Area Development and Policy, the Greater BRICS and a new world order?

ABSTRACT

The establishment of new international economic, political and financial institutions (BRICS, SCO, BRI, EAEU, New Development Bank, Asian Infrastructure Investment Bank) by emerging economies was associated with a wave of interest in the way their relative growth was reshaping the global order. Most comparisons drew on gross domestic product (GDP) data. A succession of recent crises (Western financial crisis, COVID-19 pandemic, Western sanctions on Russia and the associated disruption of supply chains) has, however, suggested that, in terms of real production of energy and minerals, food and manufactures vital for human survival, emerging economies are far stronger than GDP data suggest. This commentary draws on output, trade and balance of payments data to demonstrate that it is indeed the case, though with significant differences between world regions. Moreover, the establishment of new international trade and payments settlement systems may also see a significant geographical redistribution of services, where Western economies remain for the moment dominant.

摘要

地区发展与政策,是更强大的金砖国家还是新的世界秩序? Area Development and Policy. 新兴经济体建立了新的国际经济、政治和金融机构(包括金砖国家、上合组织、“一带一路”倡议、欧亚经济联盟、新开发银行、亚洲基础设施投资银行),这与其相对增长正在重塑全球秩序的利益方式有关。大多数比较都基于GDP数据。然而,最近的一系列危机(包括西方金融危机、新冠肺炎大流行、西方对俄罗斯的制裁以及相关的供应链中断)表明,对人类生存至关重要的能源和矿产、食品和制造业的实际生产而言,新兴经济体比GDP数据所显示地强大的多。本评论利用产出、贸易和国际收支数据来证明,尽管世界各地区之间存在着显著差异,但情况确实如此。此外,新的国际贸易和支付结算系统的建立也可能导致服务业的重大地域再分配,而西方经济体目前仍占主导地位。

RESUMEN

¿Desarrollo de áreas y política, los países BRICS y su entorno y un nuevo orden mundial?, Area Development and Policy. El establecimiento de nuevas instituciones económicas, políticas y financieras de carácter internacional (BRICS, OCS, Nueva Ruta de la Seda, UEEA, Nuevo Banco de Desarrollo, Banco Asiático de Inversiones en Infraestructura) en economías emergentes se asociaba a una oleada de interés porque su crecimiento relativo reestructuraba el orden mundial. La mayoría de comparaciones se basan en datos del PIB. Sin embargo, la sucesión de crisis ocurridas en los últimos años (la crisis financiera occidental, la pandemia de la Covid-19, las sanciones occidentales a Rusia y la consecuente alteración de las cadenas de suministro) indica que, en términos de la producción real de energía y minerales, alimentos y productos manufacturados vitales para la supervivencia humana, las economías emergentes son mucho más fuertes de lo que indican los datos del PIB. Esta reseña se basa en los datos de resultados, producción y balance de pagos que demuestran que, en efecto, este es el caso, si bien con diferencias significativas entre las regiones del mundo. Asimismo, el establecimiento de nuevos sistemas internacionales de comercio y liquidación de pagos podría también llevar a una importante redistribución geográfica de los servicios, donde por el momento las economías occidentales siguen siendo dominantes.

АННОТАЦИЯ

Комментарий: Региональное развитие и политика, Большой БРИКС и новый мировой порядок? Area Development and Policy. Создание новых международных экономических, политических и финансовых институтов (БРИКС, ШОС, BRI, ЕАЭС, Новый Банк Развития, Азиатский Банк Инфраструктурных Инвестиций) развивающимися экономиками связано с волной интереса к тому, как их относительный рост меняет глобальный порядок. Большинство сравнений основывалось на данных по ВВП. Череда недавних кризисов (западный финансовый кризис, пандемия COVID-19, западные санкции в отношении России и связанное с этим нарушение цепочек поставок), однако, показала, что с точки зрения реального производства энергии и минералов, продуктов питания и промышленных товаров, жизненно важных для выживания человека, развивающиеся экономики намного сильнее, чем предполагают данные по ВВП. Этот комментарий основан на данных о производстве, торговле и платежном балансе, чтобы продемонстрировать, что это действительно так, хотя и со значительными различиями между регионами мира. Более того, создание новых систем международной торговли и расчетов по платежам может также привести к значительному географическому перераспределению рынка услуг, где западные экономики на данный момент остаются доминирующими.

