BRICS in the global economic framework
With representatives of the world's largest emerging economies, BRICS, gathering this week in China to develop a unified approach to global economic challenges, Business RT spoke with Jacob Nell Chief Economist from Morgan Stanley Russia.
RT: Is there any hope of developing a unified approach?Jacob Nell: I think, they are different but they all have some things in common.They are all growing fast, they are all big and they are all, to a certain extent, outside the institutions of economic governance that we have in the world – the G7 in particular.Russia, for instance, is a member of the G8, but it’s not really a member of the Finance Minister’s meetings which are at the heart of the G7.So this gives them an opportunity to meet and discuss their common interests, and reach some understandings on the G20 meetings coming up later this yea.So I think it is useful, and it’s kind of a tribute to the power of ideas, because Jim O’Neill the Chief Economist of Goldman Sachs, came up with the idea of BRICs as an analytical idea, 15 years ago.And two or three years ago it turned into a political grouping.RT: And there are significant differences within the group.Do you think they will be addressed during the conference?JN: They will talk about them.It’s a talking shop. But that is good, and if you look at Brazil, who has had some of the biggest problems of any country with the weak Chinese currency, because their manufacturing has stagnated, while Chinese imports have soared,there is a visit this week by new Brazilian President, Dilma Rousseff, to China and on the back of that they have signed big deals on the sale of Brazilian jets to China, and a Chinese manufacturer is talking about a big investment back into Brazil.So talking shops can lead to deals, and Russia too.RT: Can the block promote interests of the developing world?JN: Yes, within limits.As you say they are quite a diverse group, they have got quite different interests, but I think that what they can do is, they can coordinate positions, they can understand where they are coming from, and they can put unified positions to the G7 and to the US which will make them more effective in achieving their objectives.RT: From your point of view which countries might join the organization?JN: Well, this is one of the economics parlour games everyone likes to play – Why not Mexico? What about Indonesia? And I think there is a long list of economies that are large and growing fast and going through the processes of urbanization and industrialization that we tend to look for in the large emerging economies.But I think it will probably stay where it is, because you cant expand the acronym any more now South Africa has joined and you’ve got a country from each of the continents that have emerging markets.So I think it will stay where it is.RT: Are we right to consider BRICS as emerging economies and markets?JN: Well, I think so because they don’t have some of the characteristics of developed economies in terms of the depth of financial markets, the level of credit, the income per capita, and the lower growth rates that you get when everybody has got to a sort of high level of industrialization and urbanization. So I think that they are still emerging, they have got some way to go, and they can benefit from working together.