of- with different seating capac- technology. In Yekaterin-
consumers came to account for nearly 20 pc BRIC states in an interview the four states that make up then head of the Economic Ex- fice. Since May 2008: aide to ities, and here there is the po- burg, for example, there was
of global demand. That is to say they were with RIR. BRIC have an opportunity to pert Group of Russia’s Minis- the President. tential for partnership rather discussion of modern power
buying one-fifth of everything the world was fi nd common principles for than competition. engineering, including nu-
producing. Global economic activity duly as-
VLADISLAV KUZMICHEV
tackling various issues, and clear energy. This is not a raw
sumed a pattern shaped by the pre-eminence
RIR
our joint proposals could be- When will the “new four” be able material; it’s a hi-tech indus-
of the US consumer. come a serious basis for dis- system. We have similar po- grow overall. It’s a matter of to overtake the G7? try with export potential.
The global economic crisis that we are cur- Why does Russia need BRIC cussion in wider contexts. sitions on this; of course; how that growth will devel- There’s no point comparing The meeting also discussed
rently trying to climb out of, can be seen as the when it’s already a member of there will always be nuanc- op. No one’s planning to take “the four” with “the seven”. It’s the development of agricul-
spectacular demise of this pattern. We are the G8 and the G20? What are BRIC’s proposals for es, but our positions are very anything away from anyone not a matter of trying to catch ture and the food market. All
experiencing a necessary rebalancing away States as important as Brazil, changing the world’s finan- close. else. It’s about the gradual, up with or overtake anyone. four countries’ economies
from an over-reliance on an unsustainable Russia, India and China cial architecture essential- evolutionary development of The relative weight of the have both raw material and
source of demand – the US consumer’s light should have the opportunity ly about? Is there any truth in the idea that the system. countries will change gradu- technological elements, and
has faded. to relate to each other in a The meeting in Yekaterin- the BRIC states intend to move ally. BRIC’s role will grow, but they are all working to
It is not surprising therefore that the greatest wide variety of contexts. The burg talked about issues con- part of their reserves out of dol- How will competition between it’s still premature to talk strengthen the latter.
beneficiary of the past decade has not been availability of various venues cerning the development of lars and into their national cur- members of the group be ad- about the point at which they
the US – it has been the emerging economies. makes it possible to draw up the global currency system – rencies? dressed? might intersect. For example, What influence has the crisis
Between 1995 and 2007, the BRIC economies joint stances on a wide vari- not about a supranational The discussion was about Competition in specifi c sec- if we take GDP calculated in had on the BRIC economies?
(Brazil, Russia, India and China) – the four ety of issues, to reach agree- currency, but rather about how the system will develop tors is no obstacle to the over- Purchasing Power Parity, the It’s not easy for anyone, but
largest emerging economies by population – ment in broader gatherings the development of regional in the future. There will be all development of partner BRIC countries together al- for the BRIC member-coun-
doubled their share of world GDP from 7 pc to and to develop co-operation. reserve currencies, about di- room for all currencies – the relationships. In all areas, ready outstrip the economy of tries, the way the global
14 pc in US dollar terms. Now the big question This is not about taking an versifying the exchange sys- dollar, the euro, the pound, there is the potential for com- the USA. economy develops as a whole
for these economies is: how growth can be opposing position, but about tem, and also about the pos- the yen, and the BRIC coun- petition, but also the oppor- is important. Our countries
fostered on the other side of the global crisis. trying to add to existing for- sibility of gradually conduct- tries’ currencies. Naturally, tunity to develop pragmatic And China accounts for the li- are mainly geared towards
Yet, the crisis is a push in the right direction mats. ing some transactions in na- the four countries’ monetary economic relations and to on’s share? exports, and therefore the
for them. It is an opportunity to re-orient their BRIC, which stems from our tional currencies. units will not play a very big identify interesting projects Naturally, China makes up state of world markets plays
economies towards more sustainable sources countries’ potential and their The partners came up with role in the international ex- and mutual interests. This half the weight of the BRIC. an important role in how
of demand. The challenge is for governments contribution to the growth of ideas about investing part of change system straight away. concerns both global dimen- But GDP fi gures do not fully they conduct their economic
to implement the right policies to help achieve the global economy, is also a their reserves in national That role will depend on the sions of the economy, such as refl ect the situation. It’s more policy. Nevertheless, they all
it. convenient way of working currencies, and also about state of our economies, our fi nance, and also any specifi c important to catch up with understand that developing
China’s economic priority is to stimulate great- together. There are certain ad- reforming international fi - credit status, and the state of industry one cares to name. world leaders in terms of domestic demand – in terms
er personal consumption, which will require vantages of having just a few nancial institutions with the the fi nancial markets. It will One example would be the competitiveness and quality of both investment and con-
a reduction in China’s unusually high savings countries taking part in a di- aim of increasing the resil- be small to start with, but we discussion between Brazil of life. After all, competitive- sumption – is the key to a
rate. In part, this must come about by reduc- alogue, as it becomes more fo- ience of the global exchange expect the world economy to and Russia concerning air- ness is a matter not just of stable future.
