Файл: Na_puti_k_dolgosrochnoy_strategii_stran_BRIKS_angl.pdf

BRICS Long-Term Strategy

24 

|

1.4 Economic structure of the BRICS countries

The output structures of the BRICS economies have changed significantly when 

compared to previous decades. The declining share of agriculture in GDP has 

been a common trend over the years. While there has been consistent agricultural 

growth in Brazil and Russia compared to earlier decades, agricultural perfor-

mance in India and China has shown greater volatility. Russia has experienced 

a decline in agriculture’s share of GDP, while in Brazil it has remained relatively 

stable (see table 8).

Agri-business plays a central role in Brazil’s economic development, engaging 

35 per cent of its workforce and contributing almost 42 per cent of its exports. 

Brazilian agriculture has undergone dramatic changes in the past few decades. From 

a net importer of food grains until the 1970s, Brazil has emerged as the major 

net exporter of food products. A similar trend is witnessed in the case of India, 

where the Green Revolution and developments in biotechnology have helped the 

country become self-reliant in food production. With increasing global demand 

for food and the scarcity of arable land in the world, agronomic conditions will 

enable Brazil to continue its growth and become a larger supplier of agricultural 

commodities to nations around the world. 

In China, especially since 1991 with the introduction of the socialist market 

economy system, many changes in urban areas were ushered in. The share of 

primary industry rapidly declined, while that of secondary and tertiary industries 

increased. In Russia, measures have been introduced to implement the National 

Project in Agro-industrial Complex. Among the BRICS countries, South Africa 

has the smallest share of agriculture in GDP, at around 3 per cent, and its services 

sector accounts for more than 60 per cent of total GDP (Oxford University Press, 

2012, p. 9-11).

Similarly to agriculture, industry – especially manufacturing – has been 

losing share in BRICS nations’ GDP over time. This is true for all five countries, 

with the only exception of the share of industry (not so manufacturing) in China 

and India. China is the only BRICS economy where industrial output continues 

to dominate GDP – at around 45.3 per cent in 2012 (43.5 per cent in 1992).

Another common trend is the rising share of services in GDP. This sector 

now accounts for over half of GDP in all BRICS countries except China, where 

it grew from 34.8 per cent in 1992 to 44.6 per cent in 2012. This is a productive 

structure similar to that of developed economies. The basic difference is that the 

service sector comprises not only sophisticated, high-technology activities, but 

also those that come close to underemployment, and in emerging economies the 

latter tends to be predominant.

Promoting Cooperation for Economic Growth and Development

|

 25

TABLE 8

BRICS economic structure 

(As % of GDP)

1992

2002

2012

B

R

I

C

S

B

R

I

C

S

B

R

I

C

S

Agriculture

7.7

n/a 28.7 21.8

3.8

6.6

n/a 20.7 13.7

4.2

5.2

4.4 17.5 10.1

2.6

Industry

38.7

n/a 25.8 43.5 36.4 27.1

n/a 26.2 44.8 32.6 26.3 37.6 26.2 45.3 28.4

Manufacturing

24.7

n/a 15.4 32.7 21.9 16.9

n/a 14.9 31.4 19.2 13.3 13.0 14.1

n/a 12.4

Services

53.6

n/a 45.5 34.8 59.8 66.3

n/a 53.1 41.5 63.2 68.5

58 56.3 44.6 69.0

Source: World Bank, country database: <http://goo.gl/fl78xF>; Russia data for 2012: <http://goo.gl/7uTVoy>.

2 MAIN CHALLENGES

2.1 Challenges of the post-financial-crisis era

The rapid growth trend among the BRICS countries since the 1990s faced 

constraints following the global financial crisis that began in 2008. With the 

economic slowdown and setbacks in the financial markets in the United States and 

Europe, exports from BRICS countries to developed markets and investments in 

their respective economies declined. 

The changing global financial conditions highlight the increasing sensitivity 

of emerging market economies (BRICS included) to changes in external condi-

tions, as these economies have rapidly become integrated into the global economy. 

