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Damodaram Sanjivayya
National Law

Political Science Project

Mugdha Tomar
Sec B

IInd Semester

I would like to thank our Political Science teacher Dr.T.Y. Nirmala Devi for
giving me such a wonderful opportunity to make a project on the BRICS.The
whole topic of project making helped me in enhancing my knowledge on the


Brief History
First BRIC Summit.
Entry of South Africa
BRICS Summit...
Basic Information on BRICS Countries.
Salient Features of BRICS Economies
Impact of Financial Crisis on BRICS...
Monetary Measures Taken to Manage Crisis 11-13
Best Practices. 13-14
Challenges to BRICS as a Group 15-16
Mutual Cooperation 16-18
Conclusion.. 19
Bibliography 20

BRICS, originally "BRIC" before the inclusion of South Africa in 2010, is the title of an

of emerging


economies: Brazil, Russia,India,China

and South

Africa. With the possible exception of Russia,the BRICS members are all developing or

newly industrialised countries, but they are distinguished by their large, fast-growing
economies and significant influence on regional and global affairs. As of 2013, the five
BRICS countries represent almost 3 billion people, with a combined nominal GDP of
US$14.9 trillion,and an estimated US$4 trillion in combined foreign reserves.Presently, India
holds the chair of the BRICS group.

In 2012, Hu Jintao, the President of China, described the BRICS countries as defenders and
promoters of developing countries and a force for world peace.However, some analysts have
highlighted potential divisions and weaknesses in the grouping, such as India and China's
disagreements over territorial issues,the failure of the BRICS to establish a World Bankanalogue development agency, slowing growth rates,and disputes between the members
over UN Security Council reform.1

Brief History
The foreign ministers of the initial four BRIC states (Brazil, Russia, India, and China) met
in New York City in September 2006, beginning a series of high-level meetings. A full-scale
diplomatic meeting was held in Yekaterinburg,Russia, on May 16, 2008.2

First BRIC Summit

The BRIC grouping's first formal summit commenced in Yekaterinburg on June 16, 2009,
with Luiz Incio Lula da Silva, Dmitry Medvedev,Manmohan Singh, and Hu Jintao, the
respective leaders of Brazil, Russia, India and China, all attending.The summit's focus was on
means of improving the global economic situation and reforming financial institutions, and

discussed how the four countries could better co-operate in the future.There was further
discussion of ways that developing countries, such as the BRIC members, could become
more involved in global affairs.

In the aftermath of the Yekaterinburg summit, the BRIC nations announced the need for a
new global reserve currency, which would have to be 'diversified, stable and
predictable'.Although the statement that was released did not directly criticise the perceived
'dominance' of the US dollar something that Russia had criticised in the past it did spark a
fall in the value of the dollar against other major currencies.3

Entry of South Africa

In 2010, South Africa began efforts to join the BRIC grouping, and the process for its formal
admission began in August of that year.South Africa officially became a member nation on
December 24, 2010, after being formally invited by the BRIC countries to join the group.The
group was renamed BRICS with the "S" standing for South Africa to reflect the group's
expanded membership. In April 2011, the President of South Africa, Jacob Zuma, attended
the 2011 BRICS summit in Sanya, China, as a full member.4

The BRICS Forum, an independent international organisation encouraging commercial,
political and cultural cooperation between the BRICS nations, was formed in 2011.In June


2012, the BRICS nations pledged $75 billion to boost the International Monetary Fund's
lending power. However, this loan is conditional on IMF voting reforms.5

BRICS Summit
The grouping has held annual summits since 2009, with member countries taking turns to
host. Prior to South Africa's admission, two BRIC summits were held, in 2009 and 2010. The
first five-member BRICS summit was held in 2011. The last summit took place in New
Delhi, India, on March 29, 2012.The BRICS summit is scheduled to take place in Durban,
South Africa, in March 2013.6

