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EXECUTIVE SUMMARY
In the past few decades the BRICS countries (Brazil, Russia, India, China and
South Africa) have played a vital role in the world economy in terms of total
production, investment capital destination and as potential consumer markets.
BRICS economic growth and social inclusion policies have helped to stabilise the
global economy, foster job creation, reduce poverty and combat inequality, thus
contributing to the achievement of the Millennium Development Goals (MDGs).
The global economy has been showing signs of a recovery following the
financial crisis. While it is likely that global gross domestic product (GDP) will
increase, the pace of growth itself is uncertain. Additionally, the quality of growth
is far from certain, with real economic data not showing significant improvement.
Instead, the meagre growth achieved so far, especially in advanced economies,
can be attributed to attempts at demand augmentation via a reduction in fiscal
tightening as well as liquidity-boosting measures via extremely accommodative
monetary policies.
Advanced economies’ central banks are struggling to mitigate deflationary
trends and have not yet been able to commit to a definite timeline on withdrawing
liquidity support. Although the active monetary policies have mitigated the
immediate adverse effects of the crisis, and have had a positive impact on unem-
ployment, they have not had a commensurate effect on investment growth. All of
this points to a danger of secular stagnation – a permanently lower trend of growth.
With this prospect, the BRICS countries should come up with proactive
policies that reinvigorate their domestic economies, establish stronger economic
relationships among themselves and influence the international scenario. This will
also help them to reduce to some extent their excessive dependence on exports to
markets in developed countries.
In view of this situation and aiming at making suggestions for joint BRICS
initiatives from a long-term perspective, the BRICS Think Tank Council (BTTC)
has focused on five dimensions, namely: the promotion of cooperation for economic
growth and development; the maintenance of peace and security; social justice,
sustainable development and quality of life; political and economic governance; and
achieving progress by sharing knowledge and innovation. This document presents
the BTTC appraisal of the overall scenario with regard to these dimensions, indicates
some challenges and proposes a set of recommendations to deal with them.
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In terms of economic cooperation and growth, BRICS countries should
fully participate in the formulation of international financial standards and rules,
make the best use of international financial reforming achievements and implement
international standards to achieve internal reforms and to improve their own robust
financial standards.
To be able to achieve these goals, BRICS countries consider two conditions
fundamental: reform of the governance of multilateral institutions, and the
establishment of international peace and security.
BRICS countries shall continue their efforts to promote changes in the
voting rights at the IMF and the World Bank. They must also insist on the reform
of the United Nations, including the Security Council. These measures are needed
to reflect the new economic power of emerging economies.
In parallel to these adjustments in the economic realm, the aim of BRICS is to
create a better and safer world order through peaceful diplomacy and multilateralism.
Peace and stability can be achieved through cooperation and collaboration around
existing national, regional and international peace and security initiatives, and by
developing new strategies and mechanisms to ensure a secure future, as the UN
Charter suggests.
Despite all the efforts made by the international community, it has not
yet succeeded in elaborating an adequate strategy to oppose local and regional
threats, as a number of recent events demonstrate. For example, a number of new
elements add up to affect security. Emerging types of offensive weapons pose a
danger to global stability; they are not covered by any particular treaty, they may
disrupt the established balance of power, and their usage could lead to conflict.
Furthermore, terrorism is condemned in all its forms and manifestations. All five
BRICS countries express grave concerns over the fact that terrorists increasingly
use globalisation processes to promote their cause and inflict greater damage on
peoples of the world.
Another example is the drug problem, which has evolved into a truly global
phenomenon, with transnational drug crime becoming one of the leading illegal
activities in the world.
It should also be added that the BRICS countries remain under-represented
in the field of global internet and cyber governance. BRICS should, therefore,
increase the common areas of cooperation to deal with these issues in accordance
with their agreed principles.
From their national perspective, while the BRICS countries have managed
to sustain considerable economic growth over the past decades, they continue to
face significant challenges in ensuring social and economic justice at national and
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regional levels. The presence of high rates of inequality is a common challenge faced
by all BRICS countries. Like many emerging markets and developing countries,
they continue to experience high levels of poverty, inequality and unemployment
that undermine the rights of citizens to social justice and a better quality of life.
The BRICS countries have decided to expand their focus to social development
issues. A key step is the formal commitment to strengthen their cooperation in
education. The MDGs have only partially been achieved.
The goal of universal health coverage among BRICS countries aims to ensure
that citizens have health coverage in a publicly financed health system. Different
situations are found in the BRICS countries, and cooperation and sharing experi-
ence certainly contribute to achieving such goals. Health coverage is also affected
by the pace of immigration.
Migration is an increasingly important issue for all BRICS countries, indicating
the existence of a number of common problems and policy goals. High rates of
population growth and urbanisation – which also include migration – have not
only affected the provision of public services such as health and education but also
mean that the provision of affordable housing is a growing problem.
