When IMF and the investment community say an economy is growing what they mean is that the claims they have to that economy's labor, land and natural resources are growing! It means they can now bet more money on the nation!
Money value is an illusion.
We should say no to foreign investment because the investor is KING! the borrower is SERVANT to the lender!
We can organize ourselves! we are the ones who have true capital - Land, Labor and Natural Resources. We should organize our capital to develop ourselves!
No great nation was ever developed with foreign investment.
On Sun, Aug 26, 2012 at 4:53 PM, Judy Miriga <jbatec@yahoo.com> wrote:
--
Forwarded for your information.......................
Judy Miriga
Diaspora Spokesperson
Executive Director
Confederation Council Foundation for Africa Inc.,
USA
http://socioeconomicforum50.blogspot.comAfrica and the BRICS formation
by IndepthAfrica | Posted on Thursday, April 19th, 2012Horace CampbellThe BRICS leaders have seen concretely that there is no alternative to moving from a unipolar world to a multipolar world that is based on mutual respect and an end to hierarchies.eme, 'BRICS Partnership for Global Stability, Security and Prosperity.' From the press reports coming out India, we have learnt that the leaders of Brazil, Russia India, China and South Africa signed two pacts to stimulate trade in their local currencies and agreed on a joint working group to set up a South-South Development Bank that will raise their economic weight globally.The participating banks for this new international financial struggle include the Export Import Bank of India, Banco Nacional de Desenvolimento Economico e Social (BNDES) of Brazil, State Corporation Bank for Development and Foreign Economic Affairs of Russia, China Development Bank and Development Bank of South Africa. At the end of the meeting the five leaders issued the 50 point Delhi Declaration declaring their intention to further strengthen "our partnership for common development and take our cooperation forward on the basis of openness, solidarity, mutual understanding and trust." [1]In our commentary this week we reflect on the seismic changes in the global economy and the reality that Europe has suffered so much from the capitalist crisis that the major capitalist corporations are making preparations for the collapse of the Euro. [2] With each passing day there are reports in the financial press that 'investors are taking huge sums out of eurozone bonds. [3] Where the BRIC leaders had started a formation to facilitate their expanded trading relationships, the collapse of the dollar zone and the Eurozone has accelerated so fast that the policy makers are now improvising without a clear road map as to a project of real international solidarity. To their credit, the BRICS leaders have seen concretely that there is no alternative to moving from a unipolar world to a multipolar world in the 21st Century that is based on mutual respect and an end to hierarchies. Yet, as we will argue in this extended commentary, the focus of the planning of the peoples of the South should no longer be on the basis of bargaining for better terms with western capitalist states. We will maintain that for genuine social and economic transformations to take place in these countries representing 45 per cent of the world's population, it will be necessary to make a clean break with the ideas of 'historic capitalism.' [4] Whether the BRICS formation will be the embryo of a 'new wave of independent initiatives from the South' or based on regional hegemons will be dependent on the extent to which the forces of social justice and emancipation engage the political and ideological struggles around BRICS. A 17 point action plan focused on issues relating to finance, health, population, food security and multilateral energy cooperation within the BRIC's framework provides spaces for a new research and policy agenda that could strengthen and consolidate the goals of a new framework for economic cooperation. In this way progressive scholars can give meaning to the call for the expansion of the channels of communication, exchanges and people-to-people contact amongst the BRICS, including in the areas of youth, education, culture, tourism and sports. [5]The current leaders of India aspire for a BRICS and the 'development bank' to be an auxiliary institution of the World Bank. Inside South America, Brazil is the society that is represented as a rising major power but the African descendants and the indigenous peoples in that society are involved in a major struggle for reparative justice. Temporarily, South Africa carries the torch for Africa within BRICS but we will analyze the limitations of this present arrangement arguing that the strength of BRICS will be realized in a context when new international formations such as BRICS have the full weight of African representation from a united peoples of Africa and a Brazil that is democratized to reflect the political representation of the majority of the Brazilian population. Ultimately, for BRICS to be a real alternative it will have to have a clear strategy about expansion so that the goals of building another world based on peace and real international solidarity can be realized.FROM REALISM TO BRICS AND UBUNTUWhen the financial analysts at Goldman Sachs wrote their forecasts on the future of the BRIC economics in 2003, "Dreaming With BRICs: The Path to 2050," [6] it was not in their calculation that in less than ten years the capitalist system would be in deep crisis and that the societies of the European Union would be on their knees with emissaries seeking bailout from China, Brazil and even African states. At the time of the 2012 Summit the New York Times grudgingly reported that, "Last November, Mr. O'Neill predicted that the group's combined economies, now worth almost $13 trillion, would double in the coming decade, eventually surpassing the size of the economies of both the United States and the European Union." [7] Opportunistically, the leaders of Britain are jockeying for London to be an offshore center for trade in the Chinese currency. With the news of the collapse of the Euro spooking the bond traders in Europe, a few days ago the bank HSBC announced that it was about to sell bonds denominated in the Chinese Currency (RMB or Yuan). European capitalists from the London capital markets are no longer waiting for a neat change in the property laws inside of China which would guarantee holding large amounts of Chinese currencies and assets.Today, the reality of a changed international system is evident and policy makers in all parts of the world are seeking to adjust to this new reality. Out of a force of habit from the past hundred years European and US policy makers seek to shape perceptions of the 'emerging countries' [8] and it is from their schools where there are scholars who pontificate on which society will be the hegemons in the next fifty years.Students who start from realist theories in international relations have studied ideas of strength and power for so long that in their analysis and calculation, there can be no other possibility than a world where there is one or two military 'superpowers.' Whether it is Henry Kissinger who in his book, 'On China,' envisages the dominance of China, (as long as it takes the capitalist path) or Zbigniew Brzezinski who envisage a new alliance between China and the United States in a Group of Two (so that the present Chinese political leadership can deepen their alliance with the plutocrats of Wall Street), realism and realist doctrines echo across the globe. From the United Kingdom, British scholars and journalists pontificate on the rise of China arguing that China's economic and political clout will only be realized when China embrace western 'democratic' values. [9] Robert Kaplan completes this realist tapestry by writing on the rivalry between China and the United States in the Indian Ocean. [10] From inside Chinese Universities and think tanks leading realist scholars such as Professor Yan Xuetong of Tsinghua University and Wang Yizhou, Vice Dean School of International Studies at Peking University ponder on the need for the Rise of China in order to end the dominance of United States or the U.S.-led world order." These Chinese institutions now produce books and monographs on the Rise of China and fete scholars who write books such as that of Martin Jacques, When China Rules the World: The End of the Western World and the Birth of a New Global Order. [11]When I attended the 11th annual conference on Chinese diplomacy in Beijing last December, it was striking how much emphasis the realists were placing on the future relationship with the United States as if there were no other important regional formations. It was left to by Le Yucheng, Assistant Minister and Director Policy Planning, Ministry of Foreign Affairs to highlight the new importance of BRICS for Chinese foreign policy. In his keynote address "Current International Situation and China's Foreign Affairs" le Yucheng grasped the importance of BRICS and communicated this, especially in the context of financial crisis in Europe, the revolutionary change in Egypt and the diminution of the dollar. Thus far, because of the intellectual and political retreat from Marxism and Maoism in China, the political leaders have been supporting the ideas of Confucius, "that everyone should know their place in social hierarchies." Many of the top intellectuals within the political establishment of China who seek to trace their lineage to their proper place in the social hierarchy of China prior to 1949 do not factor in the international crisis of capitalism in their analysis of the new global order.It is in India where the perverse idea of social hierarchy has been institutionalized in a caste system to the point where these ideas hold back the full potential of all of the peoples of India. Realist scholars in India respond to the end of the US dominance by holding on to a vision where the ideas and policies of the United States can form the basis for an alliance between the Indian ruling class and the United States to 'balance' the rise of China. Although touted as a 'rising economy,' India has been the largest recipient of World Bank loans. This alliance between the Indian governing class and the Bretton Woods Institutions ensured that in his address to the BRICS Summit, the Prime Minister of India, Manmohan Singh said that, BRICS need to "expand the capital base of the World Bank and other Multilateral Development Banks to enable these institutions to perform their appropriate role in financing infrastructure development." [12] There is a wider intellectual canvas in India with younger scholars recognizing the need to go beyond neo-realism in international affairs. There are major political and social struggles all over India with some of these struggles militarized. Scholars such as Sreeram Chaulia have written on need for the refinement of theories relating to South-South Cooperation. In the dominant centers of International Relations theories there is great fear of theoretical frameworks that start from a radical feminist perspective.Russia has retreated from all ideas of building an egalitarian society and is now suspended between its socialist past and its oligarchic present. Russia is already in a formation with China called the Shanghai Cooperation Organization (SCO) and recently carried out joint military operations with China. Russia is one of the societies which is still reeling from destructive dismantling of the planned economy. [13] while in Brazil the intellectual struggles are as intense as the political struggles for democratization for that society to break out of racial hierarchies. Russian scholars have been very active in calling for a clear role for BRIC in articulating the construction of a new international order. [14] In the emerging global order, the majority of the peoples of the South are seeking new relations beyond the reproduction on new 'superpowers.' [15] Inside Brazil, the majority of the peoples are struggling for a form of democratization that repairs the centuries of destruction and genocidal economics. Foremost among these peoples are those of African descent at home and abroad who are seeking to move to a new philosophical basis for international politics, one that harnesses the resources of the planet to lay the foundations for peaceful relations. It is here where the philosophy of Ubuntu holds promise in proposing a different priority from the old ideas of strength, power, military might and the 'development of the productive forces.'In 2011 South Africa was invited by China to its summit on the Chinese island of Hainan and South Africa became the fifth member of BRIC. When South Africa became the full member there were a number of choices before the South Africans, either reproducing realist ideas that South Africa was the strongest economy in Africa, a regional hegemon and hence logically entered the club of the 'emerging powers' or pushing for BRICS to engage questions of peace, health and the environment to break the preoccupation with 'trade and development' It was the South African struggle that popularized the ideas of Ubuntu but since the coming to power of the African National Congress (ANC), the political leaders have embraced the ideas of capitalist development while posturing as defenders of African freedom. The memory of the self-organization of the popular classes in the anti-apartheid struggle is still fresh in the minds of the people so the political leadership cannot jettison the ideas of African liberation. More importantly, it was this anti-apartheid struggle that gave birth to new forms of internationalism.
Thus, while progressive Pan Africanists hail the emergence of BRICS as a possible alternative to neo-liberal hegemony, the planet will not have shaken the shackles of oppression by opposing US financial dominance and replacing it with multilateral neo-liberal cooperation between rising capitalist states in Brazil, Russia, India, China and South Africa. The progressive African point of view on the emergence of BRICS is now being demanded as more and more there are initiatives coming from BRICS such as the formation of a development bank.REVISITING THE EVOLUTION OF BRICS AND THE BUILDING OF A FAIRER WORLDVladimir Shubin, Institute for African Studies, Russian Academy of Sciences (one of the intellectual holdovers from the era of socialist solidarity) has been one of the more engaging scholars from the BRIC countries who has shed some light on the thinking behind the leaders of BRIC in their invitation to the South Africans to become a member of BRIC. In his paper "BRIC or BRICS," Shubin, a leading authority on the relationship between Russia and the liberation movements in Africa, wrote of South Africa's aspiration to be part of a 'core of nonwestern powers.' [16] Shubin's writings are useful in so far as we are exposed to some of the thinking outside of western Europe on the evolution BRICS and the overlapping relations of the IBSA Dialogue Forum. During the height of the struggles over intellectual property rights in the World Trade Organization (WTO) and the future of generic medicines, India, Brazil and South Africa (IBSA) had established the IBSA forum as a platform to engage in discussions for cooperation in the fields of agriculture, trade, culture, and defence among others. One of the top priorities of IBSA was for the democratization of the Security Council of the United Nations and for the end to the veto power of the five permanent members. These three states had an interest in becoming permanent members of the Security Council displacing France and Britain. Neither China nor Russia is enthusiastic about the democratization of the Security Council of the United Nations.South Africa's ability to exercise any real leadership within IBSA was circumscribed by the proclamation of the New Partnership for Africa's Development (NEPAD) strategy for Africa's economic transformation. Numerous African scholars have written extensively on how World Bank 'development' ideas were at the foundation of this NEPAD. [17] These critiques of NEPAD and the Millennium Development Goals (MDG) are instructive in so far as the leaders of the BRICS formation continue to maintain that the outmoded MDG goals "remain a fundamental milestone in the development agenda." For the past ten years NEPAD was another foreign policy instrument for South African capital. Throughout Africa imperial economists have been able to recruit African technocrats who have been as energetic as the Bretton Woods institutions in promoting 'economic structural adjustment programmes.' These liberalization projects have been labeled as 'economic terrorism.' This economic terror has taken the form of a sustained attack on the living standards of the African peoples and the clear deterioration of the quality of life that has brought into being a new political consciousness in Africa. In all parts of Africa citizens have to do with little or no access to the basic necessities of clean water, health care, decent education and housing. Neo-liberalism and structural adjustment strengthened the alliance between the African ruling classes and the imperial overlords so that IMF and World Bank fundamentalism ensured that the profitability of enterprises took pride of place before human lives.African governments have embraced neo-liberal exploitation without the direct involvement of the international financial institutions' such as the IMF and the World Bank. In this way, leaders in societies such as India and the majority of African states will continue to serve the interests of global capitalism. Globalization gave unprecedented mobility for the lords of finance so they were not worried about national boundaries. What was most important was that 'development' serves the interest of the one per cent. This would include reproducing one per centers in the BRICS societies. In the discourse of the financial barons, 'development' was supposed to be in the hands of experts and should exclude the skills, consciousness and capabilities of the producing classes. This kind of 'development' (according to the Walt Rostow model) was for the demobilization and depoliticization of the people who fought for independence.Time was not standing still and by 2008 when the full blown capitalist crisis exploded, then there were new initiatives to create other international formations. It was just after the crash of Wall Street in 2008 when the first official multilateral conference of Brazil, Russia, India and China met in June 2009 in the Russian City of Yekaterinburg. Previously, in 2006 the foreign ministers of the four countries had met unofficially in the city of New York, followed by a meeting at diplomatic level in Yekaterinburg in May 2008. The declared objective of the first summit of BRIC was spelt out by the Russian President Dmitry Medvedev who said: "The BRIC summit aims to create the conditions for the building of a fairer world order and the creation of a favourable environment for resolution of global problems. At the same time, we must not overlook our national problems and objectives, which are priorities for all of us, of course, priorities for all the respective leaders and governments" [18] One could see from the declaration that there had not been much thought given to what would constitute a 'fairer' world order.The second summit of BRIC was held in Brasilia, Brazil in 2010 where the same 'reform' agenda echoed as the final communique. The leaders called for reforming financial institutions. It was in the context of the flurry of meetings of the G20 meeting in 2010 in Seoul, South Korea when South Africa was formally invited by the Chinese to attend the third summit of BRIC which was to be held on the Chinese Island of Hainan in April 2011. This summit took place at the height of the NATO bombing of Libya but apart from the statements of condemnation in the communique there were no strong pressures to rally the international community