BRICS:
ü B = Brazil
ü R = Russia
ü I = India
ü C = China
ü S = South Africa
ü The term ‘BRICS’ was coined by Jim O’Neill in
the year 2001. (Then Chairman of Goldman Sachs)
ü Emerging economies of the World.
ü The term was first used by Goldman Sachs
report in the year 2003. It speculated that by 2050 these 4 economies
(excluding SA) would be wealthier than most of the current economies.
ü BRICS – 42 percent of the World population.
ü 26 percent of land territory
ü 27 percent of World GDP
ü 1st summit took place in 2009 in Yekaterinburg,
Russia.
ü This is considered to be necessary reaction
to the global economic crisis.
ü During the summit the BRICS discusses about
the importance of creating more diverse international monetary system with a
diminishing reliance on dollar
ü South Africa officially joined in the year
2010.
ü BRIC à BRICS
ü The Presidency rotates
ü Objective: Improving the global economic
situation and reforming the financial institutions.
SUMMITS:
ü BRIC - Russia - 2009
ü BRIC - Brazil - 2010
ü BRICS - China - 2011
ü BRICS - India - 2012
ü BRICS - South Africa - 2013 (March)
ü BRICS -
Brazil - 2014
ü BRICS -
Russia - 2015
ü BRICS - India - 2016
ü BRICS - China - 2017
ü India proposed for - BRICS Bank.
ü The BRICS nations account for 18 percent of
the global trade.
ü BRICS trade and investment
flows would be accounted and paid for with the
·
Real (Brazil)
·
Rouble (Russia)
·
Rupee (India)
·
Yuan (Chinese)
·
Rand (South Africa)
Presidents:
India - Narendra Modi
Russia - Vladimir Putin
Brazil - Dilma Rousseff
China - Xi JinPing
South Africa -
Jacob Juma
Note:
ü Indonesia and Turkey are going to become
members soon
ü Argentina was supposed to be invited but not
so far
BRICS Bank:
ü This is also called New Development bank
ü Formed on July 15, 2014
ü Head quarters: Shanghai, China
ü Note: There was a completion from New Delhi
and Johannesburg
ü Official languages: English, Chinese, Portuguese,
Russian and 22 official languages of India
ü This is the multilateral development bank
ü This becomes an alternative to the World Bank
and IMF
ü There is no veto power and each country has
one vote
ü Note: In World Bank votes are decided by
share
ü It was agreed to establish the bank in 2013
ü Initial cost will be $ 50 billion and given
by $ 10 billion each
ü $ 100 Billion bank and a reserve pool of
another $ 100 billion
ü The other nations will be allowed to become
the members but the capital of BRICS should not be less than 55 percent
ü The first President will be from India
ü Inaugural chairmen for board of Directors
will be from Brazil
ü Inaugural Chairman for board of Governors
will be from Russia
ü Focus: Lending for infrastructure projects
Analysis:
ü The BRICS model has evolved from
investment lingo to a formalized network hoping to capitalize on the group’s
collective promise in the wake of instability in the global economy.
ü In doing so, it has taken on a greater geopolitical role, with aims
to enact institutional reforms that shift global power.
ü While initial discussions focused on
the need to reform international institutions, including the IMF and the UN
Security Council, recent developments centre on creating a new institutional
body.
ü At the BRICS presidential summit in
2013, delegates agreed to establish a BRICS development bank which would serve
as an alternative to the World Bank.
ü
BRICS bank is located in Shanghai, the bank will fund
infrastructure and sustainable development projects in both BRICS countries and developing
markets.
ü
The first bank president will hail from India (K V Kamat) and the
presidency will rotate.
ü
The board of directors will come from Brazil, and the first chair of the
board of governors will be Russian.
ü
South Africa will be home to the bank’s first regional center for
Africa.
ü
The heads of state instructed finance ministers from the five counties
to work on organizing the bank’s operations.
ü
Slated to open in 2016, bank membership will be open to other countries,
though BRICS capital share cannot fall below 55 percent.
Issues:
ü Incorporating new countries has proved
controversial. O’Neill himself expressed doubt
over the merit of South Africa’s addition, claiming that other countries
with high growth, including South Korea, more adequately fit the description of
a BRIC as he laid out in his 2001 paper.
ü The Economist even suggested that South Africa’s
inclusion took place to represent African countries in a way that kept acronym
intact and not as a result of comparative economic factors.
ü Plus, adding new members raises questions over the permanence and efficiency
of the label.
ü Numerous countries, including
Indonesia, Mexico, and Vietnam, fit the emerging market descriptions as
Argentina does.
ü For example, Indonesia, which has the
second fastest economic growth in Asia after China, has for years lead
economists to ask if BRICS should instead be BRIICS.
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