Файл: Na_puti_k_dolgosrochnoy_strategii_stran_BRIKS_angl.pdf

Promoting Cooperation for Economic Growth and Development

|

 39

strengthen mechanisms to disseminate information to SMEs, offer financial, 

information and human resources support and develop experience.

Building on the existing BRICS Exchange Alliance, countries should consider 

creating a mechanism for listing SMEs on a BRICS SME Stock Exchange, to foster 

investment. They should also consider the possibility of signing a BRICS SMEs 

Cooperation Agreement. 

The BRICS countries should carry out human resources cooperation programmes 

to promote the flow of science and engineering talent and the development of human 

resources by means of technological investigation, international conferences, skills 

training, information exchange, sci-tech exhibitions etc.

The BRICS countries should enhance their agricultural productivity to ensure 

food security, and pay attention to the protection of arable land, the application 

of new agricultural technologies and ecological safety.

BRICS countries should pay attention to the negative effects of climate 

change on agricultural productivity, especially the destructive effects caused by 

extreme weather (chapter 3 discusses this issue in more detail). They should enhance 

communication and collaboration in developing adaptive agricultural techniques 

and measures, and seek to improve agricultural efficiency and productivity in a 

sustainable manner.

BRICS countries should work together, find common ground to form a 

united negotiating bloc in global climate-change negotiations and strive for a fair 

outcome in future negotiations.

BRICS countries should enhance their cooperation in the energy field, share 

their technologies and experiences in energy exploration and use, enhance safety 

in the energy sector, improve energy efficiency, ramp up their joint efforts in the 

development and use of new and clean fuels, strengthen investment in and the 

infrastructure of new energy, and increase the proportion of renewable sources in 

energy consumption.

The BRICS countries should establish an energy research association to 

coordinate research and development on traditional and renewable energy sources 

and consider the feasibility of an energy data bank to leverage intra-BRICS energy trade.

BRICS countries should strengthen their cooperation in the area of 

communication technology and urge their research institutions to join in 

developing new information and communication technologies to improve 

their overall information level.

BRICS countries should try to build a cross-department, trans-regional, 

multi-industry and trans-boundary national-level electronic commerce network 

BRICS Long-Term Strategy

40 

|

connecting the whole world to offer necessary business information and services 

to their enterprises and to publish their business opportunities and policy changes 

in real time.

BRICS countries could also hold regular intelligent society forums to provide 

platforms for member countries to share experiences in building intelligent society, 

developing information technology and improving their information level. 

BRICS countries should focus on exchanges and communication in as-

pects that have close connection with urbanisation, such as related strategies and 

policies, city planning, industrial economy, public services, basic infrastructure, 

housing security, energy management, intelligent transportation, green buildings, 

environmental protection etc.

BRICS should facilitate cross-border population flows among member 

countries, such as by offering tourist visa or tourist group discounts. They should 

aim at eventually eliminating intra-BRICS visas.

CHAPTER 2

POLITICAL AND ECONOMIC GOVERNANCE

PILLAR

BRICS member states should share experiences and improve existing initiatives on good governance 
and transparency both within the ambit of global multilateral cooperation and domestically in 
member countries.

1 CURRENT SITUATION

The global economy has been showing signs of a recovery following the financial 

crisis. According to the International Monetary Fund (IMF) 

World Economic Outlook

, 

released in October 2014, global growth is projected to strengthen marginally 

from 3.28 per cent in 2013 to 3.31 per cent in 2014 and 3.85 per cent in 2015. 

However, given poor economic data in the first half of 2014 and an increase in 

downside risk, these numbers have been revised downwards – and the long-term 

outlook is still uncertain. 

FIGURE 1

Growth prospects (2007-2019)

-6

-4

-2

0

2

4

6

8

10

%

Advanced economies

Emerging and developing economies

World

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Source: IMF, World Economic Outlook, Oct. 2014.