Basic Information on BRICS Countries

In the past few decades, some large economies such as Brazil, Russia, India, China, and
South Africa (BRICS) have acquired a vital role in the world economy as producers of goods
and services, receivers of capital, and as potential consumer markets. The BRICS economies
have been identified as some of the fastest growing countries and the engines of the global
recovery process, which underscores the changed role of these economies. Even in the G-20
countries forum,BRICS are playing a formidable role in shaping macroeconomic policy after
the recent financial crisis. At present, these five countries encompass over 40 per cent of the
worlds population and account for nearly 25 per cent of total global GDP in terms of PPP. If
one compares the GDP in PPP terms, four economies figure among the top ten, with China,
India, Russia, Brazil, and South Africa in 2nd, 4th, 6th, 8th, and 26th places, respectively.In
terms of contribution to growth of PPP-adjusted global GDP of the world, these five
economies accounted for 55 per cent during20008, and their contribution is expected to rise
in the coming years.

The BRICS comprise a huge land share of the world (Table 1.2) and, as a result, own vast
natural resources. China, which has a land area of about 9.6 million sq. km, is the thirdlargest country in land size, after only Russia and Canada. Russia accounts for around 20
per cent of the worlds oil and gas reserves, while China has about 12 per cent of the worlds
mineral resources. In terms of agricultural land, Russia has 121.5 million hectares of arable
land. Brazil covers 47 per cent of South America and is the fi fth-largest country in the world
(8.5 million sq km), surpassed only by Russia, Canada, China, and the United States of
Each of the BRICS countries has multiple and different attributes and thus each has a huge
potential to develop. Brazil is extremely rich in resources such as coffee, soybeans, sugar
cane, iron ore, and crude oil, with around 60 million hectares of arable land (just 7 per cent
of its land area) but with an agricultural area of 31.2 per cent of the total land area. Russia is
noted for its massive deposits of oil, natural gas, and minerals. India is a strong service
provider with a rising manufacturing base, while China is seen as the manufacturing
workshop of the world with a highly skilled workforce and relatively low wage costs. South
Africa is the 26th largest economy in the world, with a GDP of US$ 357 billion. It is a
medium-sized country with a total land area of slightly more than 1.2 million sq. km and
around 12 per cent arable land area. It is the worlds largest producer of platinum and
chromium and holds the worlds largest known reserve of manganese, platinum group metals,
chromium, vanadium, and alumino-silicates. South Africa generates 45 per cent of Africas
electricity and the South African power supplier provides the 4 th cheapest electricity in the

Salient Features of BRICS Economies

The salient features of the BRICS economies are their large geographical dimensions and size
of population. It is widely perceived that all the BRICS markets have great potential for
establishing the most stabilising of forces, that is, a prosperous middle class. This middle7 The BRICS Report A Study of Brazil,Russia,India,China and South Africa with special focus on
synergies and complementarities - Ministry of Finance,Government of India Oxford University
Press JSTOR,Pg 1 & 3

income group in each country is growing at varying rates but the future direction is clear, that
is, the middle class will both broaden and deepen, providing a solid base for the growth and
development of the economies.8

Impact of Financial Crisis on BRICS

The recent global financial crisis that engulfed almost all economies marked a painful
adjustment at the macro level coupled with micro level distortions and incentives created by
past policy actions. This included excessive leverage combined with inadequate regulation,
lack of appropriate financial supervision, flawed credit ratings, and failure to appropriately
identify the build-up of risks associated with financial innovations. The low interest rate
regime, which was the result of an accommodative monetary policy, led to debt levels
acquiring unsustainable proportions. The global savings glut combined with aggressive
marketing by housing finance institutions and under-pricing of risks fuelled the build-up of
sub-prime mortgages.
The intensification of the financial crisis in September 2008 caused an abrupt increase in
uncertainty and led to a downward reassessment of wealth and income prospects. These
developments, in turn, prompted households to postpone spending on most durables, even
though falling commodity prices helped boost real disposable income.This drop in demand
and dearth of credit set off an unprecedented collapse of real economic activity, sending a
feedback loop to the stressed financial sector. As a result, average growth in 2008 slowed
by almost similar magnitudes in advanced and emerging economies, with some diff
erentiation because of country-specific circumstances.
The crisis spread to the BRICS through all four channelstrade, finance, commodity, and
confidence channels.The slump in export demand and tighter trade credit caused a
deceleration in aggregate demand. The reversal of capital flows led to equity market losses
and currency depreciations, resulting in lower external credit flows.