against the manipulation of the Resolutions of the Security Council of the United Nations on responsibility to protect. The Chinese and the Russians took cover from making any grand statement by arguing that South Africa had voted to support the UN resolution while the two permanent members had abstained.The final communique from the SANYA, Hainan meeting declared,"Leaders of the five fast-growing emerging economies vowed to support the reform and improvement in international monetary system for the establishment of a stable, reliable and broad-based international reserve currency system."The international financial crisis has exposed the inadequacies and deficiencies of the existing international monetary and financial system." [19]This declaration was being overtaken by the collapse of the old financial architecture. Before the end of 2011, the importance of BRICS as an alternative international formation was manifest by legations from the European Union travelling to China and Brazil seeking bailout for the Euro. The collapse of the European alternative to the dollar narrowed the choices before the countries of BRICS and it is this reality that should shed light on the call for BRICS to establish a development Bank at the end of the fourth summit in New Delhi.REJECTING WAR AGAINST IRANThe focus on financial relations and on creating new basis for economic relations overshadowed the burning international questions of the drumbeats of war in the Persian Gulf and the continued build-up of US military presence in Asia-Pacific and in Africa. We do not know if the leaders of BRICS discussed the question of the aftermath of Libya because Libya was not mentioned in the press reports. It was from Cuba in the last year where in a conference with intellectuals Fidel Castro was in a discussion where it was said that in all parts of the world those who want peace must discuss Libya. In particular, it was discussed that there should be international opposition to the killing of Africans in their own country and calling them mercenaries as is the case for the township of Tawerga. [20]We do know that during the last year Russia attempted to reconvene the UN Security Council to discuss the killing of innocent Africans who were deemed to be 'African' mercenaries in an African country. Collectively, the leaders of BRICS do not support the bellicose postures toward Iran and these leaders understand the long term goals of Israel and the militaristic wing of US capital. This was manifest in a strong and forthright statement that,"The situation concerning Iran cannot be allowed to escalate into conflict, the disastrous consequences of which will be in no one's interest. Iran has a crucial role to play for the peaceful development and prosperity of a region of high political and economic relevance, and we look to it to play its part as a responsible member of the global community. We are concerned about the situation that is emerging around Iran's nuclear issue. We recognize Iran's right to peaceful uses of nuclear energy consistent with its international obligations, and support resolution of the issues involved through political and diplomatic means and dialogue between the parties concerned, including between the IAEA and Iran and in accordance with the provisions of the relevant UN Security Council Resolutions."BRICS AND THE CALL FOR A NEW DEVELOPMENT BANKWhere the final communique of the fourth BRICS summit was short on recommendations for a clear statement on the 'colossal failure of NATO in Libya, it was robust in the call for a new development bank. The objective of the BRICS bank will be to scale up intra-Brics trade which has been growing at the rate of 28 per cent over the last few years. We are informed in a missive from New Delhi that, "Brics sign 2 currency pacts."This article informed us that at US$230 billion, interBrics remains much below the potential of the five economic powerhouses. Brics has set a target of interBrics trade to be US$500 billion by 2015. For this purpose there was the directive for the setting up of a BRICS Development bank. The BRICS Delhi Declaration said that, "The bank is being envisaged to mobilise "resources for infrastructure and sustainable development projects in Brics and other emerging economies and developing countries, to supplement the existing efforts of multilateral and regional financial institutions for global growth and development." The leaders directed their finance ministers "to examine the feasibility and viability of such an initiative, set up a joint working group for further study, and report back to us by the next summit", said the declaration.This move to develop a complimentary institution to supplement the existing efforts to the International Monetary Fund and the World Bank contains all of the contradictions inherent in the ideation system of those who want to catch up and surpass the West. Progressive Pan Africanists yearn for the weakening of the financial hegemony of imperialist states of the Anglo-American world and are searching for levers to break the stranglehold of the Washington Consensus. In every part of Africa there is awareness that there is need for massive infrastructural investment (roads, rail, ports, Information and Telecommunications, air transport, energy and power generation, canals and water management) that will strengthen inter African trade and break the deformed patterns of extraction of resources. However, Africans will be vigilant to ensure that the 'development' plans of BRICS do not reproduce the five decades of 'development' that Africa has witnessed since independence.The Indian Prime Minister was explicit about the kind of development that he had in mind when in his speech he argued that the BRICS development Bank will be a supplementary institution to the World Bank. Progressive grassroots movements and intellectuals in the global South have been explicit in calling for an alternative to the priorities of the World Bank. Already, the Export Import Bank of China and the China Development Bank spends more money in the developing world than the World Bank. The Financial Times reported that in 2009 China spent over US $108. Billion while the World Bank spent US $100.3 b. This shift in the source of development funds is most explicit in Africa where according to information from the Exim bank of China, in the last year China invested more than US $35b in Africa. What must change are the priorities of these investments.Dr Sreeram Chaulia, a leading Indian scholar of International Relations gave some indication of the thinking in India that went into the proposal for a development bank. Chaulia in arguing that the World Bank and the IMF have outlived their usefulness suggested that the new Development Bank of BRICS should be patterned after the Bank of the South that has been explicit in its opposition to 'development' plans based on neo-liberal ideas. Chaulia argued that,"The concept of an intergovernmental bank paralleling or opposing the World Bank and operating on different ideological and procedural bases is not novel, as there is already a 'Bank of the South' (Banco del Sur) in existence in Latin America. It is a monetary and lending organisation with seven member countries, including Brazil, and a modest seed capital of $20 billion. Its mere presence has carved an autonomous space. India's motive and selling point in advancing the proposal for a Brics bank is, likewise, that the Bretton Woods institutions have historically failed to meet the developmental requirements of the Global South and that alternatives can now be erected on the shoulders of rising powers within the South, which have accumulated vast capital reserves. It would be a financial revolution if the proposed Brics bank is integrated with the Bank of the South in Latin America through the common bridge of Brazil. Brics must avoid dangling the threat of launching a new bank only to win some more representation within the World Bank and the IMF. The Brics bank must not become a mere bargaining ploy which could be shelved if more voting rights were given to the five emerging economies in western-led international financial institutions. A bank for the entire Global South should be non-negotiable, so that Least Developed Countries (LDC) keep faith in emerging powers who are growing at a much faster rate." [21]THE AFRICAN UNION AND THE BRICS BANKI have quoted Chaulia extensively because I agree that the formation of BRICS must not become a bargaining ploy for Chinese and Indian leaders to better their relationship with western financial capitalists. From the experiences of NEPAD and the Development Bank of South Africa (DBSA), African progressives can have no confidence in the present political leaders in South Africa to promote an agenda which is for the benefit of Africans in general and not South African capitalists. It is here where it is imperative that progressive and patriotic Africans work harder for the full harmonization of economic relations within the African Union so that the future of BRICS will be anchored in an international environment where the African representation in BRICS will be on behalf of Africa as a whole.The struggles to make the 'investments' of BRICS more accountable must be engaged within South Africa so that the neo-liberal priorities of the present government must be reversed. Thus, in the short run, while South Africa carries the banner of Africa within BRICS, the political leadership in South Africa must be held accountable so that the investment strategies do not replicate the destructive investments that have been championed by the South Africans with the World Bank. The financing of the coal fired plant in South Africa is but one example of the need for a wider discussion on the investment strategies of the future BRICS bank. Africa should not be a dumping ground for old technologies that are destroying the environment. France is busy seeking to align with China to sell nuclear reactors to South Africa.In a recent book, To Cook a Continent, African scholars have been warning about the dangers and consequences of the destructive forms of extraction of resources from Africa. The proposed BRICS bank will be put on notice that Africans will be vigilant to see that Chinese, Russia, Brazilian and Indian conglomerates operate in ways that respect Africans as humans. African workers are organizing against capitalists from BRICS that seek to reproduce low wage environments with the absence of the rights of workers. Africans will not replace plunder from western capitalists by new extractive capitalists from the East and from Brazil. Importantly, African progressives will not support another financial institution that facilitate capital flight from Africa. BRICS can move decisively to ensure that it is committed to the principle of the return of stolen assets and reparations.UBUNTU IN INTERNATIONAL RELATIONS – BEYOND CONFUCIAN HIERARCHIESThe African peoples have a clear sense of the need for a new Development Bank to supplant the IMF but this financial institution cannot be based on the ideas of Walt Rostow or Henry Kissinger. Samir Amin was very clear as to the new kind of social transformation that must be in tandem with this 'development.'
"Development cannot be reduced to its apparently major economic dimension- the growth of GNP and the expansion of markets(both exports and internal markets)- even when it takes into consideration the 'social' dimensions (degrees of inequality in the distribution of income, access to public services like education and health). 'Development' is an overall process that involves the definition of political objectives and how they are articulated: democratization of society and emancipation of individuals, affirmation of the power and autonomy of the nation in the world system." [22]This was the principle of development and social progress as it was articulated by the Bandung project. Imperialism fought to roll back this project of the autonomy of societies and nations in the world system. It was in Africa where this counter revolutionary energy was fed by white supremacy so Africans will strategize for the building of a new international system. This system cannot be based on a Confucian principle of hierarchies or an Indian caste system. In the medium term, if BRICS is to be the anchor of a new social order, it must have a strategy for a phased expansion.Africans will support BRICS while they are fighting against oppression at home and abroad. Africans welcome the idea of linking up with the bank of the South in so far as it is in Latin America where the struggles against neo-liberalism and racism are most advanced. In Argentina the radical initiatives in relation to an assertive role of the Central bank and the nationalizing of foreign oil companies is now making headlines. The struggles of African descendants in Latin America have brought issues of racism and racial discrimination out in the open. It is in Brazil where the African descendants constitute the majority of the population where this struggle is most intense. The fight against racism in Brazil is going on at the same time when Africans are working hard to strengthen the African Union. It is the convergence of these two struggles which will influence the outcome of Dreaming with BRICS the path to 2050. In this way the future of BRICS will be linked to a multipolar world that is against all forms of oppression. This would expose the caste systems of Russia, China and India and be pushed by the same alliance that promoted Ubuntu in the African Liberation struggles.Ubuntu emphasizes linked humanity and our intrinsic connection with a complex universe. The processes of 'development that we have seen over the past thirty years have reinforced the forms of production and consumption that is speeding the destruction of the planet earth. Although in the communique the leaders of BRICS affirmed the concept of a 'green economy,' the language of 'sustainable development' and 'economic growth' point to the old forms of economic industrialization that has brought the world to a tipping point. The carrying capacity of the planet cannot sustain a mode of capitalist economic development that mimics the forms of human organization of Western Europe and North America. China and India argue that they are developing countries in fora that deals with climate change but want to continue the destructive forms of economic management. Ubuntu opens the space for us to understand how different parts of the universe fit together, with an understanding that "everything is connected to everything else." As temporary inhabitants of the physical space on earth, we begin to appreciate the reality that the biosphere is the global ecological system integrating all living beings and their relationships, including their interaction with the elements of the cooperating systems (atmosphere, geosphere, and hydrosphere).We are entering the era of the bio-economy and the idea of a BRICS development bank must have as its first priority the health and safety of the planet and the health and safety of humans everywhere.Horace Campbell is Professor of African American Studies and Political Science at Syracuse University.END NOTES[1] Fourth BRICS Summit – Delhi Declaration, Ministry of Foreign Affairs, India, March 29, 2012
[2] Andrea Felsted, "Companies make plans in case the euro collapses", in Risk Management, Financial Times Special Report, April 16 2012, p.2.
[3] David Oakley, "Investors taking huge sums out of eurozone bonds", Financial Times, April 17 2012, p.21
[4] Samir Amin discusses the challenges of ending historic capitalism in the book, Ending the Crisis of Capitalism or Ending Capitalism? Pambazuka Books, Oxford, 2011
[5] Delhi Declaration, No.49
[6] Goldman Sachs, 2001. Dreaming With BRICs: The Path to 2050. London,
[7] Jim Yardley, "For Group of 5 Nations, Acronym Is Easy, but Common Ground Is Hard"
[8] Roberts, Cynthia. 2011. Building the New World Order BRIC by BRIC. The European Financial Review, Spring issue, pp.4-8.
[9] Jonathan Fenby, Tiger Head, Snake Tails: China today, how it got there and where it is heading, Simon & Schuster, New York 2012. This line of argument is reproduced by Will Hutton, The Writing on the Wall: China and the West in the 21st Century, Little, Brown & Company, New York 2007
[10] Robert Kaplan, "South Asia's Geography of Conflict, Council For Foreign Relations," New York, September 2011
[11] Martin Jacques, When China Rules the World: The End of the Western World and the Birth of a New Global Order, Penguin Press, 2012
[12] http://pmindia.nic.in/content_print.php?nodeid=1156&nodetype=2
[13] Kotz, David M, "Russia's Financial Crisis: The Failure of Neoliberalism?" Z Magazine, January, 1999, 28-32., See also David Harvey, The New Imperialism, Clarendon Press Oxford, 2003
[14] Davydov, Vladimir. 2008. The Role of Brazil, Russia, India & China (BRIC) In the Construction Of the International Order. Megatrend Review, vol.5, (1), pp.85-97.
[15] Brazil As an Economic Superpower?: Understanding Brazil's Changing Role in the Global Economy, edited by Leonardo Martinez – Diaz and Lael Brainard, Brookings Institute, Washington 2009
[16] Vladimir Shubin, "BRIC or BRICS?" Paper presented at the Nordic Institute of African Studies, 2011
[17] There have been well developed critiques of NEPAD by scholars within Africa. See J.O. Adesina," NEPAD and the Challenge of Africa's Development: Towards the Political Economy of a Discourse," African Journal of International Affairs, Volume 1 No.2, 2001. See also Samir Amin, "The Millennium Development Goals: A Critique from the South," Monthly Review, Volume 57, Issue 10, 2006
[18] See Speech by the Russian President DMITRY MEDVEDEV at the BRIC summit, June 16, 2009
[19] China Daily, BRICS leaders issue Sanya Declaration, (Xinhua), April 14, 2011
[20] Fidel Castro Talk with Intellectuals: Our Duty is to struggle.
[21] Sreeram Chaulia, "Better coordination needed among Brics nations on international political issues," Economic Times, March 21, 2012
[22] Samir Amin, Ending the Crisis of capitalism or Ending Capitalism? Pambazuka Press, 2011, Page 131BRIC/BRICS
By Matt Rosenberg, About.com Guide
See More About:A sightseeing ship on the Huangpu River against the night skyline of Pudongs Lujiazui Financial District on April 15, 2010 in Shanghai, China. China is one of five countries known as BRICS.
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Goldman Sachs: InsightsInsights from Goldman Sachs on the Growth Markets in 2012www.goldmansachs.comDepression StudyWe're currently enrolling for our depression research study.www.depressionstudies.com(5) Signs of DepressionThese 5 Signs of Depression Will Shock You. See the Causes Now!Depression.DailyLife.com/5-SignsDefinition: BRIC is an acronym that refers to the economies of Brazil, Russia, India, and China, which are seen as major developing economies in the world. According to Forbes, "The general consensus is that the term was first prominently used in a Goldman Sachs report from 2003, which speculated that by 2050 these four economies would be wealthier than most of the current major economic powers."In March 2012, South Africa appeared to join BRIC, which thus became BRICS. At that time, Brazil, Russia, India, China and South Africa met in India to discuss the formation of a development bank to pool resources. At that point, the BRIC countries were responsible for about 18% of the world's Gross Domestic Product and were home to 40% of the earth's population. It would appear that Mexico (part of BRIMC) and South Korea (part of BRICK) was not included in the discussion.Pronunciation: BrickAlso Known As: BRIMC - Brazil, Russia, India, Mexico, and China.Alternate Spellings: BRIC, BRICS, BRIMC, BRIMCS (?)Examples:The BRICS countries include more than 40% of the world's population and occupy over a quarter of the world's land area. Brazil, Russia, India, China, and South Africa together are a powerful economic force.BRIC
From Wikipedia, the free encyclopediaJump to: navigation, searchNot to be confused with BRICS.