While it is likely that the global Gross Domestic Product (GDP) will 

increase, the pace of growth itself is uncertain. In 2015, the advanced economies 

are expected to grow at about 2.4 per cent, nearly one percentage point greater 

than the growth rate in 2013. At the same time, growth in emerging and developing 

BRICS Long-Term Strategy

42 

|

economies is projected to be about 5.0 per cent in 2015, compared with 4.7 per 

cent in 2013. The relative percentage change in the growth rate of emerging and 

developing economies is less than that for advanced economies, indicating a slower 

recovery than anticipated. 

Additionally, the quality of growth is far from certain, with real economic 

data (e.g. industrial, employment data) not showing any 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 

(except Japan), as well as liquidity-boosting measures via extremely accommodative 

unconventional monetary policies (UMPs). Large-scale Quantitative Easing (QE) 

programmes, as undertaken by Central Banks in the USA and Japan have flushed 

the economies with liquidity and suppressed long-term interest rates. QE in the 

USA alone expanded the Federal Reserve’s balance sheet from less than USD1 

trillion in 2007 to more than USD 4 trillion currently, and pushed the nominal 

interest rates to the zero lower bound. Moreover, central banks in several advanced 

economies have also pushed short-term nominal interest rates to near zero levels 

to ease credit constraints (figure 2). In fact, in June 2014, the European Central 

Bank (ECB) introduced negative deposit rates for the first time. 

FIGURE 2

Central Bank base rates (2007-2014)

%

0

1

2

3

4

5

6

7

01/08/2007

01/12/2007

01/04/2008

01/08/2008

01/12/2008

01/04/2009

01/08/2009

01/12/2009

01/04/2010

01/08/2010

01/12/2010

01/04/2011

01/08/2011

01/12/2011

01/04/2012

01/08/2012

01/12/2012

01/04/2013

01/08/2013

01/12/2013

01/04/2014

UK

US

Japan

Europe

Source: ECB, BoJ, Federal Reserve, BoE.

Although the UMPs have mitigated the immediate adverse effects of the 

crisis, and have had a positive impact on unemployment, they have not had a com-

mensurate effect on investment growth (figure 3). Advanced economies’ central 

Political and Economic Governance

|

 43

banks are struggling to mitigate deflationary trends and have not yet been able to 

commit to a definite timeline on withdrawing liquidity support. All of this points 

to a danger of secular stagnation – a permanently lower trend of growth. 

FIGURE 3

Investment-GDP ratio (2004-2019)

%

18

20

22

24

26

28

30

32

34

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Investment – advanced economies

Investment – emerging and developing economies

Source: IMF, World Economic Outlook

.

In addition, the UMPs have become a systemic source of spill-overs on the 

global financial markets. In particular, the low interest rate environment in advanced 

economies has led to a “search for yield” in risky alternative assets – a phenomenon 

that has led to “hot money” flows in emerging and developing economies such as 

those represented by BRICS. Recent data on high valuations on equities, narrow 

credit spreads, low volatility and abundant corporate bond issuance confirms this. 

Investors and corporations have displayed a strong appetite for risk. There is a fear 

that UMPs have facilitated the creation of asset bubbles, as financial market 

performance has dissociated from real economic performance (Bank for International 

Settlements, 2014) – for instance, since 2009, USD 1.2 trillion has flowed into 

global bond funds, compared with USD 132 billion into equities (Tett, 2014). 

New sales of “junk” bonds

1

 worldwide hit a quarterly record of USD 148 billion 

between April and June 2014, up from the average quarterly sales of around USD 

30 billion before the previous credit bubble burst (Dolan, 2014). Such misallocation 

of capital can seriously detract from a resilient economic recovery. 

In May 2013, the US Federal Reserve’s announcement of tapering its QE 

programme – scaling back purchases of government securities by USD 10 billion per 

month – led to a huge outflow of capital from emerging and developing economies 

1. As per the Standard and Poor’s definition, bonds rated BB or lower are classified as Junk Bonds.