8 The BRICS Report A Study of Brazil,Russia,India,China and South Africa with special focus on
synergies and complementarities - Ministry of Finance,Government of India Oxford University
Press JSTOR, Pg 6

During the initial phase of the crisis, the financial shock was transmitted to the real economy,
primarily through the equity price channel and, in a more differentiated fashion, through the
credit channel. The shock to international confidence had an immediate and sharp eff ect on
capital flows to emerging markets, as investors reassessed risks and global capital fl ows
collapsed. In addition to poor confidence and wealth effects, the fall in equity prices led to a
rise in the cost of capital and dampened investment confi dence. In terms of real linkages, the
collapse in demand from advanced economies was transmitted through the integrated supply
chain to developing economies, with dramatic eff ects on trade in these countries.
Among the BRICS, the global fi nancial crisis erupted after the collapse of the US-based
investment bank Lehman Brothers in September 2008. Th e banking sectors of the BRICS
economies performed relatively well. In Brazil, the local currency and stock market saw huge
fluctuations as foreign investment dwindled, demand for commodity exports dried up, and
external credit decreased. The external shock did interrupt the accelerated growth path by
prompting a slight fall of 0.6 per cent in GDP in 2009 (Table 2.1). In terms of foreign trade,
Brazilian exports reached US$ 160.6 billion in 2007, about 11.8 per cent of GDP and 1.18 per
cent of world exports. In 2009, total Brazilian foreign trade registered a fi gure of US$ 281
billion in its flow, a reduction of 24.3 per cent relative to 2008 when US$ 371 billion was
traded. This drop was the direct result of the global financial crisis, which led to a reduction
in the international prices of mineral and agricultural commodities and in the overall external
demand for goods and services.
In the midst of the crisis, the financial markets in Russia froze due to a rise in risk aversion
and significant correction of equity markets since 2007. Sovereign credit default swap (CDS)
spreads also jumped by several hundred basis points. The sudden change in exchange rate
expectations triggered by the collapse of oil prices in September 2008 led Russian banks and
firms to seek to hedge their foreign currency exposures, exacerbating pressures on the rouble.
Early in the crisis, the banking system was put under additional stress by deposit outfl
ows and some bank failures. Several mid-sized banks (Kit Finance,Svyaz Bank, Globex
Bank, and Sobinbank) had to be rescued by state entities or private investors between midSeptember and mid-October 2008.
In the initial phase of the crisis, the Indian economy remainedrelatively insulated, but
witnessed a slowdown in GDP annualized growth from around 7.5 per cent in the fi rst half to


6.0 per cent in the second half of 2008, amplifi ed by a sharp contraction in the performance
of the manufacturing sector. The significant export-orientation of manufacturing exposed the
sector to external demand shocks. Further, a large part of manufacturing exports (42 per cent)
was accounted for by leather and manufactures, textile and textile products, gems and
jewellery, and handicrafts, which are employment-intensive, with a major portion of exports
in these sectors contributed by small-scale industries (SSIs). Th us, the external demand
shock had a larger impact on output and employment in such industries, which had a direct
bearing on domestic consumption demand.
The impact of the financial crisis on China took the form of a sharp drop in external demand,
which in turn led to an economic slowdown, difficulties for businesses, and rising
unemployment. Structural problems also became more evident. Two indicators are widely
accepted and used by economists to figure out the impact of the financial crisis on Chinas
real economy. The first one is industrial electricity consumption (which is a real indicator)
and the other is industrial value-added (which is a value indicator). Th e trend of electricity
use registered an increase of about 10 per cent every month, but from the third season of
2008, the rate of increase dropped dramatically.The outbreak and spread of the global
financial crisis had a severe on Chinas financial and real estate markets, which were mainly
reflected in the following: (i) The stock index fell in an accelerated manner. During the six
months from May to October impact of the financial crisis on BRICS from May to October
2008, the Shanghai stock exchange composite index dropped over 50 per cent. (ii) Real estate
prices continuously declined. Between July 2008 and February 2009, the average sales prices
index for buildings in 70 medium-to-large cities in China fell by about 2 per cent
cumulatively. (iii) Money supply and loan supply growth rate continued to fall. From May to
November 2008, the year-on-year M2 growth rate fell by 3.3 per cent and loan supply growth
rate for the same period remained low. (iv) From July 2008 to February 2009, the RMBs real
eff ective exchange rate rose dramatically by 14.5 per cent, resulting in an unfavourable
effect on Chinas exports. The sharp drop in Chinas exports lasted over a considerable
period, and in the second half of 2008, 15 per cent of export fi rms were forced to reduce
output oreven shut down.