It has been suggested that this article or section be merged with BRICS and Group of Five. (Discuss) Proposed since July 2012. In economics, BRIC is a grouping acronym that refers to the countries of Brazil, Russia, India and China, which are all deemed to be at a similar stage of newly advanced economic development. It is typically rendered as "the BRICs" or "the BRIC countries" or "the BRIC economies" or alternatively as the "Big Four".The acronym was coined by Jim O'Neill in a 2001 paper entitled "Building Better Global Economic BRICs".[1][2][3] The acronym has come into widespread use as a symbol of the shift in global economic power away from the developed G7 economies towards the developing world. It is estimated that BRIC economies will overtake G7 economies by 2027.[4]According to a paper published in 2005, Mexico and South Korea were the only other countries comparable to the BRICs, but their economies were excluded initially because they were considered already more developed, as they were already members of the OECD.[5] The same creator of the term "BRICS" coined the term MIKT, that includes Mexico and (South) Korea.Several of the more developed of the N-11 countries, in particular Turkey, Mexico, Indonesia and Nigeria, are seen as the most likely contenders to the BRICs. Some other developing countries that have not yet reached the N-11 economic level, such as South Africa, aspire to BRIC status. Economists at the Reuters 2011 Investment Outlook Summit, held on 6–7 December 2010, dismissed the notion of South Africa joining BRIC.[6] Jim O'Neill told the summit that he was constantly being lobbied about BRIC status by various countries. He said that South Africa, at a population of under 50 million people, was just too small an economy to join the BRIC ranks.[7] However, after the BRIC countries formed a political organization among themselves, they later expanded to include South Africa, becoming the BRICS.[8]Goldman Sachs has argued that, since the four BRIC countries are developing rapidly, by 2050 their combined economies could eclipse the combined economies of the current richest countries of the world. These four countries, combined, currently account for more than a quarter of the world's land area and more than 40% of the world's population.[9][10]Goldman Sachs did not argue that the BRICs would organize themselves into an economic bloc, or a formal trading association, as the European Union has done.[11] However, there are some indications that the "four BRIC countries have been seeking to form a 'political club' or 'alliance'", and thereby converting "their growing economic power into greater geopolitical clout".[12][13] On June 16, 2009, the leaders of the BRIC countries held their first summit in Yekaterinburg, and issued a declaration calling for the establishment of an equitable, democratic and multipolar world order. Since then they have met in BrasÃlia in 2010, met in Sanya in 2011 and in New Delhi, India in 2012.[14]
Contents
[hide][edit] Thesis
Economist Jim O'Neill who proposed the idea of BRIC countries.São Paulo, BrazilShanghai, ChinaMumbai, IndiaGoldman Sachs argues that the economic potential of Brazil, Russia, India and China is such that they could become among the four most dominant economies by the year 2050. The thesis was proposed by Jim O'Neill, global economist at Goldman Sachs.[15] These countries encompass over 25% of the world's land coverage and 40% of the world's population and hold a combined GDP (PPP) of 18.486 trillion dollars. On almost every scale, they would be the largest entity on the global stage. These four countries are among the biggest and fastest growing emerging markets.{Incal 2011}However, it is not the intent of Goldman Sachs to argue that these four countries are a political alliance (such as the European Union) or any formal trading association, like ASEAN. Nevertheless, they have taken steps to increase their political cooperation, mainly as a way of influencing the United States position on major trade accords, or, through the implicit threat of political cooperation, as a way of extracting political concessions from the United States, such as the proposed nuclear cooperation with India.[citation needed][edit] (2003) Dreaming with BRICs: The Path to 2050
The BRIC thesis recognizes that Brazil, Russia, India and China[16] have changed their political systems to embrace global capitalism. Goldman Sachs predicts that China and India, respectively, will become the dominant global suppliers of manufactured goods and services, while Brazil and Russia will become similarly dominant as suppliers of raw materials. Of the four countries, Brazil remains the only polity that has the capacity to continue all elements, meaning manufacturing, services, and resource supplying simultaneously. Cooperation is thus hypothesized to be a logical next step among the BRICs because Brazil and Russia together form the logical commodity suppliers.[edit] (2004) Follow-up report
The Goldman Sachs global economics team released a follow-up report to its initial BRIC study in 2004.[17] The report states that in BRIC nations, the number of people with an annual income over a threshold of $3,000, will double in number within three years and reach 800 million people within a decade. This predicts a massive rise in the size of the middle class in these nations. In 2025, it is calculated that the number of people in BRIC nations earning over $15,000 may reach over 200 million. This indicates that a huge pickup in demand will not be restricted to basic goods but impact higher-priced goods as well. According to the report, first China and then a decade later India will begin to dominate the world economy.Yet despite the balance of growth, swinging so decisively towards the BRIC economies, the average wealth level of individuals in the more advanced economies will continue to far outstrip the BRIC economic average.The report also highlights India's great inefficiency in energy use and mentions the dramatic under-representation of these economies in the global capital markets. The report also emphasizes the enormous populations that exist within the BRIC nations, which makes it relatively easy for their aggregate wealth to eclipse the G6, while per-capita income levels remain far below the norm of today's industrialized countries. This phenomenon, too, will affect world markets as multinational corporations will attempt to take advantage of the enormous potential markets in the BRICs by producing, for example, far cheaper automobiles and other manufactured goods affordable to the consumers within the BRICs in lieu of the luxury models that currently bring the most income to automobile manufacturers. India and China have already started making their presence felt in the service and manufacturing sector respectively in the global arena. Developed economies of the world have already taken serious note of this fact.[edit] (2007) Second Follow-up report
This report compiled by lead authors Tushar Poddar and Eva Yi gives insight into "India's Rising Growth Potential". It reveals updated projection figures attributed to the rising growth trends in India over the last four years. Goldman Sachs assert that "India's influence on the world economy will be bigger and quicker than implied in our previously published BRICs research". They noted significant areas of research and development, and expansion that is happening in the country, which will lead to the prosperity of the growing middle-class.[18]India has 10 of the 30 fastest-growing urban areas in the world and, based on current trends, we estimate a massive 700 million people will move to cities by 2050. This will have significant implications for demand for urban infrastructure, real estate, and services.—[18]In the revised 2007 figures, based on increased and sustaining growth, more inflows into foreign direct investment, Goldman Sachs predicts that "from 2007 to 2020, India's GDP per capita in US$ terms will quadruple", and that the Indian economy will surpass the United States (in US$) by 2043.[18][edit] (2010) EM Equity in Two Decades: A Changing Landscape
According to a 2010 report from Goldman Sachs, China might surpass the US in equity market capitalization terms by 2030 and become the single largest equity market in the world.[19] By 2020, America's GDP might be only slightly larger than China's GDP. Together, the four BRICs may account for 41% of the world's market capitalization by 2030, the report said.[20]In late 2010, China surpassed Japan's GDP for the first time, with China's GDP standing at $5.88 trillion compared to Japan's $5.47 trillion. China thus became the world's second-largest economy after the United States.[21]Based on a Forbes report released in March 2011, the BRIC countries numbered 301 billionaires among their combined populations, exceeding the number of billionaires in Europe, which stood at 300 in 2011.[22]According to The National Institute of Economic and Social Research (NIESR) based on International Monetary Fund figures, in 2012 Brazil has become the sixth-biggest economy in the world by overtaking UK with $2.52 trillion and $2.48 trillion, respectively. In 2010, the Brazillian economy was worth $2.09 trillion and UK with $2.25 trillion. Significant increase is caused by Brazillian economic boom on high food and oil prices.[23]After Standard & Poor's (S&P) cited that India's growth outlook could deteriorate if policymaking and governance don't improve, in June 2012 Fitch Ratings cut its credit outlook to negative from stable with maintained its BBB- rating, the lowest investment grade rating. A week before Fitch released the rating, S&P said India could become the first of the BRIC countries, to lose investment-grade status.[24][edit] Statistics
Proportion of world (countries with data) nominal GDP for the countries with the top 10 highest nominal GDP in 2010, from 1980 to 2010 with IMF projections until 2016. Countries marked with an asterisk are non-G8 countries China, Brazil and India. Grey lines show actual US dollar values.[25]The Economist publishes an annual table of socio-economic national statistics in its Pocket World in Figures.[citation needed] Extrapolating the global rankings from their 2008 Edition for the BRIC countries and economies in relation to various categories provides an interesting touchstone in relation to the economic underpinnings of the BRIC thesis. It also illustrates how, despite their divergent economic bases, the economic indicators are remarkably similar in global rankings between the different economies. It also suggests that, while economic arguments can be made for linking Mexico into the BRIC thesis, the case for including South Korea looks considerably weaker.A Goldman Sachs paper published later in December 2005 explained why Mexico was not included in the original BRICs.[5]
Statistics Categories Brazil Russia India China Area 005th 001st 007th 003rd Population 005th 009th 002nd 001st Population growth rate 107th 221st 090th 156th Labour force 005th 007th 002nd 001st GDP (nominal) 007th 011th 09th 002nd GDP (PPP) 007th 006th 003rd 002nd GDP (nominal) per capita 055th 054th 137th 095th GDP (PPP) per capita 071st 051st 127th 093rd GDP (real) growth rate 015th 088th 005th 006th Human Development Index 073rd 065th 119th 089th Exports 018th 09th 014th 001st Imports 019th 017th 011th 002nd Current account balance 047th 005th 169th 001st Received FDI 011th 012th 029th 005th Foreign exchange reserves 007th 003rd 006th 001st External debt 028th 024th 026th 023rd Public debt 047th 122nd 029th 098th Electricity consumption 009th 004th 003rd 002nd Renewable energy source 003rd 005th 006th 001st Number of mobile phones 005th 004th 002nd 001st Number of internet users 005th 007th 004th 001st Motor vehicle production 007th 019th 006th 001st Military expenditures 012th 005th 010th 002nd Active troops 014th 005th 003rd 001st Rail network 010th 002nd 004th 003rd Road network 004th 008th 003rd 002nd 
The ten largest economies in the world in 2050, measured in GDP (billions of 2006 USD), according to Goldman Sachs[26]
Gross Domestic Product in 2006 US$ billions[26] Rank 2050 Country 2050 2045 2040 2035 2030 2025 2020 2015 2010 2006 1 China 70,710 57,310 45,022 34,348 25,610 18,437 12,630 8,133 4,667 2,682 2 United States 38,514 33,904 29,823 26,097 22,817 20,087 17,978 16,194 14,535 13,245 3 India 37,668 25,278 16,510 10,514 6,683 4,316 2,848 1,900 1,256 909 4 Brazil 11,366 8,740 6,631 4,963 3,720 2,831 2,194 1,720 2,087 1,064 5 Mexico 9,340 7,204 5,471 4,102 3,068 2,303 1,742 1,327 1,009 851 6 Russia 8,580 7,420 6,320 5,265 4,265 3,341 2,554 1,900 1,371 982 7 Indonesia 7,010 4,846 3,286 2,192 1,479 1,033 752 562 419 350 8 Japan 6,677 6,300 6,042 5,886 5,814 5,570 5,224 4,861 4,604 4,336 9 United Kingdom 5,133 4,744 4,344 3,937 3,595 3,333 3,101 2,835 2,546 2,310 10 Germany 5,024 4,714 4,388 4,048 3,761 3,631 3,519 3,326 3,083 2,851 11 Nigeria 4,640 2,870 1,765 1,083 680 445 306 218 158 121 12 France 4,592 4,227 3,892 3,567 3,306 3,055 2,815 2,577 2,366 2,194 13 South Korea 4,083 3,562 3,089 2,644 2,241 1,861 1,508 1,305 1,071 887 14 Turkey 3,943 3,033 2,300 1,716 1,279 965 740 572 440 390 15 Vietnam 3,607 2,569 1,768 1,169 745 458 273 157 88 55 16 Canada 3,149 2,849 2,569 2,302 2,061 1,856 1,700 1,549 1,389 1,260 17 Pakistan 3,070 2,085 1,472 1,026 709 497 359 268 161 129 18 Philippines 3,010 2,040 1,353 882 582 400 289 215 162 117 19 Italy 2,950 2,737 2,559 2,444 2,391 2,326 2,224 2,072 1,914 1,809 20 Iran 2,663 2,133 1,673 1,273 953 716 544 415 312 245 21 Egypt 2,602 1,728 1,124 718 467 318 229 171 129 101 22 Bangladesh 1,466 1,001 676 451 304 210 150 110 81 63
Gross Domestic Product per capita (real)[26] Rank 2050 Country 2050 2045 2040 2035 2030 2025 2020 2015 2010 2006 Percent growth from 2006 to 2050 1 United States 91,683 83,489 76,044 69,019 62,717 57,446 53,502 50,200 47,014 44,379 206% 2 South Korea 90,294 75,979 63,924 53,449 44,602 36,813 29,868 26,012 21,602 18,161 497% 3 United Kingdom 79,234 73,807 67,391 61,049 55,904 52,220 49,173 45,591 41,543 38,108 207% 4 Russia 78,435 65,708 54,221 43,800 34,368 26,061 19,311 13,971 9,833 6,909 1,137% 5 Canada 76,002 69,531 63,464 57,728 52,663 48,621 45,961 43,449 40,541 38,071 199% 6 France 75,253 68,252 62,136 56,562 52,327 48,429 44,811 41,332 38,380 36,045 208% 7 Germany 68,253 62,658 57,118 51,710 47,263 45,033 43,223 40,589 37,474 34,588 197% 8 Japan 66,846 60,492 55,756 52,345 49,975 46,419 42,385 38,650 36,194 34,021 196% 9 Mexico 63,149 49,393 38,255 29,417 22,694 17,685 13,979 11,176 8,972 7,918 797% 10 Italy 58,545 52,760 48,070 44,948 43,195 41,358 38,990 35,908 32,948 31,123 188% 11 Brazil 49,759 38,149 29,026 21,924 16,694 12,996 10,375 8,427 6,882 5,657 879% 12 China 49,650 39,719 30,951 23,511 17,522 12,688 8,829 5,837 3,463 2,041 2,432% 13 Turkey 45,595 34,971 26,602 20,046 15,188 11,743 9,291 7,460 6,005 5,545 822% 14 Vietnam 33,472 23,932 16,623 11,148 7,245 4,583 2,834 1,707 1,001 655 5,110% 15 Iran 32,676 26,231 20,746 15,979 12,139 9,328 7,345 5,888 4,652 3,768 867% 16 Indonesia 22,395 15,642 10,784 7,365 5,123 3,711 2,813 2,197 1,724 1,508 1,485% 17 India 20,836 14,446 9,802 6,524 4,360 2,979 2,091 1,492 1,061 817 2,550% 18 Pakistan 20,500 14,025 9,443 6,287 4,287 3,080 2,352 1,880 1,531 1,281 1,600% 19 Philippines 20,388 14,260 9,815 6,678 4,635 3,372 2,591 2,075 1,688 1,312 1,553% 20 Nigeria 13,014 8,934 6,117 4,191 2,944 2,161 1,665 1,332 1,087 919 1,416% 21 Egypt 11,786 7,066 5,183 3,775 2,744 2,035 1,568 1,260 897 778 908% 22 Bangladesh 5,235 3,767 2,698 1,917 1,384 1,027 790 627 510 427 1,225%
Gross Domestic Product in 2006 US$ billions [26] Groups Countries 2050 2045 2040 2035 2030 2025 2020 2015 2010 2006 BRIC Brazil, Russia, India, China 128,324 98,757 74,483 55,090 40,278 28,925 20,226 13,653 8,640 5,637 G7 Canada, France, Germany, Italy, Japan, United Kingdom, USA 66,039 59,475 53,617 48,281 43,745 39,858 36,781 33,414 30,437 28,005 The following three tables are lists of economies by incremental GDP from 2006 to 2050 by Goldman Sachs. They illustrate that the BRICs and N11 nations are replacing G7 nations as the main contributors to world's economic growth. From 2020 to 2050, nine of the ten largest countries by incremental GDP are occupied by the BRICs and N11 nations, in which the United States remains to be the only G7 member as one of the three biggest contributors to the global economic growth.[26]
List of Economies by Incremental Nominal GDP from 2006 to 2020 Rank Country Incremental GDP in billions of 2006 US$ 1 China 9,948 2 United States 4,733 3 India 1,939 4 Russia 1,572 5 Brazil 1,130 6 Mexico 891 7 Japan 888 8 United Kingdom 791 9 Germany 668 10 Italy 635 11 France 621 11 South Korea 621 13 Canada 440 14 Indonesia 402 15 Turkey 350 16 Iran 299 17 Vietnam 218 18 Nigeria 185 19 Philippines 172 20 Pakistan 139 21 Egypt 128 22 Bangladesh 87
List of Economies by Incremental Nominal GDP from 2020 to 2035 Rank Country Incremental GDP in billions of 2006 US$ 1 China 21,718 2 United States 8,119 3 India 7,666 4 Brazil 2,769 5 Russia 2,711 6 Mexico 2,360 7 Indonesia 1,440 8 South Korea 1,136 9 Turkey 976 10 Vietnam 896 11 United Kingdom 836 12 Nigeria 777 13 France 752 14 Iran 729 15 Japan 662 16 Canada 602 17 Philippines 593 18 Germany 529 18 Egypt 502 20 Pakistan 441 21 Bangladesh 301 22 Italy 220
List of Economies by Incremental Nominal GDP from 2035 to 2050 Rank Country Incremental GDP in billions of 2006 US$ 1 China 36,362 2 India 27,154 3 United States 12,417 4 Brazil 6,403 5 Mexico 5,238 6 Indonesia 4,818 7 Nigeria 3,557 8 Russia 3,315 9 Vietnam 2,438 10 Turkey 2,227 11 Philippines 2,128 12 Egypt 1,884 13 South Korea 1,439 14 Iran 1,390 15 Pakistan 1,376 16 United Kingdom 1,196 17 France 1,025 18 Bangladesh 1,015 19 Germany 976 20 Canada 847 21 Japan 791 22 Italy 506 At World Economic Forum 2011, there are 365 corporate executives from BRIC and other emerging nations out of 1000 participants. It is a record number of executives from emerging markets. Nomura Holdings Inc's co-head of global investment banking said that "It's a reflection of where economic power and influence is starting to move." The International Monetary Fund estimates emerging markets may expand 6.5 percent in 2011, more than double the 2.5 percent rate for developed countries. BRIC's takeover made record by 22 percent of global deals or increase by 74 percent in one year and more than quadruple in the last five years.[27][edit] History
The BRIC leaders in 2010Various sources refer to a purported "original" BRIC agreement that predates the Goldman Sachs thesis. Some of these sources claim that President Vladimir Putin of Russia was the driving force behind this original cooperative coalition of developing BRIC countries. However, thus far, no text has been made public of any formal agreement to which all four BRIC states are signatories. This does not mean, however, that they have not reached a multitude of bilateral or even quadrilateral agreements. Evidence of agreements of this type are abundant and are available on the foreign ministry websites of each of the four countries. Trilateral agreements and frameworks made among the BRICs include the Shanghai Cooperation Organization (member states include Russia and China, observers include India) and the IBSA Trilateral Forum, which unites Brazil, India, and South Africa in annual dialogues. Also important to note is the G-20 coalition of developing states which includes all the BRICs.Also, because of the popularity of the Goldman Sachs thesis "BRIC", this term has sometimes been extended whereby "BRICK"[28][29] (K for South Korea), "BRIMC"[30][31] (M for Mexico), "BRICA" (GCC Arab countries – Saudi Arabia, Qatar, Kuwait, Bahrain, Oman and the United Arab Emirates)[32] and "BRICET" (including Eastern Europe and Turkey)[33] have become more generic marketing terms to refer to these emerging markets.In an August 2010 op-ed, Jim O'Neill of Goldman Sachs argued that Africa could be considered the next BRIC.[34] Analysts from rival banks have sought to move beyond the BRIC concept, by introducing their own groupings of emerging markets. Proposals include CIVETs (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa), the EAGLES (Emerging and Growth-Leading Economies) and the 7 per cent Club (which includes those countries which have averaged economic growth of at least 7 per cent a year).[35]South Africa sought BRIC membership since 2009 and the process for formal admission began as early as August 2010.[36] South Africa was officially admitted as a BRIC nation on December 24, 2010 after being invited by China and the other BRIC countries to join the group.[37] The capital "S" in BRICS stands for South Africa. President Jacob Zuma attend the BRICS summit in Sanya in April 2011 as a full member. South Africa stands at a unique position to influence African economic growth and investment. According to Jim O'neill of Goldman Sachs who originally coined the term, Africa's combined current gross domestic product is reasonably similar to that of Brazil and Russia, and slightly above that of India.[38] South Africa is a "gateway" to Southern Africa and Africa in general as the most developed African country.[38] China is South Africa's largest trading partner, and India wants to increase commercial ties to Africa.[36] South Africa is also Africa's largest economy, but as number 31 in global GDP economies it is far behind its new partners.[36]Jim O'Neill expressed surprise when South Africa joined BRIC since South Africa's economy is a quarter of the size of Russia's (the least economically powerful BRIC nation).[39] He believed that the potential was there but did not anticipate inclusion of South Africa at this stage.[38] Martyn Davies, a South African emerging markets expert, argued that the decision to invite South Africa made little commercial sense but was politically astute given China's attempts to establish a foothold in Africa. Further, South Africa's inclusion in BRICS may translate to greater South African support for China in global fora.[39]African credentials are important geopolitically, giving BRICS a four-continent breadth, influence and trade opportunities.[36] South Africa's addition is a deft political move that further enhances BRICS' power and status.[36] In the original essay that coined the term, Goldman Sachs did not argue that the BRICs would organize themselves into an economic bloc, or a formal trading association which this move signifies.[citation needed][edit] Marketing
