BRICS: The Road Ahead
At the most recent annual BRICLab conference on March 6, speakers convened at Columbia to discuss how Brazil, Russia, India, China, and South Africa are preparing for their sixth Summit of Heads of State, which will be held in Fortaleza, Brazil, this July.
Scholars and businessmen gathered for the discussion that examined the economic performance of BRICS amidst growing skepticism toward emerging markets and the potential convergence between advanced and developing economies. Participants also weighed in on the prospects for the BRICS Development Bank (agreed to last year) and what these five nations should accomplish in order to increase their economic clout and further contribute to global growth
Marcos Troyjo, the BRICLab’s co-director and an adjunct professor of international and public affairs at SIPA, gave welcoming remarks. The speakers that followed agreed on the need of BRICS countries to have a specific agenda and institutions based on common interests.
Among the guests were Otaviano Canuto, former vice president and senior adviser at the World Bank, who discussed growth opportunities, the relationship between technology productivity, the emerging middle class, and commodities prices.
“Middle-income countries seeking to reach the next stage of development can no longer simply import or imitate existing technologies or capabilities; they must build their own,” he said. “This requires a robust institutional framework – including, for example, a strong education system, well-developed financial markets, and advanced infrastructure – that encourages innovation and can support complex supply chains.”
Fernando Sotelino, an adjunct professor of international banking and financial institutions at SIPA, focused on what he considered the most critical milestone in economic development for any emerging economy: a functional financial system, capable of provide long term credit in domestic currency and affordable interest rates.
Atsi Sheth, vice president and senior credit officer for Moody’s Sovereign Risk Group, began her presentation by asking what India’s government has done to aggregate the interests of the 800 million people in India who are eligible to vote. He suggested that India is vulnerable but does have some hidden advantages; its outlook depends on policy measures. “For India, growth is not automatic,” she said. “Macroeconomic balance must be maintained. Infrastructure and human capital have to be improved.”
Ann Lee, an adjunct professor of economics and finance at New York University, pointed out that China has developed a huge industrial base and strong trade ties with countries all over the world. “Surpassing the U.S., China became the most trading nation in the world,” she indicated. Lee also remarked that China's reserve currency is able to give credibility to the proposed BRICS development bank.
Ivan Isakov, managing partner for Crown Point Equity LLC, discussed governance challenges that Russia should face to diversify the economy: “Even if the balance sheet is still strong, slow GDP growth numbers will go up only if Russia improves its rule of law and institutional environment.”
Similarly, Loy Pires, senior manager at the International Finance Corporation of the World Bank group, asserted that BRICS countries that do well will have their people asking for more governance and transparency. He also highlighted the flourishing of BRICS private sector, the income effect and the strong demands coming from the emerging middle class. According to him, growth opportunities for BRICS will depend on changes in the working population of these countries, percentage of people moving to the middle class, and willingness to reform.
— Dariela Sosa MPA ’14