In South Africa, portfolio inflows, which had accounted for the bulk of the fi nancing of
South Africas large current account deficits in the years leading up to the crisis, quickly


turned to large net outflows, although overall net private fl ows remained positive as South
African banks ran down foreign assets. Both export and import volumes plummeted, while
the prices of most of South Africas main export commodities weakened, although this was
outweighed by the effect of lower oil prices, resulting in an improvement in the terms of
trade. The stock market, weakened directly by net outflows on the part of non-residents and
indirectly by the large corrections in equity priceselsewhere, began falling in May 2008 but
saw sharp declines between September and November 2008 in line with equities in other
emerging markets.9

Monetary Measures Taken to Manage Crisis

Brazil has featured high levels of reserve requirements, allowing the central bank to lower
reserve requirements for macro-prudential purposes following the Lehman Brothers episode.
In particular, to confront liquidity problems in the inter-bank market, the central bank reduced
reserve requirements to support lending from large liquid banks to small illiquid banks. By
introducing this liquidity provision mechanism during the crisis, the central bank was able to
avoid financial stability problems in the system.

The authorities efforts to stabilize the banking system during the fourth quarter of 2008
aimed to provide significant liquidity while keeping the exchange rate stable to offset the
abrupt loss of foreign financing. Starting in April 2008, the government auctioned excess
budgetary funds to banks, while the Central Bank of Russia (CBR) provided an everwidening array of liquidity facilities, including long-term subordinated loans and
uncollateralized loans, which had been provided under special federal laws. In 20089 the
Bank of Russia broadened the range of assets that banks could use as collateral in refi
9 The BRICS Report A Study of Brazil,Russia,India,China and South Africa with special focus on
synergies and complementarities - Ministry of Finance,Government of India Oxford University
Press JSTOR,Pg 81,84 & 85


nancing transactions and extended the terms of loans secured by non-market assets, such as
promissory notes, credit claims, or credit institution guarantees. The CBR also off ered
guarantees for inter-bank lending to qualifying bank recovering losses in the event that the
licence of the counterparty was withdrawn. In March 2009, another bank recapitalization
scheme was announced that entailed an exchange of preferred shares for government bonds.
Adjustments in the interest rates were active tools in the Bank of Russias response
to the global fi nancial crisis. Th e refi nancing rate was increased in the second half of 2008.
Th en the Bank of Russia implemented a series of reductions in the refi nancing rate: from 13
per cent in April 2009 to 7.75 per cent in June 2010. The CBR temporarily lowered the
required reserve ratios in September and in October 2008

The policy repo rate under the liquidity adjustment facility (LAF) was reduced by 400 basis
points, from 9 per cent to 5 per cent. The policy reverse repo rate under the LAF was reduced
by 250 basis points, from 6 per cent to 3.5 per cent. The cash reserve ratio (CRR) was
reduced by 400 basis points from 9 per cent of net demand and time liabilities (NDTL) of
banks to 5 per cent. The statutory liquidity ratio (SLR) was reduced from 25 per cent of
NDTL to 24 percent. The export credit refinance limit for commercial banks was enhanced to
50 per cent from 15 per cent of outstanding export credit. A special 14-day term repo facility
was instituted for commercial banks up to 1.5 per cent of NDTL. A special refinance facility
was instituted for scheduled commercial banks (excluding RRBs) up to 1 per cent of each
banks NDTL as of 24 October 2008.