-
ing incentives for households to save, such as
China’s woeful state provision of healthcare
and social insurance. Recent government an-
nouncements to address this issue are very
encouraging.
Brazil, conversely, needs to save more - or
at least its government needs to save more.
A multipolar world
Business interest rates in Brazil are the high-
est in the world. This signifies (alongside the
presence of a highly inefficient banking sector) four countries are not in the coincide on the principles of
a staggering excess of desired investment
CONTINUED FROM PAGE 1
habit of interfering in each resolving the situations in the
over savings. Brazil’s investment potential The volume of trade between other’s internal affairs (or in Middle East, Iraq and Af-
is second to none, but it needs more capital. BRIC countries is less than those of other countries), and ghanistan and around Iran’s
The government spends far too much on cur- with the countries of the they accept their partners as nuclear programme. The four
rent expenditures (the result of a bloated civil West, and structures could be they are, in the way they’ve countries play an important
service), which directly crowds out vital public better. Their differences in developed over the centuries. role in the economy of their
investment and indirectly crowds out private geography and history dic- They obviously have interests regions and act as centres of
investment through high taxes. Brazil needs a tate different geopolitical and principles in common. regional integration, while at
fiscal re-arrangement. stances, and mean they have For various reasons, these the same time having global
India must remove political uncertainties to different agendas in terms of leading non-Atlantic powers interests. The BRIC countries
business investment. Coalitional governments security. Although the BRIC are either not or only partly are on a course of conver-
with disparate interests have made it difficult certainly doesn’t see itself as included in the system of gence, motivated by growing
for the private sector seeking government confrontational or anti- Western organisations, for realisation that together they
co-operation - particularly when attempting Western, it is sometimes por- example the G8, and have to are capable of creating a new
to link up the stagnant agricultural sector with trayed as such in the Western take a backseat which is not world economic and political
the rest of the economy. The result of the 2009 media; there is no doubt that, consistent with their status. architecture which can act as
elections in May significantly strengthened the say, the USA will try to put a All four are in favour of de- an alternative to the present
hand of the Congress party, the leading party spanner in its works. mocratising international re- one – an alternative which
in the United Progressive Alliance coalition, But is the situation hopeless? lations, against hegemony can lead to the emergence of KONSTANTIN ZAVRAZHIN_RG
which should in theory make doing business Certainly not. and strong-arm politics, and a truly multipolar world. A promising friendship: Leaders of the BRIC countries shake hands, in an endeavour to utilise the com-
with the government easier. That is why the Belonging to different civili- support world diversity and BRIC is not an organisation mon platform to introduce change and ensure a bright future
stock market rose emphatically the morning sations is not necessarily a di- the creation of a global and representing one of the poles:
after the election result. visive factor, because each regional security system that it focuses on harmonising the
Russia’s strategy over the next decade must one has built up many centu- takes account of mutual in- interests of a number of rights. The BRIC is not plan- national organisations and on fi nancial and monetary is-
involve broadening the economy to incorpo- ries of experience of cultural terests and the principles of states. These states are big ning to take the place of ex- strengthen their voice by sues – not just fi nance minis-
rate a larger industrial base. and religious tolerance. The equal security. Their stances enough to have a particular isting international organi- working together. ters, but also heads of central
This will reduce the economy’s reliance on en- sphere of national interests sations. It doesn’t see itself as Rather, the BRIC is a club banks and vice-premiers re-
ergy revenues and raise average productivity. which are sometimes differ- an alternative to the G8 or which is in some ways, simi- sponsible for macro-eco-
To achieve this, the focus must be on infra- ent to the interests of other the G20; it’s a different and lar to the G7 in the early stag- nomic policy.