Furthermore, as emerging economies with large populations, land masses
and disparities among their people, the BRICS countries stand to be significantly
impacted by climate change. Their particular vulnerability thus requires them to
actively participate in the negotiations and planning underway within their regions
and internationally to promote sustainable development.
One basic condition for BRICS to assure sustainable development is to
improve competitiveness. This can be achieved through a number of specific
initiatives. One of the most important is to provide the conditions for these
economies to catch up with developed countries in terms of technical progress.
There is a consensus that scientific and technological developments are
positively associated with growing productivity. The question remains as to how
to improve in this area. Countries that excel in technology have efficient National
Innovation Systems (NISs). These systems represent a set of institutions involved
in the creation of science, technology and innovation – notably government,
universities and research institutes, and private companies – and the knowledge
that flows between them. In a mature NIS, there is a smooth flow of knowledge,
with highly innovative firms – competitive in global markets – generating
technologies in their own research laboratories or in partnership with universities
and research institutions.
BRICS countries have improved their performance in science, technology
and innovation (STI) indicators but still lag far behind when compared to more
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developed countries. To catch up in terms of governance, a number of issues have
to be addressed. BRICS countries have large populations and territories, complex
government structures and different levels of government. This, of course, makes
the coordination of STI policies very difficult. It is also hard to coordinate STI
policies with other public policies. However, joint initiatives such as the exchange
of technology and researchers among BRICS and sharing information about
specific experiences are likely to be very helpful in creating favourable conditions
for overcoming these difficulties.
These goals, of course, impose on BRICS a number of challenges.
For instance, excess liquidity spill-overs stemming from the advanced countries’
monetary policies lead to cross-border banking flows, exchange rate volatility, and
overvalued assets in capital-receiving countries. Also, the “rebalancing” of the
global economy may lead to slow growth in total global demand and restrict the
development space for BRICS.
Furthermore, the rise of trade protectionism and increasingly complex issues
faced by foreign investment might affect global resource allocation.
As the BRICS countries assume a pivotal role in the global governance
architecture, they have to strive to affect structural changes within existing
multilateral institutions, to promote effective governance, inclusiveness and
transparency. They must be propositional and share relevant governance experiences
with each other to further this central objective.
To be effective, it is imperative for BRICS to articulate a collective voice on
issues of global importance. BRICS must take a leadership role in matters of global
political and economic governance, by voicing not just their collective concerns
but also representing the concerns of other emerging and developing countries.
Emerging and developing economies can coordinate and effectively use the
international financial architecture to address common concerns. For instance,
although the capital structure and voting rights have been amended at both the
World Bank and the IMF, voting power is still skewed towards advanced economies.
The Group of 20 (G20) can be a particularly useful platform for dealing with this
situation, as well as for mobilising civil society to increase the pressure for reforms.
Indeed, BRICS has recently created the first non-regional post-Bretton
Woods multilateral institution, the New Development Bank (NDB), to tackle
certain challenges.
Infrastructure financing still remains a significant obstacle to the development
of many emerging and developing economies and is a clear priority for the members
of BRICS. But it is also clear that the NDB’s sustainable-development-linked
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financing mandate should focus on reducing inequality, improving inclusion and
enhancing social and human development. The NDB could follow a demand-driven
approach to financing which would place the onus of identification of viable
projects for financing on recipient governments.
On the social side, BRICS countries are encountering a long-term brain
drain – through educational emigration and the direct outflow of qualified
professionals – leading to both a significant loss of highly qualified professionals
and financial losses derived from the cost of their education in the home countries
of migrants. Conditions should be created to reverse this trend.
Access to social protection services is a challenge for all BRICS countries
due to the physical size of the countries and their populations. Ensuring universal
access to social protection requires vast logistical operations for those living in
remote areas. Other challenges include banking facilities used as a condition for
accessing benefits.
Moreover, encouraging and sustaining effective urban planning and municipal
governance are essential and have proved to be a challenge across BRICS.
Insufficient funding for infrastructure programmes such as housing and the
provision of services such as sanitation and water may challenge sustainability.
Prioritisation is, therefore, essential.
The move to adopt cleaner energy sources must be encouraged, for its effects
not only on the population’s access to energy but also for its sustainability and
consequent impact on production processes.
BRICS countries have complex innovation systems, involving numerous
institutions, laws, regional levels, policies and programmes. It is a complex task
to integrate and coordinate all these dimensions, but it is essential that this
integration happens; otherwise a lot of time and human and financial resources
may be wasted.
BRICS countries have experienced – to different degrees – impressive improve-
ments in their STI indicators. However, overall innovation activity by enterprises
is low compared to developed countries. There is a dilemma of how to seek insertion
in a globalised market while capturing a significant share of the value added.
In addition to the above-mentioned issues, the current military-political
situation near some of the BRICS countries’ borders is fraught with large-scale
armed conflicts that directly endanger their security. BRICS should deal with these
security problems predominantly by using political and diplomatic measures, as
provided by the UN Charter. Member States should take note of initiatives on
the non-weaponization of outer space and welcome wide discussion of the topic.