China made efforts to guide financial institutions to make remarkable credit planning. Since
September 2008, the PBC has lowered the benchmark deposit and lending rates five times,
from 4.14 per cent to 2.25 per cent and from 7.47 per cent to 5.31 per cent, respectively. To
amplify liquidity in the banking system, the PBC cut the RMB reserve requirement ratio of fi
nancial institutions four times in the latter half of the year 2008. Specifically, the reserve
requirement ratio of large financial institutions was cut by 2 percentage points cumulatively,
whereas that of small financial institutions was cut by 4 percentage points cumulatively. Th e


1-year central bank liquidity lending rate was cut from 4.68 per cent to3.33 per cent. Th e
rediscount rate was cut from 4.32 per cent to 1.8 per cent. At the same time, the PBC
eliminated quantitative ceilings for financial institutions credit lending and promoted greater
support for SME lending to increase their credit supply and optimize the credit structure.

South Africa
South Africa In response to the fi nancial crisis during December 2008, the Monetary Policy
Committee of SARB reduced its policy rate by 50 basis points. Further cuts worth 600 basis
points reduced the repo rate to an all-time low of 5.5 per cent by November 2010. Interest
rate reductions were facilitated by an improved inflation outlook against the backdrop of
slowing economic growth (increasing output gap) and declining commodity prices.10

Best Practices
Best practices refers to the practices which that have made significant differences to these
economies and contributed to their high growth rates.
Major showcase areas for Brazil include agricultural research, which has transformed the
country into a major exporter; the use of bio-fuel for road transport, and the emergence of
Embraer as a high technology aircraft manufacturer. In the social sphere, Conditional Cash
Transfers that target poverty and the success of the anti-AIDS policy provide useful lessons.
A regulatory framework that helped Brazil withstand the shock of the global crisis and the
issuance of domestic currency-denominated international bonds, which transfer currency risk
to investors, are other successful practices that have been highlighted.
Russias major achievements include reforms during 19992009 that promoted economic
growth, lowered inflation, and led to a dramatic fall in the number of people living below the
poverty line. Specific achievements include setting up of the Oil Stabilisation Fund that was
successful during the crisis, budgetary reforms through the devolution of decision-making
10 The BRICS Report A Study of Brazil,Russia,India,China and South Africa with special focus on
synergies and complementarities - Ministry of Finance,Government of India Oxford University
Press JSTOR,Pg 88 & 89


powers, and the introduction of a fl at personal income tax rate of 13 per cent that ensured
improvement in compliance.
The main showcase institution for India is private entrepreneurship which has been
instrumental in achieving 89 per cent annual growth of the economy in recent years. Private
initiative has been responsible for the excellence achieved in the information technology
sector and the innovative streak that has led to improvization and
production of low-cost goods for the Indian mass market.Besides, the calibrated approach to
capital account convertibility and the External Commercial Borrowing Policy have helped
insulate the economy against surges and reversals of debt flows and maintained the external
debt at sustainable levels. The Right to Information Act is increasing transparency and
accountability of government operations and the Mahatma Gandhi National Rural
Employment Guarantee Scheme is a major step towards making growth inclusive.
The best practices and institutions of China are those that have helped ensure progress in
terms of economic growth, enhancing its national strength and improving the living standards
of its people as well as the success in making the historic transition from a highly centralized
planned economy to a robust socialist market economy and from a closed and semi-closed
country to a country that is open to the outside world. Specific areas are FDI attraction and
utilization, and infrastructure financing, among others.Th e Chinese globalization model has
also been diff erent, in that foreign direct investment was encouraged. The sub-national
governments (cities/provinces) have been successful in attracting foreign investment by
providing improved infrastructure and a favourable regulatory environment. China also has
experience in financial macro- management. The reform and development of Chinas banking
industry and financial market played a key role in promoting rapid sustainable economic