KEYWORDS:

• international division of labour
• global geographies of energy
• food and manufactures
• emerging economies
• Collective West
• international trade and payments systems
• hegemony

关键词:

• 国际分工
• 全球能源地理
• 食品和制造商
• 新兴经济体
• 集体西部
• 国际贸易和支付系统
• 霸权主义

Palabras clave:

• división internacional del trabajo
• geografías mundiales de energía, alimentos y productos manufacturados
• economías emergentes
• colectivo de Occidente
• sistemas internacionales de comercio y de pagos
• hegemonía

Ключевые слова:

• Международное разделение труда
• глобальная география энергетики
• продовольствия и обрабатывающей промышленности
• развивающиеся экономики
• Коллективный Запад
• международная торговля и платежные системы
• гегемония

Disclosure statement

No potential conflict of interest was reported by the author(s).

Correction Statement

This article has been corrected with minor changes. These changes do not impact the academic content of the article.

Notes

1. In the words of the Joint Statement of the BRIC countries’ leaders, published at its 2009 meeting in Yekaterinburg: ‘We underline our support for a more democratic and just multi-polar world order based on the rule of international law, equality, mutual respect, cooperation, coordinated action and collective decision-making of all states’.

2. The US is seeking to resist these trends establishing alternative international economic projects, such as the Indo-Pacific Economic Framework for Prosperity (IPEFP) and the G7 Build back Better World, to exclude China from the system of international division of labour in currently the most important IT technologies, to invest at home reducing its reliance on overseas semiconductor supply chains, to establish a coalition of what it calls ‘democracies’ and to expand the North Atlantic Treaty Organization (NATO).

3. In September 2022 Iran was made a full member and Bahrain, Maldives, Kuwait, United Arab Emirates and Myanmar received the status of SCO dialogue partners.

4. Between 2009 and 2020 the stock of sovereign bonds (Euro bonds) of all low and middle-income countries quadrupled to reach US$1737.2 billion climbing as share of government-guaranteed external debt from 30.7% to 50.4%. These bonds are associated with high rates of interest, short repayment cycles, high risk premia and a high degree of volatility as global liquidity increased and international financial capital sought high returns. In 2020, 63.2% of total interest payments were on this debt (compared with 9.8% on bilateral debt). In a context of falling commodity prices, fiscal deficits (where large shares of government revenue are required to service debts), declining international demand, increasing interest rates, falling exchange rates and a need to roll over existing debt these dollar and Euro dominated bonds serve as major causes of debt crises (Tang, 2022).

5. It is important to recall that the global trade system providing developed countries with cheap Russian energy and Chinese manufactured commodities and underpinned a regime of low interest rates that reduced the costs associated with the accumulation of debt and allowed QE.

6. GDP is the sum of value added by economic entities in production to purchased intermediate inputs and consists of the remuneration of labour (compensation of employees) and tangible and intangible capital (gross operating surplus). Attracted by low tax rates, multinational corporations relocate economic activities and the legal ownership of their associated intellectual property (licences, patents, blueprints) so that the sales of affiliates and contract manufacturers that embody it count as part of the GDP of the country concerned. At present the use of intangible assets in production and their increasing values generates significant value added shaping the geography of production. This value added may be repatriated along with depreciation costs to non-resident economic owners. Along with transfer pricing arrangements this situation erodes the relationship between GDP and material well-being and its geography, as high GDP does not mean high employee compensation or high household disposable income. Ireland is a country whose GDP and household income are powerfully affected by these considerations (Organization for Economic Co-operation and Development (OECD), 2016).