Friday, July 24, 2009

The new stars on the global economy :The BRIC group

With 40% of world population, and 25% of world GDP, the BRIC group is increasingly considered as the key new economic global partner. The BRIC group , which includes Brazil, Russia, India and China, has arrived to the world stage apparently to works with a different approach , specially concerning the currency for international operations. They do not fully trust the dollar, as the only reference for international finance, so they believe a new world order must arise with more currencies available.-
A key issue about the BRIC group, is related to the fact that they to do not seem to be homogeneous enough as it would necessary to count them as a strong partner .Let check this out a bit further:
a.- Geographically distant from one another, it might affects its sense of identity and common purpose for their leadership. Asian countries share history and cultural values, which makes them prone to work together more actively than with “foreign” .-
b.- Politically ranging from democracy to Political State kind of regime, their leaders are accountable by different audiences and institutions .For instance Brazil has a free press ,with no restriction whatsoever to the news media ability to check what government is doing, which imply higher transaction cost than its partner, when it comes to make political decisions.
c.- Institutionally , the BRIC group also have a mixture ranging from a strong State like China and Russia, to a less centralized State in India, whereas in Brazil the State is returning to a more complementary fashion with the private sector. The rule of law also differ, setting undesirable conditions for trusting them a reliable partners.
Thus, although it looks like the global economy will be organized on the basis of important blocs,(USA ,European Union and Asia), the adding up factors (population and GDP)might not be sufficient condition to consolidate such BRIC structure, like it is the APEC which is also an adding up organization (all of them are on the pacific grim). As long as there is connecting points, the BRIC group will represent the new world economy reality, specially decisive for global economy recovery. However, there is still a long way before such an interesting group become a global partner on its own .
The real importance of BRIC, will probably deal with its role of fulfilling expectations of those countries which are left behind on global affairs , because of the relevance of its new political voice status, to speak out at global stage and international organizations. In fact, the G8 might not longer be what it was, excluding for future meeting the BRIC .
Further advances will depend upon this BRIC group to creates its own structure either to solve differences ,whether they appears on key issues, or to make decisions.-