South Africa has a long record of responsible macroeconomic management, which has helped
to promote the development of a deep and liquid bond market and reduced external
vulnerability.South Africa has strong institutions and a highly developed, well regulated
banking sector that escaped the worst effects of the financial crisis. With the most developed
industrial and financial capabilities on the African continent, South Africas role in the
integration of policies, markets, finance, and infrastructure is vital to Africas economic


development and realization of the continents potential as a growth pole in the global
economy. Outwardly oriented South African companies are among the largest sources of FDI
in Africa and the countrys development financing institutions are playing an increasing role
in the funding of regional infrastructure investment.11

Challenges to BRICS as a Group

In the years to come, it is expected that the BRICS will become large global suppliers of
manufactured goods and services as well as major suppliers and consumers of commodities.
Thus, the BRICS have the potential to evolve into a powerful economic bloc.
In recent years, the BRICS have been taking advantage of their abundant population and
resources and, on the whole, achieving steady economic growth. However, the trends in GDP
indicate that the individual countries have different paces and levels of economic growth.
China has been maintaining its long-term high economic growth trajectory, while India and
Russia have been moving towards sustained high growth. In contrast, Brazil and South Africa
have shown sustainable but lower economic growth rates since the early 2000s, but have been
making rapid strides along the path from crisis to stability and growth. For South Africa, the
major challenges are the development of the socio-economic infrastructure and furthering
the reforms process.

Despite the resilience to the recent global crisis, there is a source of potential downward
pressure on growth in the BRICS because of weak growth and the spill over effects of policy
responses in advanced economies.
While the infrastructure requirements of the BRICS economies are huge, publicprivate
participation can help relax this constraint, provided that the institutional mechanism is sound
11 The BRICS Report A Study of Brazil,Russia,India,China and South Africa with special focus on
synergies and complementarities - Ministry of Finance,Government of India Oxford University
Press JSTOR,Pg 103,104 & 105


enough for their optimal combination. In this context, strategic cross-sector reforms, resulting
in improved policy as well as legal and institutional frameworks for greater private sector
participation, anchored in good governance norms are required.
A common challenge that the BRICS economies face is the need for institutional
development without which sustainable growth cannot be ensured. Institutional development
is still a long way off in most of these countries. At present, international investors may
be bullish about the future potential of the BRICS economies as reflected in AT Kearneys
FDI Confidence Index and Global Retail Development Index, the remaining challenges
should not be overlooked. Similarly, the credibility of the policy of reforms is crucial for
the BRICS economies to make their growth processes more durable and developmentoriented.12

Mutual Cooperation
All the BRIC countries cooperate closely in several areas, which have, or in the future will
have a global character and influence, and thus they will strengthen their position in the
world. It is, for example, the opportunity to negotiate mutual agreements on trade in national
currencies. This will enable them to shift their mutual cooperation to a new, qualitatively
higher level. In a sense, the BRIC will become independent from the world's major economic
centers (mainly the USA) and thus can partially avoid collisions, which occur in the global
economy, especially, the impact of the financial and economic crisis on the economy of the
In the recent past the threat came from the USA, since in 2009 the Federal Reserve System
authorized an increase in money supply of 600 bill. USD. These however, were not secured
by assets, so there was a rapid influx of dollars into developing countries (through
investments) and the domestic currencies became more expensive. This situation had also an
impact on the exchange rates, since different bubbles can develop. The countries, of course,
are beginning to protect themselves against such speculative investment capital, adopt
measures to prevent the influx of dollars, and prefer investments from other
12 The BRICS Report A Study of Brazil,Russia,India,China and South Africa with special focus on
synergies and complementarities - Ministry of Finance,Government of India Oxford University
Press JSTOR,Pg 165,166


countries.Nowadays, even the BRIC countries operate globally, strengthening their position
in the world even more. An example of such geopolitical and geoeconomic stategies is the
effort to stabilize the international financial system and they want to create an international
reserve currency system, which would ensure stability and security. Their representatives see
the solution in the abandonment of the dollar and its replacement by a local or national
currency. The new international reserve currency system would, according to the BRIC
countries, guarantee stability and security, which the American dollar is no longer able to
guarantee in the present monetary system. The BRIC countries will try to use broader, socalled Special Drawing Rights (SDR) in the international system. Nowadays, the SDR are
composed of the American dollar, the euro, the Japanese yen and the British sterling