structure investment to make Russian industry
BRIC: Global giants
centres of influence, but at supplementary format. es of its development. For the Brazil, Russia, India and
more competitive, and to raise the capacity of the same time, they are not foreseeable future, this is the China are in one sense an
the economy to grow without generating infla- strong enough to always de- most realistic and sensible ideal group: they represent a
tion – one of Russia’s main problems in recent
Lists Brazil Russia India China
fend those interests on their The BRIC countries format. It’s important to set whole range of views on the
years. “Soft” infrastructure (education, welfare, own. BRIC development can
are on a course
up an institution of special world, its problems and ways
etc.) must be part of the strategy too to help
Countries by total area 5
th
1
th
7
th
3
rd
/4
th
also make a signifi cant con-
tribution in the humanitari-
of convergence,
“sherpas”, like those of the of addressing them. The BRIC
foster innovation and reduce inequality.
By population 5
th
9
th
2
nd
1
st
an sphere, which is currently
motivated by grow-
G8. There should be national is like a small-scale model of
In 2008, the Ministry of Economic Develop-
GDR (nominal) 10
th
8
th
12
th
3
rd
working groups on co-oper- the contemporary world and
ment and Trade set out a number of goals for dominated by the stereotypes ing realisation that ation within the BRIC, in- its activity presents an excel-
the next decade under the programme, 'Rus-
GDP (PPP) 9
th
7
th
4
th
2
nd
of just one culture.
together they are
cluding diplomats and repre- lent opportunity to create a
sia 2020'. Broadening of the economy and
Exports 21
th
11
th
23
rd
2
nd
What is the BRIC today? Es-
sentially, it is still a future
capable of creating
sentatives of academic and consolidated view of global
innovation were central in the plan. This is Imports 27
th
17
th
16
th
3
rd
projection. The BRIC coun-
a new economic and
public circles, to reinforce the problems and find ways of
very positive, but the trick will be finding the
Current account balance 29
th
5
th
154
th
1
st activity of the sherpas on a tackling them that are ac-
required investment. Foreign capital will prob- tries are not striving for world political architecture. permanent basis. The BRIC’s ceptable to everyone. The
ably have to be part of the answer. In order
Received FDI 16
th
12
th
29
th
5
th
domination, nor are they expert “second track”, which four states, can exist without
to facilitate this, it is vital that the Russian gov-
Foreign exchange reserves 7
th
3
rd
4
th
1
st
about to claim a leading role began work at the end of last the BRIC, but there is an un-
ernment does more to help foreign investors External debt 25
th
20
th
29
th
22
nd
in global governance. On the Moreover, by putting forward year, should also be institu- derstanding that it would be
understand its objectives. Global growth on
Public debt 47
th
117
th
29
th
98
th contrary, they are focused on well thought-through, pre- tionalised. A BRIC parlia- more difficult for them alone
the other side of the crisis (there will be some!)
Eletricity consumption 10
th
3
rd
7
th
2
nd
finding ways of building a pared and agreed positions, mentary forum should be set than together.
will not be achieved by continuing the old hab- new world system based on the BRIC countries can make up. There is a need to create a The BRIC has come into
its of the past decade. The role of emerging
Number of mobile phones 5
th
4
th
2
nd
1
st
the ideals of freedom of an substantial contribution mechanism for high-level being – and with it a multipo-
economies will be larger than ever. choice, justice and equal to the activity of other inter- quadrilateral consultations lar world.
-
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