Below is a revised thesis on international political economy I'm currently working on, many ideas of which may contain logical flaws and misinterpretations. Therefore, I wholeheartedly welcome any rational comments and discussions in order to make this paper an ultimate approximation to the real situation. Thank you!
FiFi Qin
Impacts of the BRICS Countries on the Global Economy
Abstract
In 2003, Goldman Sachs issued
an investment report that coined the now-famous acronym, the BRIC to jointly
refer to the economies of Brazil, Russia, India and China. While these
economies only reflected a small portion of the global GNP at that time,
economists have projected that in 40-50 years, these nations may very well
catch up to the OECD countries in their economic capability. At the outset,
these four BRIC nations are seemingly disparate; however, they have a common
thread in that they are all developing nations with a significant growth
potential.
In 2011, the BRIC turned to be
the BRICS as South Africa gained entry. Since then, the BRICS have been
representing a group of leading emerging economies that play a key role in the
world development platforms. The group has received overwhelming global
attention and has been playing a critical role across the globe.
From a political perspective,
the rise of the BRICS has brought a redirection of foreign policy targets in
member nations as well as a tectonic shift of power in global governance.
From an economic perspective,
the huge volume of trade and the upsurge of market demand generated from the
BRICS nations contribute significantly to the recovery and growth of world
economy after the 2008 crisis. Moreover, the proposed establishment of the
BRICS Development Bank will possibly fashion a new model for international
banking, and create development opportunities needed by the developing world.
Therefore, the thesis is set to
analyze how the BRICS countries impact the global economy from two aspects: foreign
policy and economics. The author hopes this thesis could provide a general
insight into the contributions and influences the BRICS makes internationally.
Chapter
1 Literature Review and Research Structure
1.1
Introduction to the BRICS
In 2001, Terence James "Jim"
O'Neill, the retiring chairman of Goldman Sachs Asset Management, coined the
acronym the BRIC that has become well known nowadays, to refer to the four
rapidly developing countries that symbolize the global economic power shift
away from the developed G7 economies. The four countries are Brazil, Russia,
India and China. The term BRIC was first proposed in Jim’O’Neil’s report, The World Needs Better Economic BRICs, a
paper he wrote for Goldman Sachs's Global
Economic Paper series. Later, South Africa, in 2011 at the third summit of
the BRIC, gained its entry to the group, which was renamed as the BRICS since
then. The BRICS grouping marks a tectonic shift, or the so-called “great
transformation” of the world economy, where the impact of the BRICS and other
similar emerging economies expand and, very possibly, would eventually outstrip
the major developed countries.
Politically, no apparent similarities
exist between the BRICS members. Instead, their internal political structures
differ significantly. Among the five politically divergent states, Brazil,
India and South Africa are well-established democracies, while Russia’s claimed
democracy is largely affected by an authoritarian and oligarchic regime. China,
the largest and most powerful socialist people’s republic, is under a unique
political structure that is also depicted by the Western World as
authoritarian. However, the BRICS countries have common pursuits in the
international society. They form a considerable force in seeking joint action
and allying other developing economies in UN resolutions and other
international negotiations. For example, Brazil, India and South Africa are
seeking a greater voice in the international peacekeeping efforts through the
reform of United Nations Security Council. China and Russia are trying to
achieve larger influence in the International Monetary Fund (IMF) through IMF
Quota Reform. On the other hand, BRICS members on their own are either regional
leaders or powerful emerging economies that contribute significantly to
regional development. By associating with each other, BRICS countries are able
to justify their regional prominence and create a broader platform for
cooperation with developing economies of mutual interest.
Economically, the BRICS nations
represent a considerable weight in the global economy. According to 2012
estimate on a Purchasing Power Parity (PPP) basis, the Gross Domestic Product
(GDP) of the five nations amounted to $22,539 billion in total, approximately
25% of the global GDP. They also account for
45% of the world’s population,, and 40% of the world currency reserves. Trade within the group amounts to $6.1 billion(trillion?) or 16.8% of global
commerce. Economists have projected that in 40 to 50 years, the BRICS nations
may very well catch up to the OECD countries in their economic prowess. At the
outset, these five nations are seemingly disparate with regard to economic
structure, development strategy, and macroeconomic policies; however, they have
a common thread in that they are all large developing nations with a
significant growth potential. The Goldman
Sachs Global Economics Paper No.208 estimated in 2011 that, by around 2030,
the BRICS economy as a whole will outstrip the G7 developed economies in total. The
strength in economic growth has led to the transformation of the BRICS notion
from a conceptual economic term to a formal political grouping based on common
developmental interests. With official BRICS summits held and joint communiqués
released, a polycentric system in global affairs is trending up towards the use of non-
institutionalized mechanisms of global governance and network-based diplomacy,
and the growing economic interdependence of states, where the BRICS grouping is
gaining authority as an exemplary framework.
1.2
Research Structure
The following part of the thesis will
mainly focus on two parts. First, the foreign policy strategies BRICS countries
are generally taking and the implications on international affairs. Second,
which is the motivation behind the formation of the BRICS, the economic
linkages and prospective cooperation among BRICS nations and the impacts
generated on the global economy.