The São Paulo Stock Exchange is the third-largest exchange operator by market value in the world.[40]The BRIC term is also used by companies who refer to the four named countries as key to their emerging markets strategies. By comparison the reduced acronym IC would not be attractive, although the term "Chindia" is often used. The BRIC's study specifically focuses on large countries, not necessarily the wealthiest or the most productive and was never intended to be an investment thesis. If investors read the Goldman's research carefully, and agreed with the conclusions, then they would gain exposure to Asian debt and equity markets rather than to Latin America. According to estimates provided by the USDA, the wealthiest regions outside of the G6 in 2015 will be Hong Kong, South Korea and Singapore. Combined with China and India, these five economies are likely to be the world's five most influential economies outside of the G6.On the other hand, when the "R" in BRIC is extended beyond Russia and is used as a loose term to include all of Eastern Europe as well, then the BRIC story becomes more compelling. At issue are the multiple serious problems which confront Russia (potentially unstable government, environmental degradation, critical lack of modern infrastructure, etc.[citation needed]), and the comparatively much lower growth rate seen in Brazil. However, Brazil's lower growth rate obscures the fact that the country is wealthier than China or India on a per-capita basis, has a more developed and global integrated financial system and has an economy potentially more diverse than the other BRICs due to its raw material and manufacturing potential. Many other Eastern European countries, such as Poland, Romania, the Czech Republic, Slovakia, Hungary, Bulgaria, and several others were able to continually sustain high economic growth rates and do not experience some of the problems that Russia experiences or experience them to a lesser extent. In terms of GDP per capita in 2008, Brazil ranked 64th, Russia 42nd, India 113th and China 89th. By comparison South Korea ranked 24th and Singapore 3rd.Brazil's stock market, the Bovespa, has gone from approximately 9,000 in September 2002 to over 70,000 in May 2008. Government policies have favored investment (lowering interest rates), retiring foreign debt and expanding growth, and a reformulation of the tax system is being voted in the congress. The British author and researcher Mark Kobayashi-Hillary wrote a book in 2007 titled 'Building a Future with BRICs' for European publisher Springer Verlag that examines the growth of the BRICs region and its effect on global sourcing. Contributors to the book include Nandan Nilekani, and Shiv Nadar.[edit] International Law
Brazilian lawyer and author Adler Martins has published a paper called "Contratos Internacionais entre os paÃses do BRIC"[41] (International Agreements Among BRIC countries) which highlights the international conventions ratified by the BRIC countries, which allow them to maintain trade and investment activities safely within the group. Mr. Martin's study is being further developed by the Federal University of the Minas Gerais State, in Brazil.[edit] Financial diversification
It has been argued that geographic diversification would eventually generate superior risk-adjusted returns for long-term global investors by reducing overall portfolio risk while capturing some of the higher rates of return offered by the emerging markets of Asia, Eastern Europe and Latin America.[42] By doing so, these institutional investors have contributed to the financial and economic development of key emerging nations such as Brazil, India, China, and Russia. For global investors, India and China constitute both large-scale production platforms and reservoirs of new consumers, whereas Russia is viewed essentially as an exporter of oil and commodities- Brazil and Latin America being somehow "in the middle".[edit] Criticism
A criticism is that the BRIC projections are based on the assumptions that resources are limitless and endlessly available when needed. In reality, many important resources currently necessary to sustain economic growth, such as oil, natural gas, coal, other fossil fuels, and uranium might soon experience a peak in production before enough renewable energy can be developed and commercialized, which might result in slower economic growth than anticipated, thus throwing off the projections and their dates. The economic emergence of the BRICs will have unpredictable consequences for the global environment. Indeed, proponents of a set carrying capacity for the Earth may argue that, given current technology, there is a finite limit to how much the BRICs can develop before exceeding the ability of the global economy to supply.[43]Academics and experts have suggested that China is in a league of its own compared to the other BRIC countries.[44] As David Rothkopf wrote in Foreign Policy, "Without China, the BRICs are just the BRI, a bland, soft cheese that is primarily known for the whine [sic] that goes with it. China is the muscle of the group and the Chinese know it. They have effective veto power over any BRIC initiatives because without them, who cares really? They are the one with the big reserves. They are the biggest potential market. They are the U.S. partner in the G2 (imagine the coverage a G2 meeting gets vs. a G8 meeting) and the E2 (no climate deal without them) and so on."[45] Deutsche Bank Research said in a report that "economically, financially and politically, China overshadows and will continue to overshadow the other BRICs." It added that China's economy is larger than that of the three other BRIC economies (Brazil, Russia and India) combined. Moreover, China's exports and its official foreign-exchange reserves are more than twice as large as those of the other BRICs combined.[46] In that perspective, some pension investment experts have argued that "China alone accounts for more than 70% of the combined GDP growth generated by the BRIC countries [from 1999 to 2010]: if there is a BRIC miracle it's first and foremost a Chinese one".[47] The "growth gap" between China and other large emerging economies such as Brazil, Russia and India can be attributed to a large extent to China's early focus on ambitious infrastructure projects: while China invested roughly 9% of its GDP on infrastructure in the 1990s and 2000s, most emerging economies invested only 2% to 5% of their GDP. This considerable spending gap allowed the Chinese economy to grow at near optimal conditions while many South American and South Asian economies suffered from various development bottlenecks (poor transportation networks, aging power grids, mediocre schools...).[48]The preeminence of China and India as major manufacturing countries with unrealised potential has been widely recognised, but some commentators state that China's and Russia's large-scale disregard for human rights and democracy could be a problem in the future. Human rights issues do not inform the foreign policies of these two countries to the same extent as they do the policies of other large states such as Japan, India, the EU states and the USA. There is also the possibility of conflict over Taiwan in the case of China.There is also the issue of population growth. The population of Russia has been declining rapidly in the 1990s and only recently did the Russian government predict the population to stabilize and grow in 2020. Brazil's and China's populations will begin to decline in several decades[citation needed], with their demographic windows closing in several decades as well. This may have implications for those countries' future, for there might be a decrease in the overall labor force and a negative change in the proportion of workers to retirees.Brazil's economic potential has been anticipated for decades, but it had until recently consistently failed to achieve investor expectations.[citation needed] Only in recent years has the country established a framework of political, economic, and social policies that allowed it to resume consistent growth. The result has been solid and paced economic development that rival its early 70's "miracle years", as reflected in its expanding capital markets, lowest unemployment rates in decades, and consistent international trade surpluses - that led to the accumulation of reserves and liquidation of foreign debt (earning the country a coveted investment grade by the S&P and Fitch Ratings in 2008).Finally, India's relations with its neighbor Pakistan have always been tense. In 1998, there was a nuclear standoff between Pakistan and India.[49] Border conflicts with Pakistan, mostly over the long held dispute over Kashmir, has further aggravated any economic ties. This impedes progress by limiting government finances, increasing social unrest, and limiting potential domestic economic demand. Factors such as international conflict, civil unrest, unwise political policy, outbreaks of disease and terrorism are all factors that are difficult to predict and that could have an effect on the destiny of any country.Other critics suggest that BRIC is nothing more than a neat acronym for the four largest emerging market economies,[citation needed] but in economic and political terms nothing else (apart from the fact that they are all big emerging markets) links the four. Two are manufacturing based economies and big importers (China and India), but two are huge exporters of natural resources (Brazil and Russia). The Economist, in its special report on Brazil, expressed the following view: "In some ways Brazil is the steadiest of the BRICs. Unlike China and Russia it is a full-blooded democracy; unlike India it has no serious disputes with its neighbors. It is the only BRIC without a nuclear bomb." The Heritage Foundation's "Economic Freedom Index", which measures factors such as protection of property rights and free trade ranks Brazil ("moderately free") above the other BRICs ("mostly unfree").[50] Henry Kissinger has stated that the BRIC nations have no hope of acting together as a coherent bloc in world affairs, and that any cooperation will be the result of forces acting on the individual nations.[citation needed]It is also noticed that BRIC countries have undermined qualitative factors that is reflected in deterioration in Doing Business ranking 2010 and other several human indexes.[51]In a not-so-subtle dig critical of the term as nothing more than a shorthand for emerging markets generally, critics have suggested a correlating term, CEMENT (Countries in Emerging Markets Excluded by New Terminology). Whilst they accept there has been spectacular growth of the BRIC economies, these gains have largely been the result of the strength of emerging markets generally, and that strength comes through having BRICs and CEMENT.[52][edit] Proposed inclusions
Mexico and South Korea are currently the world's 13th and 15th largest by nominal GDP just behind the BRIC and G7 economies. Both are experiencing rapid GDP growth of 5% every year, a figure comparable to Brazil from the original BRICs. Jim O'Neill, expert from the same bank and creator of the economic thesis, stated that in 2001 when the paper was created, it did not consider Mexico, but today it has been included because the country is experiencing the same factors that the other countries first included present.[30][31] While South Korea was not originally included in the BRICs, recent solid economic growth led to Goldman Sachs proposing to add Mexico and South Korea to the BRICs, changing the acronym to BRIMCK, with Jim O'Neill pointing out that Korea "is better placed than most others to realize its potential due to its growth-supportive fundamentals.[53] Again Jim O'Neil recently created the term MIKT that stands for Mexico, Indonesia, Korea (South Korea), and Turkey.[54]A Goldman Sachs paper published later in December 2005 explained why Mexico and South Korea weren't included in the original BRICs. According to the paper,[5] among the other countries they looked at, only Mexico and South Korea have the potential to rival the BRICs, but they are economies that they decided to exclude initially because they looked to them as already more developed. However, due to the popularity of the Goldman Sachs thesis, "BRIMC" and "BRICK" are becoming more generic marketing terms to refer to these six countries.In their paper "BRICs and Beyond", Goldman Sachs stated that "Mexico, the four BRIC countries and South Korea should not be really thought of as emerging markets in the classical sense", adding that they are a "critical part of the modern globalised economy" and "just as central to its functioning as the current G7".[55]The term is primarily used in the economic and financial spheres as well as in academia. Its usage has grown specially in the investment sector, where it is used to refer to the bonds emitted by these emerging markets governments.[56][57][58][edit] Mexico
Primarily, along with the BRICs,[59] Goldman Sachs argues that the economic potential of Brazil, Russia, India, Mexico and China is such that they may become (with the USA) the six most dominant economies by the year 2050. Due to Mexico's rapidly advancing infrastructure, increasing middle class and rapidly declining poverty rates it is expected to have a higher GDP per capita than all but three European countries by 2050, this new found local wealth also contributes to the nation's economy by creating a large domestic consumer market which in turn creates more jobs.
Mexico in 2050 [60] GDP in USD $9.340 trillion GDP per capita $63,149 GDP growth (2015–2050) 4.0% Total population 142 million [edit] South Korea
South Korea is by far the most highly developed country when compared to the BRICs and N-11s. It has achieved an incomparable level of development compared to these groups, with its Human Development Index higher than some of the world's most advanced economies, including France, UK, Austria, Denmark, Finland and Belgium. When compared to other OECD members in 2010, South Korean workers had a higher disposable income than Germany, Japan and Sweden, by far the highest in Asia with the strongest growth rate that is more than quadruple that of the United States in the same period. Despite these conditions, it has been achieving growth rates of 4-6%, a figure more than double to triple that of other advanced economies. More importantly, it has a significantly higher Growth Environment Score (Goldman Sachs' way of measuring the long-term sustainability of growth) than all of the BRICs or N-11s.[55] Commentators such as William Pesek Jr. from Bloomberg argue that Korea is "Another 'BRIC' in Global Wall", suggesting that it stands out from the Next Eleven economies. By GDP (PPP), South Korea already overtook a G7 and G8 economy, Canada, in 2009, surpassing Spain in 2010. According to the International Monetary Fund World Economic Outlook, it will overtake Italy in 2014 and Mexico in 2016 to become one of the world's top ten economies and the 6th largest among developed countries. In terms of GDP per capita (PPP), South Korea has surpassed many developed countries, including Portugal in 2003, New Zealand in 2008 and Greece, Spain and Italy in 2010. At current speeds, it will surpass Japan and France in 2016. While measuring the South Korean economy by nominal GDP is inaccurate as the South Korean won is artificially kept low to boost exports, economists from other investment firms argue that even when measured by nominal GDP per capita, South Korea will achieve over $96,000 by 2050, surpassing the United States and by far the wealthiest among the world's major economies, suggesting that wealth is more important than size for bond investors, stating that Korea's credit rating will be rated AAA sooner than 2050.[61][edit] United Korea
Pyongyang, North KoreaIn September 2009, Goldman Sachs published its 188th Global Economics Paper named "A United Korea?" which highlighted in detail the potential economic power of a United Korea, which will surpass all current G7 countries except the United States, such as Japan, the United Kingdom, Germany and France within 30–40 years of reunification, estimating GDP to surpass $6 trillion by 2050.[62] The young, skilled labor and large amount of natural resources from the North combined with advanced technology, infrastructure and large amount of capital in the South, as well as Korea's strategic location connecting three economic powers, is likely going to create an economy larger than the bulk of the G7. According to some opinions, a reunited Korea could occur before 2050,[62] or even between 2010 and 2020.[63] If it occurred, Korean reunification would immediately raise the country's population to over 70 million.[64]
Korea in 2050[65] United Korea
South Korea
North Korea
GDP in USD $6.056 trillion $4.073 trillion $12.5 billion GDP per capita $86,000 $96,000 $560 GDP growth (2015–2050) 4.8% 3.9% -0.008% Total population 71 million 42 million 23 million [edit] See also
- BRICS
- MIKT
- Next Eleven
- Geographical country groupings such as EMEA and APAC
- Potential superpower
- Emerging markets
- EAGLEs, Emerging and Growth Leading Economies
- North American Union
- CIVETS
- G7
- G8
- G8+5
- G20
- BASIC countries + Russia = BASICR
- PIGS (economics)
- IBSA Dialogue Forum
- List of countries by GDP (nominal)
- List of countries by average wage
- List of countries by future GDP (PPP) estimates
[edit] References
- ^ Kowitt, Beth (2009-06-17). "For Mr. BRIC, nations meeting a milestone". CNNMoney.com. http://money.cnn.com/2009/06/17/news/economy/goldman_sachs_jim_oneill_interview.fortune/index.htm. Retrieved 2009-06-18.
- ^ Global Economics Paper No. 99, Dreaming with BRICs and Global Economics Paper 134, How Solid Are the BRICs?
- ^ Economist's Another BRIC in the wall 2008 article
- ^ Rana Foroohar (2009-03-20). "BRICs Overtake G7 By 2027". The Daily Beast. http://www.thedailybeast.com/newsweek/2009/03/20/power-up.html. Retrieved 2012-06-19.
- ^ a b c "How Solid are the BRICs?" (PDF). Global Economics. http://www2.goldmansachs.com/ideas/brics/how-solid-doc.pdf. Retrieved 2010-09-21.
- ^ "Reuters 2011 Investment Outlook Summit, London and New York, 6-7 December 2010". Live.reuters.com. http://live.reuters.com/Event/Reuters_2011_Investment_Outlook_Summit. Retrieved 2012-06-19.
- ^ Reuters 2011 Investment Outlook Summit, London and New York, 6–7 December 2010
- ^ "New era as South Africa joins BRICS". SouthAfrica.info. http://www.southafrica.info/global/brics/brics-080411.htm. Retrieved 2012-06-19.
- ^ "bricnation.com". bricnation.com. http://bricnation.com/?p=24. Retrieved 2010-10-15.