In essence, although domestic economic and structural policies remain important 

determinants of growth, external conditions also deserve attention. If impending 

changes in the external environment are dominated by an improvement in 

advanced economies, emerging market economies will benefit in both the short 

and medium terms. Conversely, if external financing conditions tighten, growth in 

emerging markets will suffer a relatively lasting effect. Even if external conditions 

deteriorate, the ability of emerging markets to weather such shocks will be affected 

by the domestic policies aimed at offsetting those shocks (IMF, 2014, p. 128).

Facing different recovering growth rates in emerging economies and the 

developed economies, the short-term economic policy of BRICS is confronted 

with a dilemma. The “rebalancing” of the global economy may lead to slow growth 

in total global demand and restrict the BRICS nations’ space for development.

Furthermore, the re-industrialisation based on the third industrial revolution 

of the West in the post-crisis era will pose great export pressure on the emerging 

economies depending on their market development, and also reduce the momentum 

for development. If the global climate change rules are reset, it might influence 

and even change BRICS nations’ choice regarding the path of industrialisation.

BRICS Long-Term Strategy

26 

|

The BRICS countries are at the low end of the global value chain, and the 

contribution of technological innovation to their economies remains limited, hence 

weakening their traditional competitive advantage.

Lastly, the rise of trade protectionism and increasingly complex issues faced 

by foreign investment might affect global resource allocation.

On the domestic side, inflation rates are generally rising among the BRICS 

countries, and the declining growth of foreign investment and capital outflow 

pose serious problems. BRICS countries should improve their domestic market 

conditions, since low growth may cause vulnerability, instability and lack of 

sustainability of the domestic economy.

2.2 Trade complementarity and competitiveness of BRICS countries

According to UNCTAD (2014), the overall trade volume of BRICS countries in 

2000 was $ 891 billion, accounting for 6.8 per cent of total world trade. Trade 

attributed to BRICS countries reached $ 6,484.3 billion in 2013, making up 18.7 

per cent of total world trade, with an average annual growth rate of 45 per cent. 

Meanwhile, mutual trade among BRICS countries continued to grow. Trade volume 

among the BRICS countries was $ 21 billion in 2001 and reached $ 296.4 billion 

in 2013, increasing by fourteen times. That figure is expected to reach $ 500 billion 

in 2015. However, trade among BRICS countries merely constitutes a tiny part of 

total world trade (0.8 per cent in 2013). In addition, its share of the total foreign 

trade of each country is low. China is one of the main trading partners of the other 

BRICS countries, while the volume of trade among the other BRICS countries 

is small, and complementarities of their products are poor (UNCTAD, 2014).

GRAPH 1

BRICS trade and its share in world trade (2000-2013)

6,5 

7,1 

7,7 

8,5 

9,4 

10,4 

11,2 

11,9 

12,8  13,1 

14,6 

15,4  16,0 

18,7 

0

2

4

6

8

10

12

14

16

18

20

0

1000

2000

3000

4000

5000

6000

7000

8000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Total trade volume of BRICS countries (billion)
Share of total world trade volume (percentage)

Promoting Cooperation for Economic Growth and Development

|

 27

Certain measures should be taken by BRICS countries to boost their trade. 

One possibility would be a platform for the exchange of specific information. Not only 

should this platform release trade information and related policy information, but it 

should also provide information on social infrastructure planning and investment, 

which is closely related with trade, gradually making it a comprehensive information 

platform for trade and economic cooperation among the BRICS countries. 

Exports and imports are subject to currency risk, because international 

trade transactions are mostly settled in major international currencies. Currency 

risk factors impede the growth of international trade, as exporters/importers are 

concerned about the implications of exchange rate fluctuations, especially during 

times of high currency volatility. A way forward could be to explore the prospect 

of trade settlement in domestic currencies. This would help mitigate the negative 

impact of currency volatility on trade and help promote the international use of 

the BRICS nations’ currencies. 

China has already made a pioneering effort in this direction by settling some of 

its bilateral trade in renminbi and promoting an inter-bank and offshore bond market 

(Hong Kong-based) for renminbi. This would create investment opportunities and 

liquidity in the market, encouraging wider use of the renminbi for trade settlement. 