The MERCOSUR countries (Brazil, Argentina, Uruguay, Paraguay and Venezuela) are
gradually cleansing their markets of the dollar in favor of national currencies. The rouble,
actually, has already obtained the status of the regional exchange currency in the area of
Russia and the Post-Soviet States. The competition between the Chinese yuan and the
American dollar is well known. Strategically, China wants directly or indirectly to
dedollarize the global financial structure and to make the yuan the reserve currency. If it
succeeded, international markets would also trade in yuans. And China, as well as the BRIC
countries, could strengthen their position in the global economy in this way.
Information sharing about possible speculative attacks on the hard-currency, fund and rawmaterials markets is another important tool for the BRIC. However, the BRIC countries do
not want to, and even cannot, exist separately, they understand that they are a part of the
world economy and they want to hold a dialogue and share the information with other
countries, or blocks as well (G7, G20, the EU, APEC, the UN and so on).
Nowadays, the BRIC countries are creating a common information database to analyze the
condition of their food security, since the issue of production, consumption, and supplies of
food has become global. They are also negotiating about exchanging agricultural
technologies, because the provision of sufficient food to their inhabitants will become a key
concern in the future.


The BRIC cooperate actively with the UN they became co-authors of the UN General
Assembly resolutions on the prevention of any types of weapons deployment in outer space.
At the last BRIC summit (April 2011) on the island of Hainan the members passed a joint
declaration on mutual dialogue and cooperation in the area of politics, business and economic
relations and mutual cooperation in the sphere of science, healthcare and ecology. The BRIC
face the same tasks connected with economic development, technological modernization and
the social system development. These priorities open further space for cooperation whereby
these countries can reach their objectives faster.
Another example of their common effort in the framework of cooperation with the United
Nations is the fact that Brazil, as well as India, are interested in becoming permanent
members of the UN Security Council, which is supported by both Russia and China. Russia
and China are permanent members of the UNSC with a veto power, and they have confirmed
that they "attach the importance to the status of India, Brazil and South Africa in international
affairs" and they "understand and support their aspiration to play a greater role in the
UN"(Medvedev 2011).
The BRIC members agree on the need to reform the UN Security Council to make it more
representative and effective. The Brazilian President Dilma Rousseff said: "The reform of the
United Nations and its Security Council is essential. It is just impossible that we should still
remain attached to institutional arrangements that were built in the post-war period."
(Rousseff 2011). The South African President Jacob Zuma also called for the reform of the
United Nations Security Council to give developing nations a greater say in urgent issues.13

The economic potential of the BRIC countries remains above-average and their market
situation in the mid-term and obviously, in the long-term is expected to improve. This will
further deepen the global influence of the BRIC countries. However, it is possible that for a
long time these countries will not play a role of the axis around which the global economy
and politics will rotate. The economic dynamics of the BRIC countries can seem impressive,
13 Global Influence of BRIC Countries by Olga Slobodnikova and Renata Nagyova,University of
Ostrava,Ostrava,Czech Republic,JSTOR.Pg 306 & 307


but as for their standard of living these countries still lag behind the developed economies.
Smaller areas of prosperity sharply contrast with areas of poverty. It will probably take
decades before these countries solve their most critical and pressing social and economic
problems, such as poverty, criminality or unemployment.
A decade of rapid growth (2000-2010) is not sufficient for the BRIC countries to pick up the
baton from the present global economic leaders the USA and the Western Europe. The
BRIC countries may surprise the world with their development within ten years provided
there will be a quality improvement and further economic growth. Moreover, there are other
countries in the world with fast growing economies. They are referred to as the MIKT
countries - Mexico, Indonesia, South Korea and Turkey. These countries may become
competitors of the BRIC.


1. The BRICS Report A Study of Brazil,Russia,India,China and South Africa with
special focus on synergies and complementarities - Ministry of Finance,Government
of India Oxford University Press JSTOR.
2. Global Influence of BRIC Countries by Olga Slobodnikova and Renata
Nagyova,University of Ostrava,Ostrava,Czech Republic,JSTOR.