- ^ http://www.investordaily.com/cps/rde/xchg/id/style/801.htm?rdeCOQ=SID-3F579BCE-819F182C
- ^ "Brazil, Russia, India And China (BRIC)". Investopedia. http://www.investopedia.com/terms/b/bric.asp. Retrieved 2008-05-11.
- ^ "BRICs helped by Western finance crisis: Goldman". Reuters. 2008-06-08. http://www.reuters.com/article/ousiv/idUSL071126420080608?pageNumber=2&virtualBrandChannel=0.
- ^ Mortished, Carl (2008-05-16). "Russia shows its political clout by hosting Bric summit". The Times (London). http://business.timesonline.co.uk/tol/business/markets/russia/article3941462.ece. Retrieved 2010-04-26.
- ^ Halpin, Tony (2009-06-17). "Brazil, Russia, India and China form bloc to challenge US dominance". The Times, 17 June 2009. Retrieved from http://www.timesonline.co.uk/tol/news/world/us_and_americas/article6514737.ece.
- ^ Ask the expert: BRICs and investor strategy from the Financial Times, Monday 2006-11-06 09:55
- ^ Five Years of China's WTO Membership. EU and US Perspectives on China's Compliance with Transparency Commitments and the Transitional Review Mechanism, Legal Issues of Economic Integration, Kluwer Law International, Volume 33, Number 3, pp. 263-304, 2006. by Paolo Farah
- ^ BRICs - Goldman Sachs Research Report
- ^ a b c "Microsoft Word - Draft of Global Econ Paper No 152.doc" (PDF). http://www.usindiafriendship.net/viewpoints1/Indias_Rising_Growth_Potential.pdf. Retrieved 2010-10-15.
- ^ http://www.dasinvestment.com/fileadmin/images/pictures/0809_Global_Econ_Paper_No__204_Final.pdf
- ^ "Goldman predicts: onwards and upwards for emerging markets, beyondbrics blog". Blogs.ft.com. 2010-09-08. http://blogs.ft.com/beyond-brics/2010/09/08/goldman-onwards-and-upwards/. Retrieved 2012-06-19.
- ^ Japan's Gross Domestic Product Fell 0.3% at Year's End http://www.nytimes.com/2011/02/14/business/global/14yen.html?partner=rss&emc=rss
- ^ BRICs becoming billionaire factory http://www.ft.com/cms/s/0/bc9b6d80-4a8d-11e0-82ab-00144feab49a.html?ftcamp=rss#axzz1GCKIXd3V
- ^ "Brazil 'overtakes UK's economy'". BBC News. March 6, 2012. http://www.bbc.co.uk/news/business-17272716.
- ^ "Fitch cuts India rating outlook to negative". Reuters. June 18, 2012. http://in.reuters.com/article/2012/06/18/fitch-india-outlook-revision-idINDEE85H0A020120618.
- ^ "IMF World Economic Outlook database". http://www.imf.org/external/pubs/ft/weo/2011/01/weodata/WEOApr2011all.xls. Retrieved 2012-06-19.
- ^ a b c d e "BRICS AND BEYOND" - Goldman Sachs study of BRIC and N11 nations, November 23, 2007.
- ^ . http://mobile.bloomberg.com/apps/news?pid=2065100&sid=a7CGZv5B2Guo. [dead link]
- ^ August 27, 2008 12:00AM (2008-08-27). "The Australian Business - Emerging markets put China, India in the shade". Theaustralian.news.com.au. http://www.theaustralian.news.com.au/story/0,25197,24224508-5001942,00.html. Retrieved 2010-10-15.
- ^ Martens, China, "IBM Targets Russian Developers: Could overtake India, China in number of developers, says senior executive", OutSourcing World, February 11, 2006
- ^ a b Le Figaro, newspaper, interview with expert Jim 0'Neill (French)
- ^ a b "Opinion Page" (PDF). http://www.merit.unu.edu/archive/docs/hl/200611_Sergey%20-%20Conference%20Report.pdf. Retrieved 2010-10-15.
- ^ "Study: Energy-rich Arab countries are next emerging market". Thestar.com.my. 2007-02-23. http://thestar.com.my/news/story.asp?file=/2007/2/23/apworld/20070223082158&sec=apworld. Retrieved 2010-10-15.
- ^ Welcome to Huaye Iron&Steel Group[dead link]
- ^ By Jim O'Neill (2010-08-26). "How Africa can become the next Bric, Jim O'Neill, Financial Times". Ft.com. http://www.ft.com/cms/s/0/6c00e950-b153-11df-b899-00144feabdc0,dwp_uuid=52a9abc0-0213-11e0-b66c-00144feabdc0.html#axzz180UiCcGb. Retrieved 2012-06-19.
- ^ "Acronym alert: the Eagles rock, beyondbrics blog". Blogs.ft.com. 2010-11-15. http://blogs.ft.com/beyond-brics/2010/11/15/acronym-alert-the-eagles-rock/. Retrieved 2012-06-19.
- ^ a b c d e "BRIC Becomes BRICS: Changes on the Geopolitical Chessboard | Foreign Policy Journal | 2". Foreign Policy Journal. http://www.foreignpolicyjournal.com/2011/01/21/bric-becomes-brics-changes-on-the-geopolitical-chessboard/2/. Retrieved 2012-06-19.
- ^ "BRIC Becomes BRICS: Changes on the Geopolitical Chessboard". Foreign Policy Journal. http://www.foreignpolicyjournal.com/2011/01/21/bric-becomes-brics-changes-on-the-geopolitical-chessboard/. Retrieved 2012-06-19.
- ^ a b c By Jim O'Neill (2010-08-26). "How Africa can become the next Bric". FT.com. http://www.ft.com/cms/s/0/6c00e950-b153-11df-b899-00144feabdc0.html#axzz1Bgg5fGXt. Retrieved 2012-06-19.
- ^ a b "South Africa | Economy | BRIC". Globalpost.com. 2011-01-08. http://www.globalpost.com/dispatch/south-africa/110107/south-africa-be-bric. Retrieved 2012-06-19.
- ^ DealTalk: Nasdaq, CBOE top targets in exchange merger mania Reuters. Feb 10 2011.
- ^ MARTINS, Adler. Available at http://jus.com.br/revista/texto/17419/contratos-internacionais-entre-os-paises-do-bric
- ^ (French) see M. Nicolas J. Firzli, Asia-Pacific Funds as Diversification Tools for Institutional Investors, http://www.canadianeuropean.com/yahoo_site_admin/assets/docs/FONDS_DASIE-PACIFIQUE_REVUE_AF_APR_09.95131642.pdf, retrieved 2009-04-02
- ^ [Sapovadia, Vrajlal K., Bric Potency: Truth or Trance' (April 3, 2010). Available at SSRN: http://ssrn.com/abstract_id=1583828]
- ^ "BRICs and G-2". Indianexpress.com. 2009-06-17. http://www.indianexpress.com/news/brics-and-g2/477573/0. Retrieved 2010-10-15.
- ^ "What BRIC would be without China... | David Rothkopf". Rothkopf.foreignpolicy.com. http://rothkopf.foreignpolicy.com/posts/2009/06/15/the_brics_and_what_the_brics_would_be_without_china. Retrieved 2010-10-15.
- ^ "The Hindu News Update Service". Chennai, India: Hindu.com. 2009-06-08. http://www.hindu.com/thehindu/holnus/001200906081851.htm. Retrieved 2010-10-15.
- ^ (English) see M. Nicolas J. Firzli, "Forecasting the Future: The G7, the BRICs and the China Model", JTW & An-Nahar, Mar 9 2011, http://www.turkishweekly.net/op-ed/2799/forecasting-the-future-the-brics-and-the-china-model.html, retrieved 2011-03-09
- ^ M. Nicolas Firzli & Vincent Bazi (Q4 2011). "Infrastructure Investments in an Age of Austerity : The Pension and Sovereign Funds Perspective". Revue Analyse Financière, volume 41 (.). http://www.turkishweekly.net/op-ed/2852/infrastructure-investments-in-an-age-of-austerity-the-pension-and-sovereign-funds-perspective.html. Retrieved 30 July 2011.
- ^ [1][dead link]
- ^ "Land of promise". Economist.com. 2007-04-12. http://www.economist.com/surveys/displaystory.cfm?story_id=E1_RJVNQGG. Retrieved 2010-10-15.
- ^ "SSRN-BRIC Potency: Truth or Trance? by Vrajlal Sapovadia". Papers.ssrn.com. 2010-04-03. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1583828. Retrieved 2010-10-15.
- ^ "/ FTfm - Emerging Markets: Brics sceptics have their backs to the wall". Ft.com. 2006-12-11. http://www.ft.com/cms/s/7761deb2-88bc-11db-b485-0000779e2340,dwp_uuid=cc9f419c-4bb1-11da-997b-0000779e2340.html. Retrieved 2010-10-15.
- ^ Pesek, William (2005-12-08). "South Korea, Another `BRIC' in Global Wall: William Pesek Jr.". Bloomberg. http://www.bloomberg.com/apps/news?pid=10000177&sid=aoJ4WG5LSf1s&refer=market_insight. Retrieved 2010-10-15.
- ^ "MIKT: Another BRIC in the Making?". Seekingalpha.com. http://seekingalpha.com/article/247492-mikt-another-bric-in-the-making. Retrieved 2012-06-19.
- ^ a b "Our Thinking". Goldman Sachs. http://www2.goldmansachs.com/ideas/brics/book/BRIC-Full.pdf. Retrieved 2012-06-19.
- ^ Correio Da Manha, newspaper[dead link]
- ^ Business Standard, "Emerging risk and return"[dead link]
- ^ Company News Group, "L'oreal, first quarter sales report"[dead link]
- ^ "BRIC thesis Goldman Sachs Investment Bank, "BRIC"". Gs.com. http://www.gs.com/insight/research/reports/99.pdf. Retrieved 2010-10-15.
- ^ Global Economics Paper No: 153 The N-11m: More Than an Acronym, March 28, 2007.
- ^ http://www.strattonstreetcapital.com/abf/reports/a%20pile%20of%20brics.pdf
- ^ a b "Unified Korea to Exceed G7 in 2050". Koreatimes.co.kr. 2009-09-21. http://koreatimes.co.kr/www/news/biz/2009/09/123_52202.html. Retrieved 2010-10-15.
- ^ "Questia Online Library". Questia.com. http://www.questia.com/googleScholar.qst?docId=5002508142. Retrieved 2010-10-15.
- ^ List of countries by population
- ^ "Global Economics Paper No: 188 "A United Korea?"" (PDF). http://www.nkeconwatch.com/nk-uploads/global_economics_paper_no_188_final.pdf. Retrieved 2010-10-15.
[edit] Bibliography
- Elder, Miriam, and Leahy, Joe, et al., Who's who: Bric leaders take their place at the top table, Financial Times, London, September 25, 2008
- Firzli, M. Nicolas, "Forecasting the Future: The BRICs and the China Model", JTW/ USAK Research Center, Mar 9 2011
- Kateb, Alexandre, Les nouvelles puissances mondiales. Pourquoi les BRIC changent le monde" (The new global powers. Why the BRIC change the world) (in French), Paris : Ellipses, 2011, 272 p. ISBN 978-2-7298-6473-6
- O'Neill, Jim, BRICs could point the way out of the Economic Mire, Financial Times, London, September 23, 2008, p. 28.
- Mark Kobayashi-Hillary, 'Building a Future with BRICs: The Next Decade for Offshoring' (Nov 2007). ISBN 978-3-540-46453-2.
- J. Vercueil, Les pays émergents. Brésil-Russie-Inde-Chine... Mutations économiques et nouveaux défis (Emerging Countries. Brazil - Russia - India - China... Economic Transformations and new Challenges) (in French), Paris : Bréal, 2010, 207 p. ISBN 978-2-7495-0957-0
- Paulo Borba Casella, "BRIC : Brésil, Russie, Inde, Chine et Afrique du Sud - A l'heure d'un nouvel ordre juridique international, éd. A.Pedone, Paris, Sept. 2011, EAN ISBN :9782233006264
show] BRICS countries
[show] BRICS leaders
[show] Membership Summits Bilateral relations
[show] Types of power Types of power status Geopolitics Theory and history Studies Organizations / groups
The IMF and World Bank Are Major Causes of Poverty in Africa
From the ArchivesPosted on March 23, 2007Opinion article questions the efficacy of IMF and World Bank policies in the developing world.
Trade liberalization can have negative effects on local industries. Photo Credit: Cassandra Nelson/Mercy Corps
The International Monetary Fund (IMF) and the World Bank are the major cause of poverty in African countries today. Despite claims that they will reduce poverty in Africa, it is widely accepted that most of the debts, as a cause of poverty in Africa, are due to the policies of the International Monetary Fund (IMF) and the World Bank.
Their programmes have been heavily criticized over the years because they most times result in poverty scenarios. The IMF and the World Bank's polices are very different now from what they were originally intended for. These two monetary institutions were first formed by 44 nations at the Bretton Woods Conference in 1944 with the goal of creating a stable framework for the post-war global economy.
The IMF in particular, was originally formed to promote steady growth and full employments by offering unconditional loans to economies in crises and establishing mechanisms to stabilize exchange rates and facilitate currency exchange.
Much of these visions never came to reality. Pressure from the US government made IMF start offering loans based on strict conditions. Critics have said that these policies have reduced the level of social safety and worsened labour and environmental standards in developing countries.
The World Bank, initially known as the International Bank for Reconstructions and Development, was formed to fund the rebuilding of infrastructure in nations ravaged by World War II. Its focus soon changed in the mid 1980's. The Bank turned its attention away from Europe to the third World countries, most of which are in Africa. It started funding massive industrial development projects in Africa, Asia, and Latin America.
The World Bank and IMF adjustment programmes differ according to the role of each institution. IMF's loan conditions focus on monetary and fiscal issues. They emphasize programmes to address inflation and balance of payment problems, often requiring specific levels of cut backs in total government spending.
The adjustment programmes of the World Bank are wider in scope, with a more long-term development focus.
They highlight market liberalizations, seen as promoting growth theory expanding exports particularly cash crops.
The IMF and World Bank are largely controlled and owned by the development nations such as USA, Germany, UK, Japan, amongst others. The US for example controls 17 to 18% of the voting right at the IMF. When an 85% majority is required for a decision, the US effectively has veto power at the IMF. In addition, the World Bank is 51% funded by the US treasury.
Under a plane devised mechanism the World Bank and the IMF loan money in return for the structural adjustment of their economies. This means that economic direction of each country would be planned, monitored, and controlled in Washington. For instance, the World Bank assistance for helping a poor country involves, country by country investigations with a meeting of begging-Finance Ministers who are handed a restructuring agreement pre-drafted for voluntary signature.
For one, it could lead to dumping of cheap and substandard products from outside. Such items as clothes, shoes, creams are just amongst many others that flood markets in developing economies.
This undermines local industries that produce or intend produce the same products.
Africa's infant industries fail to take off under extensive trade liberalization. This is also very critical with respect to imported food such as rice, wheat, milk, amongst others. Developed countries which have excess of these food items reduce their prices and export them to Africa as a way of getting rid of them. If such situations were not conditioned, Africa would never be able to produce its own food.
Privatization, on the other hand, and its effects on government enterprises that do not function well cannot be challenged. But wholesale privatization of everything that is government owned cannot also be justified. In any case, there are few difficulties such as the limited indigenous business to take over government enterprises; the shortages of local private capital to pay for the running cost of privatized enterprises and the greater importance of the services to the people of some enterprises as compared to being profitable.
Again the cut in government expenditure in some cases could be necessary. However, what often happens is that it is the so-called soft sectors of education, health, and housing amongst others that will suffer from the cut in government expenditure. Most governments do not reduce expenditure on the army or on their non-productive and unnecessary areas. The result is that cut in government expenditure ends up harming the welfare of the people.
Another very important factor is the devaluation of currencies which is supposed to increase self sufficiency by making imported products more expensive and African exports cheaper. Since most African countries do not produce these products, it is not possible to replace them with locally produced ones.
On the other hand, most of the countries that buy African products have set certain amounts on how much can be imported or have fixed prices in foreign currencies to shelter their own products, even when they become cheaper in local currencies, do not necessarily gain new outside markets or earn more foreign exchange.
Offshoring
From Wikipedia, the free encyclopediaJump to: navigation, search"Offshore" may refer to oil and natural gas production at sea; see Oil platform. For the Philippine outsourcing company, see Offshoring Inc.
