The government leaders of four of the largest and fastest growing nations of the world have organized for the first time at a summit in Russia. After underlining the broad struggles of their individual economies’ developments, the once-sunny skyway to uncharted prosperity for BRICs (Brazil, Russia, India and China) is now recognized as clouded by the challenges each faces through global recession and national limitation.
Fastest Growing Economies are Organizing
The first BRIC summit took place in Yekaterinburg, Russia on June 16, 2009, where the government heads of Brazil, Russia, India and China participated in discussions upon the outlook for each of the economies, the stability of the dollar as the world reserve currency and achieving greater influence within the IMF (International Monetary Fund).
The challenges for each of these rapidly growing nations were also defined during the discussions at this summit to prove that future organization and cooperation among them would be imperative.
According to elements discussed in the June 16, 2009 Wall Street Journal article “Dollar-Trashing Rates Low on BRIC Agenda,” by Riva Froymovich, sustainable development and success in the each of these four super-powered regions is dependent upon key growth conditions such as:
- Net Importer vs. Net Exporter
- Pegging Domestic Currency to the US Dollar
- Barriers to Trade
- Current Account Management
The Impact of Global Recession on Developing Nations
As the world’s fastest growing nations with the most swiftly developing economies, BRICs are expected to emerge as global superpowers with the ability to significantly impact international trade, monetary and civil policies through the next several decades. However, each of the BRIC countries hosts a myriad of growth issues that have arisen due to the onset of the global financial recession beginning at the last quarter of 2008.
Brazil’s struggles were discussed at length at the São Paulo Conference, “Brazil: Challenges and Opportunities in the New Global Scenario” hosted by The Americas Society and Council of the Americas on June 9th, 2009. Specifically highlighted were trade barriers with the US (while preferring exportation of risk-averse primary goods to China) and radical corporate governance. The crisis has provoked new approaches to business in Brazil, some of which are criticized to be counterproductive to its growth.
Russia has been challenged with a diminishing population, increased corruption and strained export competition since the onset of the crisis. To accompany an arguably unbalanced government and serious necessity for modern infrastructure throughout the 11 time zones Russia spans, President Dmitri Medvedev has been expressive about the importance of cooperation among BRIC economies and the need for reform.
Undergoing several market adjustments since the end of 2008, India has been affected by the global recession in nearly every sector, with exports dropping dramatically due to less demand from Western nations and real estate and infrastructure projects sitting half-completed due to lack of funding. These developments have contrasted India’s booming pre-crisis economic growth rate of 8.7%.
China has weathered the global recession with the most grace of all the BRIC nations, however, maintaining its current account surplus is not the only issue. The Asian super-producer has been stubborn to lower export prices to remain competitive in the international arena, while this would create alternate struggles to maintain efficiencies and employment rates. Without their colossal export sector to balance an almost equally impressive import industry, the Chinese would not have a sustainable economy.
Limitations among the World’s Leading BRIC Economies
At issue for the continued success of all BRIC economies are the multiple hindrances which limit their maturation. In order to achieve consistent positive development and growth that echoes their recent expansions and successes, the world’s leading nations will need to overcome these limitations.
Climate control in Brazil is recognized as a highly critical issue, as sugar cane production involves heavy deforestation and has the ability to destroy the Amazon rainforest. The positive development of the economy will need to be balanced against the world’s greatest wildlife and oxygen resource.
For Russia, limited supply of iron ore and steel will eventually impact export markets while permafrost/desertification conditions and over-grazing by livestock contribute to poor soil for sowing crops. Lower-than-average quality of life among Russian citizens is attributable to malnutrition in rural areas (an effect of the over-grazing issue causing dismal harvests) and a renowned alcoholism struggle. The production of Russian people may also be threatened by the devastatingly high consumption of Afghan heroin, with approximately 2.5 million addicts as reported in the March 11, 2009 article “Russia is World’s Biggest Consumer of Heroin” from the UK publication The Telegraph.
Development in India is most subject to the struggles of the massive population living in poverty. In worse than Sub-Saharan conditions, about two of every three Indians lives on just $2 a day, and with a population of 1.3 billion, India has become a place of notorious corruption among those who are able-minded and struggling to improve their living conditions.
China experiences limitations to its development in environmental degradation due to over-exploited lands in the processes of its behemoth export sector. The leading Asian economy is also challenged with overcoming regional coal shortages , while coal has, until recent years, supplied 75% of the country’s energy needs and designated it with the highest mining-related death toll. The major oil field Daqing is depleting at a rate that has suggested that China will depend on imports for its energy necessities by 2015. The massive current efforts in renewable energies development throughout the growing nation will be a saving grace if projects are well-implemented.
Challenged but Not Defeated
Although Brazil, Russia, India and China have all been confronted with the rogue waves of recession and national limitation, there is an underlying reason that these fastest growing nations are called “BRIC” economies, and with all positive expectations, each will overcome their trials to emerge as the economic and political giants they are forecasted to become.
Sources:
Donahue, Patrick. (May 15, 2009)"'BRIC' Nations Summit Seeks to Turn Economic Might Into Clout." Bloomberg.
Scott. Michael. (June 9, 2009). "CRISIS IMPACT:Russian Recession Raises Hope for Reform." Reuters.
Unmüssig, Barabra. (2009). "Limits to Growth in China, too." IP Global Volume 10, Summer. German Council on Foreign Relations.
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