As far as Brazil is concerned, the Payment System in Local Currency (SML in 

Portuguese) with Argentina began to operate in October 2008. It is a unique system 

designed by both central banks, which carefully reviewed various international expe-

riences in the area of payment systems, especially those of early intra-regional trade 

in Europe. All individuals and companies are eligible to participate in the SML in 

transactions relating to trade in goods and services (such as freight and insurance), 

which are either imports denominated in Argentine pesos or exports in Brazilian real. 

Trade flows between two countries can indicate complementarity between the 

two economies, if the traded goods originating from each one are different, or some 

degree of competition, if there is similarity in the trade flows in both directions.

Spearman’s rank correlation coefficient is one measure for measuring the 

revealed comparative advantage in trade between two countries.

1

 As shown in table 9, 

there are three major types of trade relations among the BRICS. First, a stable 

trade complementarity: China’s trade relations with Brazil, Russia and South Africa 

are complementary, and the strongest complementary trade relations are between 

China and South Africa, featuring a typical U shape. China-Russia trade relations 

are also complementary, and show a stable and intensifying trend. 

1. A negative coefficient generally shows a complementary nature of trade between the two countries, indicating that 

they export different products that meet each other’s need; a positive coefficient shows a competitive relation, indicating 

that the two countries export similar products that may potentially compete with each other. The absolute value of the 

coefficient shows the magnitude of complementarity and competitiveness.

BRICS Long-Term Strategy

28 

|

Second, there is a stable trade competitiveness between South Africa and 

Russia, and South Africa and Brazil. The intensity of trade competitiveness in the 

two groups is high and increasing. Competitiveness is also strong in Brazil-Russia 

trade and Brazil-India trade, but this seems to be decreasing in magnitude over 

time. Trade competitiveness between Brazil and India is alswo decreasing. Trade 

competitiveness between Brazil and Russia features an inverted U shape. 

Third, two pairs of countries have seen a change between competitiveness 

and complementarity. Trade between India and Russia was complementary before 

2005, but by 2009 it had become slightly competitive. On the other hand, trade 

between India and South Africa has turned from competitive to complementary.

TABLE 9

Trade complementarity and competitiveness among BRICS countries (2001-2009)

2001

2005

Brazil

Russia

India

China

Brazil

Russia

India

China

Russia

0.2652

-

-

-

0.4831

-

-

-

India

0.2130

-0.1033

-

-

0.0936

-0.0422

-

-

China

-0.1789

-0.2109

0.2720

-

-0.1514

-0.2123

0.1969

-

South Africa

0.3685

0.4934

0.1014

-0.2868

0.4577

0.6467

0.0199

-0.2234

2009

2001-2009

Russia

0.3333

-

-

-

0.4245

-

-

-

India

0.1032

0.0169

-

-

0.1214

-0.0910

-

-

China

-0.2866

-0.2634

0.2205

-

-0.2273

-0.2695

0.1681

-

South Africa

0.5433

0.6495

-0.0044

-0.3542

0.4285

0.6059

0.0464

-0.2696

Source: The Spearman’s rank correlation coefficient adopted from Wu (2012, p. 27). All pairs of trade relations are listed in the table. 

BRICS countries should come up with proactive policies that reinvigorate 

their domestic economies and also establish strong economic relationships among 

themselves. It is important for them to forge stronger relationships to expand their 

domestic markets to revive growth. This will also help them reduce to some extent 

their excessive dependence on exports to markets in developed countries.

An open world economy will benefit all. BRICS countries are committed 

to establishing a post-Bali work programme to conclude the Doha Round, so 

as to build an “open, inclusive, non-discriminatory, transparent and rule-based 

multilateral trading system”, according to the Fortaleza Declaration released following 

their sixth summit (China Daily, 2014). As shown in table 10, there has been 

limited progress in the negotiations in the Doha Round so far. As the share of the 

BRICS countries’ trade and investment in total global trade and investment grows, 

they have been playing an increasingly important role in the multilateral trading 

system. The current mega agreements being negotiated, such as the Trans-Pacific