This article includes a list of references, but its sources remain unclear because it has insufficient inline citations. Please help to improve this article by introducing more precise citations. (August 2009) Offshoring describes the relocation by a company of a business process from one country to another—typically an operational process, such as manufacturing, or supporting processes, such as accounting. Even state governments employ offshoring.[1] More recently, offshoring has been associated primarily with the sourcing of technical and administrative services supporting domestic and global operations from outside the home country, by means of internal (captive) or external (outsourcing) delivery models.[2]The term is in use in several distinct but closely related ways. It is sometimes used broadly to include substitution of a service from any foreign source for a service formerly produced internally to the firm. In other cases, only imported services from subsidiaries or other closely related suppliers are included. A further complication is that intermediate goods, such as partially completed computers, are not consistently included in the scope of the term.[3]Offshoring can be seen in the context of either production offshoring or services offshoring. After its accession to the World Trade Organization (WTO) in 2001, the People's Republic of China emerged as a prominent destination for production offshoring. Another focus area has been the software industry as part of Global Software Development and developing Global Information Systems. After technical progress in telecommunications improved the possibilities of trade in services, India became a country leading in this domain though many parts of the world are now emerging as offshore destinations.The economic logic is to reduce costs. If some people can use some of their skills more cheaply than others, those people have the comparative advantage. The idea is that countries should freely trade the items that cost the least for them to produce.
Contents
[hide][edit] Frequently used terms
Offshoring is defined as the movement of a business process done at a company in one country to the same or another company in another, different country. Almost always work is moved because of a lower cost of operations in the new location. More recently, offshoring drivers also include access to qualified personnel abroad, in particular in technical professions, and increasing speed to market.[2] Offshoring is sometimes contrasted with outsourcing or offshore outsourcing. Outsourcing is the movement of internal business processes to an external organizational unit. Outsourcing refers to the process by which an organization gives part of its work to another firm / organization and makes it responsible for most of the applications as well as the design of the enterprise business process. This process is done under restrictions and strategies in order to establish consistency with the offshore outsourcing organizations. Many companies nowadays outsource various professional areas in the company such as e-mail services, payroll and call center. These jobs are being handled by other organizations that specialize in each sector allowing the off-shoring company to focus more on other business concerns . However, subcontracting in the same country would be outsourcing, but not offshoring. A company moving an internal business unit from one country to another would be offshoring or physical restructuring, but not outsourcing. A company subcontracting a business unit to a different company in another country would be both outsourcing and offshoring.Related terms include nearshoring, which implies relocation of business processes to (typically) lower cost foreign locations, but in close geographical proximity (e.g., shifting United States-based business processes to Canada/Latin America); inshoring, which means picking services within a country; and bestshoring or rightshoring, picking the "best shore" based on various criteria. Business process outsourcing (BPO) refers to outsourcing arrangements when entire business functions (such as Finance & Accounting, Customer Service, etc.) are outsourced. More specific terms can be found in the field of software development - for example Global Information System as a class of systems being developed for / by globally distributed teams.A further term sometimes associated with offshoring is bodyshopping which is the practice of using offshored resources and personnel to do small disaggregated tasks within a business environment, without any broader intention to offshore an entire business function.[edit] Production off-shoring
Production offshoring also known as physical restructuring of established products involves relocation of physical manufacturing processes to a lower-cost destination. Examples of production offshoring include the manufacture of electronic components in Costa Rica, production of apparel, toys, and consumer goods in China, Vietnam etc.Product design, research and the development process that leads to new products, are relatively difficult to offshore. This is because research and development to improve products and create new reference designs requires a skill set that is harder to obtain in regions with cheap labor. For this reason, in many cases only the manufacturing will be offshored by a company wishing to reduce costs.However, there is a relationship between offshoring and patent system strength. This is because companies under a strong patent system are not afraid to offshore work because their work will remain their property. Conversely, companies in countries with weak patent systems have an increased fear of intellectual property theft from foreign vendors or workers, and, therefore, have less offshoring.Physical restructuring got its big push when the North American Free Trade Agreement (NAFTA) made it easier for manufacturers to shift production facilities from the US to Mexico. This trend later shifted to China, which offered cheap prices through very low wage rates, few workers' rights laws, a fixed currency pegged to the US dollar, (currently fixed to a basket of economies) cheap loans, land, and factories for new companies, few environmental regulations, and huge economies of scale based on cities with populations over a million workers dedicated to producing a single kind of product. However, many companies are reluctant to move high value-added production of leading-edge products to China because of lax enforcement of intellectual property laws.[4] CAFTA has increased the velocity at which physical restructuring is occurring.[edit] IT-enabled services offshoring
The growth of IT-enabled services offshoring is linked to the availability of large amounts of reliable and affordable communication infrastructure following the telecommunication and Internet expansion of the late 1990s. This was seen all the way up to the year 2000. Coupled with the digitization of many services, it was possible to shift the actual production location of services to low cost countries in a manner theoretically transparent to end-users. Services include administrative services, such as finance and accounting, HR, and legal; call centers; marketing and sales services; IT infrastructure; application development; and knowledge services, including engineering support, product design, research and development, and analytics.India first benefited from the offshoring trend as it has a large pool of English speaking people[5] and technically proficient manpower. India's offshoring industry took root in low-end IT functions in the early 1990s and has since moved to back-office processes such as call centers and transaction processing. In the late 1990s, India's abundant and well qualified software engineering talent combined with massive demand from the Y2K problem[citation needed] helped to move India up the value chain to attract large-scale software development projects for US based customers. This spawned the neologism Bangalored, used to indicate a layoff, often systemic, and usually resulting from corporate outsourcing to lower wage economies – derived from Bangalore in India, where some of the first outsource centers were located.[6]Currently, India's engineering talent has made India the offshoring destination of global firms like HP, IBM, Accenture, Intel, AMD, Microsoft, Oracle Corporation, Cisco, SAP, and BEA.Because of inflation, high domestic interest rates, robust economic growth and increased IT offshoring, Indian IT sector has witnessed 10 - 15% wage growth in the 21st century. Consequently, Indian's operations and firms are concerned that they are becoming too expensive in comparison with competition from the other offshoring destinations. To maintain high growth rates, attempts have been made to grow up the value chain and diversify to other high-end work in addition to software and hardware engineering. These jobs include research and development, equity analysis, tax-return processing, radiological analysis, medical transcription, and more.The choice of offshoring destination is often made according to cultural concerns. Japanese companies are starting to outsource to China, where large numbers of Japanese speakers can be found — particularly in the city of Dalian, which was Japanese-occupied Chinese territory for decades (this is discussed in the book The World is Flat). German companies tend to outsource to Poland and Romania, where proficiency in German is common.[7] French companies outsource to North Africa for similar reasons. For Australian IT companies, Indonesia is one of the major choice of offshoring destination. Near shore location, common time zone and adequate IT work force are the reasons of offshoring IT services to Indonesia.Other offshoring destinations include Mexico, Central and South America, the Philippines, South Africa and Eastern European countries.The Central America Free Trade Agreement (CAFTA) made nearshoring more attractive between the Central American countries of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic and the US.[edit] Innovation offshoring
Once companies are comfortable with services offerings and started realizing the cost savings, many high-tech product companies, including some in Silicon Valley, started offshoring innovation work to countries like South Africa, India, China, Mexico, and Russia. Accessing the talent pools in these countries has the potential to cut costs or even shorten product lifecycles. Developing countries like India are usually involved in this practice.When offshoring knowledge work, firms heavily rely on the availability of technical personnel at offshore locations. In order to secure access to talent, Western firms often establish collaborative relationships with technical universities abroad and thereby customize university programs to serve their particular needs. Examples include universities in Shanghai, such as Tong-Ji University, where German firms and scholars co-sponsor labs, courses, and provide internships. Similar examples of collaborative arrangements can be found in Eastern Europe, e.g. Romania.[7][edit] Re-shoring
"Re-shoring" (sometimes "Backshoring"[8]) is offshoring that has been brought back onshore.[edit] Focus and strategy in offshoring
To survive in the outsourcing world, strength in multiple terms is necessary. On one hand, while it is important to have robust processes and structures in place, with manpower to execute projects, on the other hand it is necessary for firms to have their strategy firmly in place.[9] While the Vision and Mission define the ethos of any enterprise, irrespective of the field in it, yet this is necessary to drive the wheel of a company forward. It is undoubted that strategy varies as an offshoring enterprise evolves and goes through its various phases of growth. While nascent players may look at opportunities to grab and work upon, established players have a well set and defined plan of action. Players in the growth phase are the ones who have strategy targeted at achieving the ulterior goal and demonstrate perseverance and drive to achieve the same. These trends are truly reflective of the path that some of the established players today have had in mind. Being a business model, which has a unique driving force behind is, the fact that the industry as a whole has coped rather well with the economic downturn. For those who have grown and escalated in this scenario, it is their strategy in view of their ultimate vision and mission to which credit must be attributed.[10][edit] Transfer of intellectual property
Offshoring is often enabled by the transfer of valuable information to the offshore site. Such information and training enables the remote workers to produce results of comparable value previously produced by internal employees. When such transfer includes protected materials, as confidential documents and trade secrets, protected by non-disclosure agreements, then intellectual property has been transferred or exported. The documentation and valuation of such exports is quite difficult, but should be considered since it comprises items that may be regulated or taxable.[edit] Debate
The neutrality of this section is disputed. Please do not remove this message until the dispute is resolved. (December 2007) Offshoring has been a controversial issue spurring heated debates among economists, some of which overlap those related to the topic of free trade. It is seen as benefiting both the origin and destination country through free trade, providing jobs to the destination country and lower cost of goods and services to the origin country. This makes both sides see increased gross domestic product (GDP). And the total number of jobs increase in both countries since those workers in the origin country that lost their job can move to higher-value jobs in which their country has a comparative advantage.On the other hand, job losses and wage erosion in developed countries have sparked opposition to offshoring. Experts argue that the quality of any new jobs in developed countries are less than the jobs lost and offer lower pay. Economists against offshoring charge that currency manipulation by governments and their central banks causes the difference in labor cost creating an illusion of comparative advantage. Further, they point out that even more educated highly trained workers with higher-value jobs such as software engineers, accountants, radiologists, and journalists in the developed world have been displaced by highly educated and cheaper workers from India and China. On May 1, 2002, Economist and former Ambassador Ernest H. Preeg testified before the Senate committee on Banking, Housing, and Urban Affairs that China, for instance, pegs its currency to the dollar at a sub-par value in violation of Article IV of the International Monetary Fund Articles of Agreement which state that no nation shall manipulate its currency to gain a market advantage.[11] Traditionally "safe" developed world jobs in R&D and the Science, Technology, Engineering, and Mathematics (STEM) fields are now perceived to be endangered in these countries as higher proportions of workers are trained for these fields in developing nations. Economists such as Paul Craig Roberts claim that those economists who promote offshoring misunderstand the difference between comparative advantage and absolute advantage.[edit] Level-of-service concerns
With the off-shoring of call-center type applications, debate has also surfaced that this practice does serious damage to the quality of customer service and technical support that customers receive from companies who do it. Many companies have caught much public ire for their decisions to use foreign labor for customer service and technical support, mostly because of the apparent language barrier that it creates. While some nations have a high level of younger, skilled workers who are capable of speaking English as one of their native languages, their English skills have caused debate in North America and Europe.[citation needed]Criticisms of outsourcing from much of the American public have been a response to what they view as very poor customer service and technical support being provided by overseas workers attempting to communicate with Americans.[edit] Supply chain concerns
Some claim that companies lose control and visibility across their extended supply chain under outsourcing, creating increased risks. A 2005 quantitative survey of 121 electronics industry participants by Industry Directions Inc and the Electronics Supply Chain Association (ESCA) found that 69% of respondents said they had less control over at least 5 of their key supply chain processes since the outsourced model took hold, while 66% of providers felt their aggregate risk with customers was high or very high.[citation needed] 36% of providers responded that they felt an increased risk of uncertainty compared to their uncertainty risk before the rise to prominence of the outsourced model.[citation needed] 62% of respondents described as "problematic" at least two core trading partner management practices, which included performance management and simple agreement on results.[citation needed] 40% of all respondents encountered resistance to sharing risk in outsourced partnership agreements, according to the research.[citation needed][edit] Competitive concerns
The transfer of knowledge outside a country may create competitors to the original companies themselves. Chinese manufacturers are already selling their goods directly to their overseas customers, without going through their previous domestic intermediaries that originally contracted their services. In the 1990s and 2000s, American automakers increasingly turned to China to create parts for their vehicles. By 2006, China leveraged this know-how and announced that they will begin competition with American automakers in their home market by selling fully Chinese automobiles directly to Americans. When a company moves the production of goods and services to another country, the investment that companies would otherwise make in the domestic market is transferred to the foreign market. Corporate money spent on factories, training, and taxes, which would otherwise be spent in the market of the company is then spent in the foreign market. As production increases in the foreign market, qualified and experienced domestic workers leave or are forced out of their jobs, often permanently leaving the industry. At some point, dramatically fewer domestic workers are left who are qualified to perform the work. This makes the domestic market dependent on the foreign market for those goods and services, thereby strategically weakening the "hollowed-out" domestic country. In effect, offshoring creates and strengthens the competitive industries of the foreign country while strategically weakening the domestic country.[dubious – discuss]However, employment data has cast doubt on this claim. For example, IT employment in the United States has recently reached pre-2001 levels[12][13] and has been rising since. The number of jobs lost to offshoring is less than 1 percent of the total US labor market.[14] According to a study by the Heritage foundation, outsourcing represents a very small proportion of jobs lost in the US. The total number of jobs lost to offshoring, both manufacturing and technical represent only 4 percent of the total jobs lost in the US. Major reasons for cutting jobs are from contract completion and downsizing.[15] Some economists and commentators claim that the offshoring phenomenon is way overblown.[15][edit] Retraining concerns
One solution often offered for domestic workers displaced by offshoring is retraining to new jobs. Some displaced workers are highly educated and possess graduate qualifications. Retraining to their current level in another field may not be an option because of the years of study and cost of education involved. Anecdotal evidence also suggests they would be rejected for being overqualified.[edit] Effects of factor of production mobility
According to classical economics, the three factors of production are land, labor, and capital. Offshoring relies heavily on the mobility of two of these factors. That is, how offshoring affects economies depends on how easily capital and labor can be repurposed. Land, as a factor of production, is generally seen to have little or no mobility potential.The effects of capital mobility on offshoring have been widely discussed. In microeconomics, a corporation must be able to spend working capital to afford the initial costs of offshoring. If the state heavily regulates how a corporation can spend its working capital, it will not be able to offshore its operations. For the same reason the macroeconomy must be free for offshoring to succeed. Generally, those who favor offshoring support capital mobility, and those who oppose offshoring call for greater regulation.Labor mobility also plays a major role, and it is hotly debated. When computers and the Internet made work electronically portable, the forces of free market resulted in a global mobility of work in the services industry. Most theories that argue offshoring eventually benefits domestic workers assume that those workers will be able to obtain new jobs, even if they have to obtain employment by downpricing themselves back into the labor market (by accepting lower salaries) or by retraining themselves in a new field. Foreign workers benefit from new jobs and higher wages when the work moves to them.[edit] History
In the developed world, moving jobs out of the country dates to at least the 1960s[16] and has continued since then. It was characterized primarily by the transferring of factories from the developed to the developing world. This offshoring and closing of factories has caused a structural change in the developed world from an industrial to a post-industrial service society.During the 20th century, the decreasing costs of transportation and communication crossed with great disparities on pay rates made increased offshoring from wealthier countries to less wealthy countries financially feasible for many companies. Further, the growth of the Internet, particularly fiber-optic intercontinental long haul capacity, and the World Wide Web reduced "transportation" costs for many kinds of information work to near zero.[17]With the development of the Internet, many new categories of work such as call centres, computer programming, reading medical data such as X-rays and magnetic resonance imaging, medical transcription, income tax preparation, and title searching are being offshored.Before the 1990s, Ireland was one of the poorest countries in the EU. Because of Ireland's relatively low corporate tax rates, US companies began offshoring of software, electronic, and pharmaceutical intellectual property to Ireland for export. This helped create a high-tech "boom" and which led to Ireland becoming one of the richest EU countries.[17]In 1994 the North American Free Trade Agreement (NAFTA) went into effect. As concerns are widespread about uneven bargaining powers, and risks and benefits, negotiations are often difficult, such that the plan to create free trade areas (such as Free Trade Area of the Americas) has not yet been successful. In 2005, offshoring of skilled work, also referred to as knowledge work, dramatically increased from the US, which fed the growing worries about threats of job loss.[17][edit] See also
- Anti-Globalism
- Call center security
- Globally Integrated Enterprise
- Globality
- Homeshoring
- Inshoring
- Offshoring Research Network
- Outsourcing
- Personal offshoring
- Restructuring
- Runaway production
- Programmers Guild
- Follow-the-sun
- Decline and Fall of the American Programmer
- Job migration
- Hybridshoring
By sector:
- Business process outsourcing
- Information technology consulting
- Legal outsourcing
- Offshore software outsourcing
- Offshoring IT Services
[edit] Literature
- Ashok Deo Bardhan and Cynthia Kroll, "The New Wave of Outsourcing" (November 2, 2003). Fisher Center for Real Estate & Urban Economics. Fisher Center Research Reports: Report #1103. http://repositories.cdlib.org/iber/fcreue/reports/1103
- Alan E. Blinder, Offshoring: The Next Industrial Revolution?, in: Foreign Affairs, Vol. 85, No.2, March/April 2006, 113-128.
- Vinaj Couto, Mahadeva Mani, Vikas Sehgal, Arie Y. Lewin, Stephan Manning, Jeff W. Russell, Offshoring 2.0: Contracting Knowledge and Innovation to Expand Global Capabilities Offshoring Research Network 2007 Service Provider Report.
- Georg Erber, Aida Sayed-Ahmed, Offshore Outsourcing - A Global Shift in the Present IT Industry , in: Intereconomics, Volume 40, Number 2, March 2005, 100 - 112
- Thomas L. Friedman, The World is Flat: A Brief History of the Twenty-First Century 2005 ISBN 0-374-29288-4
- Gary Gereffi and Vivek Wadhwa, "Framing the Engineering Outsourcing Debate: Placing the United States on a Level Playing Field with India and China" (2006) http://memp.pratt.duke.edu/outsourcing
- Ron Hira and Anil Hira, with forward by Lou Dobbs, Outsourcing America: What's behind Our National Crisis and how we can reclaim American Jobs. (May 2005). ISBN 0-8144-0868-0.
- Bradford Jensen and Lori Kletzer (September 2005), "Tradable Services: Understanding the Scope and Impact of Services Outsourcing", Institute for International Economics Working Paper No. 05-9 SSRN 803906
- Mark Kobayashi-Hillary, 'Who Moved My Job?' (2008). ISBN 978-1-4092-7107-9.
- Mark Kobayashi-Hillary, 'Building a Future with BRICs: The Next Decade for Offshoring' (Nov 2007). ISBN 978-3-540-46453-2.
- Mark Kobayashi-Hillary & Dr Richard Sykes, 'Global Services: Moving to a Level Playing Field' (May 2007). ISBN 978-1-902505-83-1.
- William Lazonick, Globalization of the ICT Labor Force, in: The Oxford Handbook on ICTs, eds. Claudio Ciborra, Robin Mansell, Danny Quah, Roger Solverstone, Oxford University Press, (forthcoming)
- Arie Y. Lewin and Vinaj Couto, Next Generation Offshoring: The Globalization of Innovation Offshoring Research Network 2006 Survey Report.
- Mario Lewis, IT Application Service Offshoring: An Insider's Guide, Sage Publications, ISBN 0-7619-3525-8, ISBN 978-0-7619-3525-4
- Catherine Mann, Accelerating the Globalization of America: The Role for Information Technology, Institute for International Economics, Washington D.C., June 2006,[18] ISBN paper 0-88132-390-X
- Stephan Manning, Silvia Massini and Arie Y. Lewin, "A Dynamic Perspective on Next-Generation Offshoring: The Global Sourcing of Science and Engineering Talent", in: Academy of Management Perspectives, Vol. 22, No.3, October 2008, 35-54.[2]
- Stephan Manning, Joerg Sydow and Arnold Windeler, "Securing Access to Lower-Cost Talent Globally: The Dynamics of Active Embedding and Field Structuration", in: Regional Studies, Forthcoming (2011).[7]
- McKinsey Global Institute; "Offshoring: Is It a Win-Win Game?", August 2003
- Bharat Vagadia, "Outsourcing to India: A Legal Handbook", August 2007, Springer, ISBN 978-3-540-72219-9
- Atul Vashistha and Avinash Vashistha, The Offshore Nation, ISBN 0-07-146812-9
- Wolfgang Messner, "Intelligent IT Offshoring to India. Roadmaps for Emerging Business Landscapes", Palgrave Macmillan, ISBN 978-0-230-24626-3
- Toledo Mario, "Outsourcing and Offshoring:Companies and governments immerged in a complex environment" a Research Project for Global Innovation at Hamburg University of Technology, August 2007, [1]
[edit] References
- ^ "The Offshoring of American Government", Cornell Law Review, Nov. 2008, available: http://www.lawschool.cornell.edu/research/cornell-law-review/upload/Zuckerman.pdf
- ^ a b c "SSRN-A Dynamic Perspective on Next-Generation Offshoring: The Global Sourcing of Science and Engineering Talent by Stephan Manning, Silvia Massini, Arie Lewin". Papers.ssrn.com. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1287369. Retrieved 2010-05-22.
- ^ See "Appendix II: Definitions of Offshoring" in General Accounting Office: "International Trade: Current Government Data Provide Limited Insight into Offshoring of Services", September 2004. Imported intermediate goods are included in offshoring in "Swenson, D: "International Outsourcing", in "The New Palgrave Dictionary of Economics", 2008.
- ^ Fishman, T: "China, Inc." Scribner, 2006.
- ^ Working Through Outsourcing: Software Practice, Industry Organization and Industry Evolution in India Kyle Eischen. eScholarship Repository, 2006. Retrieved 25 November 2006.
- ^ Bangalored
- ^ a b c "SSRN-Securing Access to Lower-Cost Talent Globally: The Dynamics of Active Embedding and Field Structuration by Stephan Manning, Joerg Sydow, Arnold Windeler". Papers.ssrn.com. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1753212.
- ^ Workforce Management Online, Dec 2007
- ^ "The 10 Top Pitfalls of Offshoring". http://www.twago.com/blog/2010/01/18/the-top-10-pitfalls-of-offshoring/. Retrieved 2 February 2012.
- ^ Focus and strategy in Offshoring, Clairvolex, Jan25,2010
- ^ Ernest H. Preeg (May 1, 2002). Testimony on Chinese Currency Manipulation Manufacturers Alliance
- ^ IT Employment Reaches Record High In U.S. - IT Employment At Record High - InformationWeek
- ^ U.S. Tech Workers In Hot Demand Despite More Outsourcing - Outsourcing Blog - InformationWeek
- ^ Myths and Realities: The False Crisis of Outsourcing
- ^ a b "Samuelson: Debunking the Great Offshoring Myth". Newsweek.com. 2007-08-21. http://www.newsweek.com/id/34690. Retrieved 2010-05-22.
- ^ General Accounting Office: "Offshoring: U.S. Semiconductor and Software Industries Increasingly Produce in China and India", September 2006.
- ^ a b c Sara Baase, "A Gift of Fire: Social, Legal, and Ethical Issues for Computing and The Internet. Third Ed. 'Work'" (2008)
- ^ "Accelerating the Globalization of America: The Role for Information Technology - Catherine L. Mann, Jacob Funk Kirkegaard, Peter G. Peterson Institute for International Economics". Bookstore.iie.com. 2010-03-25. http://bookstore.iie.com/merchant.mvc?Screen=PROD&Product_Code=3900. Retrieved 2010-05-22.
[edit] External links
This article's use of external links may not follow Wikipedia's policies or guidelines. Please improve this article by removing excessive or inappropriate external links, and converting useful links where appropriate into footnote references. (May 2010)
Look up offshoring in Wiktionary, the free dictionary. [edit] News
- http://www.bls.gov/eag/eag.us.htm
- BusinessWeek online on "Let's Offshore The Lawyers"
- Offshore Outsource Savings Can Be Elusive, Survey Shows
- Don't be afraid of offshoring - by Diana Farrell
- Ensuring India's offshoring future - Article by Diana Farrell, Sascha Stürze & Noshir Kaka based on a 12-month research project conducted by the McKinsey Global Institute on the "Emerging Global Labor Market" (see Research section below)
- Latin America: Outsourcing's New Hot Spot
- GE ex-CEO Welch blasts opponents of offshoring by Anupama Chandrasekaran, Forbes.com
- At Mysore We are Running a US Law Firm by Shelley Singh (Economic Times)
- Fortune 500 firms driving LPO industry by Praveen Bose (Business Standard)
- U.S. corporates outsource legal work to India by Anjali Prayag (The Hindu Business Line)
- New York Firm Takes On India... "Very Nice!" by Heather Greenwood Davis (The Globe and Mail -- Lexpert Magazine)
- LPOs add more punch to India action by Sushmita Mohapatra & P P Thimmaya (The Economic Times)
- Now, for some LPO action by Sachin Malhan (The Hindu)
[edit] Research
- Offshoring Research Network
- Book:: Offshoring IT Services : A Framework for Managing Outsourced Projects
- Report from the BCS on offshoring and outsourcing with regard to IT
- Report by McKinsey and Nasscom regarding skills and quality of Indian workforce
- Essay on the "Fear of Offshoring" by Alan S. Blinder, Princeton University
- Zinnov Report on Product Innovation: Growing up the value chain
[edit] Internet articles
- Nearshore outsourcing is more cost efficient than offshore outsourcing - By H. Boersen, W. Gils (van) & M. Zantinge
- Risks, Rewards, Challenges and Opportunities in Offshore Outsourcing By Akshay Upadhye
- Offshore Outsourcing of Data Services by Insured Institutions and Associated Consumer Privacy Risks (www.fdic.gov)
Contributed by Bhoyy Jalloh in the Opinion section of the Concord Times in Freetown, South Africa. Reprinted with permission from allAfrica.com. Copyright © 2007 allAfrica.com. All rights reserved.
To read another Global Envision article about the IMF and the World Bank, see The IMF and World Bank - An Overview.
GLOBALIZATION
- forcing competition
- opportunities for small companies
- sustainable development
- worldwide protests against globalization
- growing power of MNCs
- OECD Guidelines for MNCs
- specific consequences
- globalization and the environment
see witiger.com/internationalbusiness/globalizationSustainableDevelopment.htm
see witiger.com/internationalbusiness/globalization-soverignty-issues.htm
see witiger.com/internationalbusiness/globalization.htm
see witiger.com/internationalbusiness/globalization-reverse.htm..
Global Business Today, 2nd Ed.
Hill, McKaig ... and RichardsonISBN-10: 0-07-098411-5.... jjj
The debate over the positive and negative effects of globalization is a hot topic for many individuals, agencies, organizations and government departments who find themselves in a position to defend or attack the current globalization trends. We can have an interesting debate in class about the merits of globalization but in the end, whether we like it or not, it is a situation we have to deal with.
WTGR
OBJECTIVES After reading this online unit, and attending the lecture, the student will
o be able to define what globalization means in the context of int'l business
o understand the effects of globalization in terms of corporate competitiveness
o be able to define U.S. and Canadian differences in opinion on the issue of globalization
o know some of the positions that entities have on the "pro" and "con" side
o be aware of some of opportunities, and challenges, facing SMEs dealing with globalization
o be able to explain how globalization effects sustainable development
o be aware of some of the issues in the worldwide protests for, and against globalization
o be able to explain how globalization effects social justice in some effected regions
o understand how the global activities of large companies may effect national sovereignty
o know some specific examples of the effect of globalization on business in CanadaWTGR
INTRODUCTION GLOBALIZATION2009. The economic "disclocation" of the North American economy in 2008-2009 has created substantial "ripples" which have effected, and are effected by the economic upheavals in Asia (North America's largest trading partner) and Europe. One thing that has become "evident" from the results of the North American economic problems is that- this "reaction" seems to substantiate claims that Globalization is indeed intense.
- the economy of Asia's exporters has been effected by
- reduced North American consumption
- and consequently reduced North American importing
WTGR
INTRODUCTION GLOBALIZATION2007.. "The great challenge facing political leaders today is to persuade the public that continuing to liberalize trade will bring more benefits than costs. Distrust of globalization has probably never been higher in the past 60 years....China and India are among the reasons. There is widespread fear that globalization means job losses and lower wages as the export power of these huge nations grows. So countries are becoming more protectionist, more unwilling to deal with change and make adjustments." David Crane
well known economics and int'l trade journalist for The Toronto Star 2006 Dec 31Definition of Globalizationo People around the globe are more connected to each other than ever before.
o Information and money flow more quickly than ever.
o Goods and services produced in one part of the world are increasingly available in all parts of the world.
o International travel is more frequent.
o International communication is commonplace.
This phenomenon has been titled "globalization."
From Keith Porterhttp://globalization.about.com/cs/whatisit/a/whatisit.htmThe term "globalization" describes the increased mobility of goods, services, labour, technology and capital throughout the world.
http://www.canadianeconomy.gc.ca/English/economy/globalization.html"Globalization is a term for the horizontal and vertical integration of manufacturing and trade on an international level"
www.endgame.org/gtt-globalization.htmlGlobalization, an example in the forest products industry
...
The vertical integration of the wood products industry "is probably the single most recognized characteristic of the industry" -- for example, most paper sales are by corporations which also control timberland. Now the horizontal integration of the industry is also being completed, as corporations like International Paper spread their operations to dozens of countries."
www.endgame.org/gtt-globalization.html 1..
The reason why we emphasize the forest products industry in a Canadian course on International Business is
- historically
- it was the rich forests of Canada which were one of the big incentives for European explorers to investigate the waterways of our country as a way to ship back logs to Europe for the French and British navy.
- currently
- the forest products industry
is the biggest industry by dollar amount, and volume, in Canada
- exporting paper
- exporting pulp
- exporting dimension lumber
Forestry trade DeforestationGlobalization"The effects of deforestation have been known since ancient times. Empires from Roman to colonial times have expanded to acquire wood supplies for shipbuilding and fuel for industry, and have collapsed when those wood supplies were depleted. The post-World War II ascendancy of U.S. timber corporations has brought the industry to new heights, and promises to take it to new lows as well. The global timber industry has tried to escape the ecological limits to raw materials, and the social and economic limits to markets, by relying on frontiers. While multinational timber corporations use the rhetoric of sustainability and jobs, the centuries-old reality of cut and run continues. Despite the public relations strategies of the corporations, timber industry overcutting has been confirmed by numerous industry, academic, and government studies. Now that the end of the forest frontier is being reached, free trade agreements are threatening to remove the last barriers to total industrialization and depletion." by George Draffan, Public Information Network, Seattle
permission to quote Draffan received in an email Oct 11th, 2002. Copies of emails kept in the permissions binder."Globalization forces everyone to compete with the cheapest producers."
see youtube.com/watch?v=YFVzjLqZj7g&feature=related
Italy's 'Made in China' LabelIs this a good thing or a bad thing?"In the early 1990s, bleached hardwood pulp cost- therefore the cutting down of the rainforest in Brazil !
- $78 per ton to produce in Brazil,
- $156 per ton to produce in eastern Canada, and
- $199 per ton to produce in Sweden."
by George Draffan, Public Information Network, Seattle.
Globalization of Markets / Customers
Globalization of Production
Globalization of Government and NGOs
as discussed in Hill / McKaig Global Business Today, 2nd Ed....
Chpt 1The Globalization of Markets / Customers Globalization of markets refers to the "merging of historically distinct and separate national markets into one huge global marketplace"For some products and services "the tastes and preferences of consumers in different nations are beginning to converge on some global norm" - a consequence of the "globalization of the customer"Why is this happening?
- advances in the technological environment
- more people travelling
- information through the web
- blending across social - cultural environment
Stuff = ... ....
Industrial Services Industrial Goods Consumer Services Consumer Goods ...
Chpt 1The Globalization of Markets / Customers "Most global markets are not for consumer products ... but markets for industrial goods and materials that serve a universal need the world over".
...
Industrial Services Industrial Goods Consumer Services Consumer Goods ...
Chpt 1The Globalization of Markets / Customers
...
Industrial Services Industrial Goods Consumer Services Consumer Goods
A tricky conceptOne the one hand, there is an increasing tendancy for consumer product companies to narrow their "target market segmentation" for certain types of consumer products and services, - this helps achieve very large economies of scale which drive down the price of things such as consumer electronics; yet, for many things, ie cell phone ring tones, there is an increasingly diverse segmentation based on pandering to the diverse social/cultural market."While modern communication and transportation technologies are ushering in the 'global village', very significant national differences remain in culture, consumer preferences, and business practices. A firm that ignores differences between [nations] does so at its peril"ff
Chpt 1The Globalization of Production Globalization of production refers to the "sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production like land, labor, and capital"Why is this happening?
- advances in the technological environment and regional advantages and variances in the economic environment have allowed for transportation of larger volume goods over longer distances
- bigger stuff travelling farther
- technology effecting information/communications
- it is possible to "know" where to buy components parts at cheaper prices
- the "modular: aproach to manufacturing - few things "made" in a factory, most stuff is assembled from component parts that come from a variety of locations, some national, some international
ff
. The Globalization of Production Erosion of "national identity" associated with a branded consumer product.Given the diverse origins of component parts, it becomes increasingly challenging to say a complex consumer product (such as a large TV, computer or car) is predominantly from "X" country.Influences of, and changes in, thehave resulted in Supply Chain Management solutions that source parts all over, based on the lowest price and fastest deliverly time.
- economic environment
- competitve environment
- technological environment
Example: One particular model of a consumer branded electronic product may have internally three different battery pack arrangements, depending on how the supply chain people sourced the parts at the time a long production run was being carried out - some may come from Korea, some may come from China or Taiwan.When large companies establish extremely large production runs, supplier companies sometimes cannot meet the volume of requirements so supply chain staff source from multiple locations...
Chpt 1The Globalization of Government / Emergence of Global Institutions WTO - World Trade Organization
IMF - International Monetary Fund
United Nations
World BankAs companies grow from national to trans-national organizations, we have seen an emergence of institutions needed to "help manage, regulate and police the global marketplace"....
Chpt 1The Globalization of Government / Emergence of Global Institutions Drivers:
decline in trade barriers (as encouraged by WTO and IMF)
advances in the "technological environment"
- which effects
- communications, WWW
- we can be in touch with more people, in more complex ways
- globalization of TV and entertainment- blends differences between cultures
- allows "immigrant cultures" to remain viable- information processing
- allows for more complex decision making
- relates to facilitating banking transactions globally
- provides capability to know more detail about customers (CRM)- transportation
- people, - global travel facilitates global business
- contanerization; products, supplies
. The Globalization of Government / NGO's Regional and national governments are increasingly "sensitive" to circumstances happening outside their national borders.For example the ability of a government to raise money selling bonds depends not just on the citizens buying, but also institutional investors in other countries, which in turn allows the gov't to use deficit financing for domestic projects.
.
Globalization
is good !!from the front page of the National Post, July 9th, 2002 "Globalization Cures Poverty: Study"
is the title of a story by Jan Cienski which cites that "Free markets credited with reducing misery - yet the gap between rich and poor widens"Cienski says "Many globalization critics are "poorly informed about the historical record, and appear not to be aware of the contribution played by globalization in the struggle against poverty," the study's authors say."Cienski makes the interesting point that "Improved communications has had the perverse effect of undermining the case for globalization because "the poor that remain, though a shrinking proportion of the whole population, are more than ever aware of their relative deprivation."
Globalization
is good !!the study, referred to in the Cienski article, was by the London-based
Centre for Economic Policy Research.
Instead of relying on the Canadian newspaprs interpretation, we can use the resources of the Internet to go direct to the CEPR webpage and get direct information about this globalization studythe CEPR has a press release on their study released in July 2002 and you can read it at www.cepr.org/press/PP8.htm..
Globalization
is good !!
Globalization
is good !!" the authors of the new CEPR Report find that many of the charges levelled against globalization are misguided:" - they list several points on their website which deserve reading.
- "There is a wealth of economic evidence that demonstrates that globalization brings great benefits as well as costs. It offers the opportunity for a higher rate of sustainable growth - growth that translates into longer, healthier lives and improved living standards.
- On average, economic growth is good for the poor, and trade is good for growth. Trade is also associated with lower inflation and less corruption. A significant degree of openness to trade, financial liberalization, and global financial integration are necessary conditions for sustained economic growth.
- The increasing integration of the world's economies does not inevitably increase the inequality of incomes. The 19th century saw an explosion of inequality but by the middle of the 20th century it had stopped rising. The proportion of the world's population in absolute poverty is now lower than it has ever been. The number of those living on less than 1$ a day, adjusted for inflation, has declined from around half in 1950 to less than a quarter in 1992.
- Many of the apparent costs of globalization reflect domestic policy failures, to the extent that they would be better tackled through domestic policy reform than through seeking to halt the forces driving globalization.
There is little evidence that governments are losing power to multinational corporations or that there is 'a race to the bottom' in environmental standards or taxation."..
Globalization
is good !!David Crane explained in a Dec 2006 article titled
"Don't discount the positive side of globalization""Canada's clothing industry provides a good example of the trade-off that comes when a country lowers its trade barriers as Canada has done with clothing. According to Statistics Canada, production by Canada's clothing industry fell from $7.9 billion in 2000 to $5 billion in 2005, a 37 per cent decline. Employment fell by 34,000 to 60,000, a 36 per cent fall in the number of clothing industry jobs.About 70 per cent of this decline was due to a loss of share in the Canadian market to imports from China, Bangladesh, India, Mexico and other developing countries, while 30 per cent of the decline was due to a fall in exports to the U.S. as developing countries displaced Canadian shipments.So trade liberalization has meant a loss of jobs and output in Canada's clothing industry, though the Canadian companies that have survived have become more innovative and productive. But it has also meant cheaper clothing for Canadians. This matters, especially to low-income families and seniors living on fixed incomes. "
Globalization and SME's"Globalization and the Internet have created unprecedented opportunities for small and medium-sized businesses in Canada"
is the title of a Sept 2002 story by Lopez-Pacheco
asc.sc
KEY
POINTSThere are a lot of stories in some media that discuss how Globalization is challenging [read difficult and painful] for small and medium sized enterprises because they are being forced by the competitive environment to sell product and services to their customers, at lower prices ; cause - if they don't, some vendor in another part of the world will steal away their customers. However with every challenge, there are also opportunities - in some situations, the consequences of globalization can be a benefit for SME's cause the "shrinking world" [ facilitated by the developments in the technological environment] can bring more opportunities to SME's that previously they could not deal with. Therefore we have included in this section on Globalization a story from the National Post about how "Globalization and the Internet have created unprecedented opportunities for small and medium-sized businesses in Canada".
WTGR
National Post, September 23, 2002 by Alexandra Lopez-PachecoThe key thing about this story is that one of the ways small and medium sized companies are dealing with opportunities afforded by globalization is to be bigger companies !!! - and this can be affected through using strategic alliances."Globalization and the Internet have created unprecedented opportunities for small and medium-sized businesses in Canada -- an environment where competition is fierce. To take advantage of these opportunities, while avoiding some of the competitive obstacles often faced by the little fish in the big ocean, many of these businesses are forming partnerships or, more precisely, strategic alliances. "There are various advantages to forming strategic alliances," says Estelle Metayer, president of Montreal-based Competia Inc., a leading competitive intelligence and strategic planning company and publisher of Competia Online. "One is the ability to penetrate markets that would be too costly to develop on your own. For example, if you form an alliance with an American partner who can take on your products and distribute them through their network, you could save a lot of money on the marketing side." Another big advantage comes from joining forces with a business that can provide your enterprise with access to expensive technology you might not be able to afford otherwise. Management-based strategic alliances are also advantageous, Ms. Metayer says. "Often, smaller companies don't have big management teams. So if they need someone who has a certain expertise, but they really can't afford to hire such a person, then they can form an alliance with a company that has that management expertise.""Strategic alliances also benefit the big companies. "With large corporations, one of the problems often is the inability to move quickly, because of bureaucracy and more complicated internal politics. Smaller companies are able to react more quickly to changes in the marketplace. So from both parties' perspectives, it serves their needs," he says. Although the concept of a strategic alliance can sound so appealing to a struggling small business that they might be tempted to run out and get one, experts warn businesses should not rush into partnerships, especially if another company comes courting."
.Globalization, the development of strong, and sustained protests worldwide
vdfv
KEY
POINTSBy mentioning the worldwide growing protests movement against aspects of globalization, we are not endorsing the violence by which the protestors are conveying their message - we are recognizing that it has become an issue and some consequences are effecting international business management. The screen capture below comes from a newspaper article following the G8 Summit in Genoa in July 2001 - which was a particular noteworthy event due to the large organized scale of the anti-globalization forces, and the fact the police countered with lethal force.
WTGRMenon makes reference to Seattle, saying that "... Seattle, where approximately 60,000 protesters from all political, social and environmental persuasions managed to shut down a meeting of the World Trade Organization. Once perceived as staid centres of international bureaucracy, the WTO, as well as the World Bank and International Monetary Fund (IMF), are now targets of anti-globalization activists, who regard these institutions as murky cabals - unaccountable, undemocratic and unwitting facilitators of the corporate agenda."
"This is the anti-globalization movement. Sprawling, disparate, powerful. A political force unto itself that, given its international scope and staggering number of participants, is unprecedented in history. And, it would appear, at a significant crossroads."
Vinay MenonMenon, noting comments from Ronald Deibert, a political science professor at the University of Toronto, says that "....another challenge anti-globalization protesters face: Many members of the public can't grasp the abstract, socio-economic principles upon which the movement is based. So critics start dismissing groups as "militant radicals," "Yuppie freaks," "Hippie wannabes," "flat-Earth advocates," "neo-Marxists," "neo-Luddites" and "anti-capitalist pipe dreamers."Even the term "anti-globalization movement" is misleading. There is no formal structure, no hierarchy. No one leader. No one platform. For some, there isn't even an "anti" - they believe it's not a question of "if we globalize," but how. There are, instead, widely different groups, with widely different agendas. And these groups will only get bigger and more effective".
.
Globalization, social justice issues - commentary by David Crane - Article 1
..
KEY
POINTSWhether or not one agrees with the "social justice issues" being evangelized by some special interest groups - it must be aknowledged that these opinions are increasingly being expressed in many circles and it would be responsible for us to review what these people are trying to communicate.
WTGR
David Crane writing in The Star
2001 Nov 20th
"Globalization can't ignore social justice"Crane's article refers, in part, to the G-20 meetings in Ottawa in mid-November 2001Crane quotes some of the key figures at the event."As Gordon Brown, Britain's chancellor of the exchequer and chairman of the IMF and World Bank weekend meetings, said, "The real issue is not whether you are for or against globalization, because globalization is moving forward. The real issue is whether you are for or against social justice on a global scale, and I believe there is an increasing recognition that we have to work together to make the world and the global economy a better place for the world's poor." According to World Bank president James Wolfensohn, "in the next 30 years, the population of the world will increase from 6 to 8 billion, and virtually all of those 2 billion additional people will live in the developing world. The sooner we are able to grasp the implications of this, the better."Crane further quotes Wolfensohn adding ""Some form of globalization is with us to stay," Wolfensohn said. "But the kind of globalization is not yet certain: it can be either a globalization of development and poverty reduction - such as we have begun to see in recent decades, although this trend still cannot be taken for granted - or a globalization of conflict, poverty, disease, and inequality." Our huge task is to tip the scales toward good globalization."
..
KEY
POINTSSo, one of the reasons we discuss globalization and social justice issues is that it relates to issues of stability or instability which in turn are part of the concerns about risk and threat situations for international business in developing economies..
WTGR
Globalization, social justice issues - commentary by David Crane - Article 2
.Crane's article refers, the OECD - which we discuss in this course + the Canadian Federal Government web site of Canada's National Contact Point for the OECD Guidelines for Multinational Enterprises www.ncp-pcn.gc.ca/menu-en.asp
David Crane writing in The Star
2003 Feb 9th
"Putting a human face on Globalization"
" In the process, they have provided companies operating internationally with a set of standards that lets hem know how they should perform. In the case of the Zambian farmers, they were able to enlist the help of Oxfam Canada, which went to Canada's National Contact Point for the guidelines — each OECD country has to maintain such a contact point where complaints can be raised — and a dialogue was launched. The TSE-listed company, First Quantum Minerals Ltd. of Vancouver, agreed to allow the Zambian farmers to stay on the land, though not permanently."
click to see ZambiaCrane writes "When a group of Zambian farmers faced eviction by a Canadian mining company from lands they were using, they were able to get help in Canada. They were able to remain on the land for some further time as a result of a code of responsible corporate behaviour developed by the Organization for Economic Co-operation and Development in Paris. The guidelines for multinational enterprises were adopted by the OECD in 2000, and since then have become an important way of holding multinational corporations to a set of core standards of behaviour."
www.oecd.org
click to see get to OECD sitefrom the OECD site
"The OECD Guidelines for Multinational Enterprises are non-binding recommendations to enterprises, made by the thirty-seven governments that adhere to them. Their aim is to help Multinational Enterprises (MNEs) operate in harmony with government policies and with societal expectations."Crane explains that "The guidelines, which can be found at http://www.ncp-pcn.gc.ca, cover corporate disclosure, employment and industrial relations, the environment, bribery, consumer protection, science and technology, competition, and taxation. They represent not a bad summary of what should be standard corporate citizenship and ideally would be taught to all MBA students."Crane also adds that "the [OECD] guidelines are of value to the International Monetary Fund and the World Bank in their own dealings with developing countries and international corporations." The point being that companies in contravention of the guidelines cannot be participants in IMF and World Bank projects.
..
KEY
POINTSCrane's article is helpful because it ties in Globalization with social justice issues in a real context, and also shows the links to OECD, IMF and World Bank issues.
WTGR
Globalization, social justice issues - commentary by David Crane - Article 3
.
David Crane writing in The Star
2004 Feb 25th
"Globalization is not the Enemy"Crane's article refers to an article written by John Saul - husband of the Governor General. In this article, Saul suggests Globalization is bad and Crane counters by explaining that Saul's interpretation is flawed.Crane argues "Saul's thesis is that globalization is essentially dead, and deserves to be dead because it has been nothing more than an assault on society and the environment by narrow corporate interests. If that were true, then he would have a case. But of course globalization is much more complicated than Saul's gross oversimplification. For him [Saul], globalization is a world in which global markets leave the nation-state powerless to look after the needs of its citizens.But there are many concepts of globalization. And while there are some who argue and even advocate the end of the nation-state, more serious discussion of globalization is about how we can create a more prosperous global community, with fairer sharing of the wealth, while sustaining the environmental health of the planet, thwarting international crime and terrorism, and doing all of this in a way that takes into account the views and concerns of people everywhere.The fundamental problem is that Saul does not seem to understand what globalization is really about. His quarrel should be with neoconservatism and market fundamentalism, not globalization. It is the neoconservatives, the market fundamentalists that have done damage, and they have done it both at the global level and within the nation-state. The challenge we face is to sustain globalization in a more human form, not to promote its collapse. More than ever we will need stronger global rules and institutions if we are to have a stable world in which population could increase 50 per cent by the middle part of this century. We will also need more international trade and investment if the world's poor are to be lifted out of poverty."
..Globalization and povertywww.worldbank.org/poverty/wdrpoverty/report/index.htm
contact was made with the World Bank head office June 9th, 2005 for the purposes of obtaining permission to use this screen capture. Copies of emails kept in the permissions binderif you are interested, here is the site where you can read the entire text of the
World Bank, World Development Report 2000
.
Globalization, big companies forcing small companies to compete at an unfair level
cccc
How Canadian
Tire's overseas sourcing
led to a Canadian icon
losing businessAs explained by the president of Woods, David G. Earthy,
Woods Canada Limited was founded in 1885 and has been a well known Canadian manufacturer of outdoor clothing and equiment. They were most famous for good quality sleeping bags which they made in Canada (in Toronto) right up til 2005
www.woodscanada.com/_Messages/Msg_02_Dec06.html
a significant part of Woods business was supplying Canadian Tire - in fact the two companies had a supplier - retailer relationship more than 80 years.Earthy explained Woods had to shut down operations following "...a decision by the Company's largest customer, Canadian Tire, to discontinue purchasing domestically manufactured sleeping bags."It has been suggested by others in the industry that Canadian Tire (facing competition from Wal-mart and other big vendors of camping equipment) had to further cut costs and was simply geting cheaper sleeping bags from suppliers in China.xxc
How Walmart's low price policy was accused of shutting down a
North American manufacturing companyAn example of North American workers losing jobs to cheaper labor overseas Like many small and medium sized manufacturers, Schrade was flattered when Wal-mart expressed interest in buying their product - the obvious consequence was that Schrade would be able to manufacture in larger numbers and have a better chance of staying in business in a competitive marketplace.
Schrade is (was) a very old family based American manufacturing company that made, since 1904, a limited range of folding knives and fixed blade knives for decades at their factory in the small town of Ellenville in New York state. Some of their product line can still be seen at
http://www.knivesplus.com/schrade-knives.htmlOver a period of time, Wal-mart became Schrade's largest customer to the point where 80% of Schrade's product was going to the large discount chain.Then, Wal-mart squeezed Schrade by asking them to compete with low priced knives they were beginning to source in China. Schrade could not match the very low price from China so Wal-mart abruptly cut their business with Schrade. Faced with the loss of its largest customer, Schrade crashed in 2004 barely reaching the 100th anniversary of the founding of the company before all its assets were sold at auction as it was forced in bankruptcy.There are a number of "walmart sucks" sites on the web that have this story recounted by walmart insiders, and other similar tales, check http://www.freewebs.com/wallmartsucks/
cxxcd
KEY
POINTSAmerican public opinion is, in the majority, negative towards Globalization. Canadians are even further effected, on an individual basis, by international trade since a higher proportion of Canadians have jobs which are effected by international business competitiveness. WTGR.v
Globalization U.S.
opinion
Wall Street Journal/NBC News poll found that 58% of Americans believed that trade had reduced U.S. jobs and wages, a view that is almost never expressed by commentators or those who shape public opinion. from www.cepr.net/GlobalPrimer.htm1.There are positive and negative aspects of Globalization. Some people who champion the negative aspects are very intense in their efforts to persuade others to see their point of view.
www.endgame.org discusses the downside of competition cause by globalization.ResourcesToward Globalization of the Forest Products Industry
http://www.rff.org/documents/RFF-DP-06-35.pdf
David Bael and Roger A. SedjoMill closures devastate Canada's forest industry
http://www.wsws.org/articles/2006/oct2006/fore-o31.shtml
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Karibu Jukwaa la www.mwanabidii.com
Pata nafasi mpya za Kazi www.kazibongo.blogspot.com
Blogu ya Habari na Picha www.patahabari.blogspot.com
Kujiondoa Tuma Email kwenda
wanabidii+unsubscribe@googlegroups.com Utapata Email ya kudhibitisha ukishatuma
Disclaimer:
Everyone posting to this Forum bears the sole responsibility for any legal consequences of his or her postings, and hence statements and facts must be presented responsibly. Your continued membership signifies that you agree to this disclaimer and pledge to abide by our Rules and Guidelines.
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