INTERNATIONAL ECONOMICS
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WEEK7PRESENTATIONCHAPTER17BRAZIL.pptxChapter 17
THE BRIC ECONOMIC
BLOCS IN BRAZIL
Bruna Martins
BU532 International Economics
Southern States University
Dr. Kim, Rachel
Introduction: The economic bloc
A set of countries which engage in international trade together, and are usually related through a free trade agreement or other association
Type of an international agreement often part of regional intergovernmental organizations.
Economic blocs has a number of classifications.
A trade bloc is an intergovernmental agreement where barriers of trade for example tarifs are either eliminated or reduced among participating countries.
Trade bocs can either be stand alone agreements between several states for example COMESA or part of regional organization for example European Union.
Depeding on the economic level, blocs can be classified as monetary unions, economic or common market, custom unions, free trade areas and preferential trading areas.
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Economic blocs in Brazil
Brazil is a member of several trade blocs.
Brazil trade blocs include
ALADI
ELAN
The EU Mercosur
BRICs
G-20
CELAC
UNASUR
OEA
Brazil is a member of World Trade Organization and a participant to a number of preferential trade agreements
The participation of Brazil in the preferential trade agreements stems from the membership of the country in Mercosur and ALADI.
The trading blocs of Brazil are ALADI, ELAN, The EU Mercosur, BRICs, OEA, UNASUR, G-20, CELAC.
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BRICS
"BRICS" is the acronym denoting by James O’Neill, of Goldman Sachs, in 2001 after he wrote a paper, “Building Better Global Economic BRICs”
”BRICs” is the emerging national economies of Brazil, Russia, India and China.
Deemed to be developing countries at a similar stage of newly advanced economic development, on their way to becoming developed countries.
The term BRICs was coined by the Chief Economist of Goldman Sach. O’Neill coined the term BRICs to stand for Brazil, Russia, india and China as the largest emerging market economies. O'Neill expected the four countries that is Brazil, Russia, India and China to grow faster than developed country and play an important role in the economy.
BRICs are large, ranking among the world’s top 10 in population and top 11 in GDP
All have undergone reforms that have transformed them are more internationally integrated and central to the future of the world economy
Each has an abundance of unrealized potential which conceivably have larger impacts on the global economy in the not-too-distant future
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Demographic and Economic Characteristics of BRICs
In 2010 South Africa joined the BRIC group, these countries had approximately 41 percent of the world’s population and 25 percent of world GDP when measured in PPP terms.
It has been postulated that by 2050 these economies would be wealthier than most of the current major economic powers.
BRIC countries are heterogeneous as they differ in their economic, structural and geopolitical importance.
India and China are characterized by controlled capital markets and the largest population of these countries (India and China) resides in rural area.
Russia and Brazil are natural based economies and well known commodity experts.
China’s economy is 2nd only to United States in size; the largest in next decade at current rates of growth
Brazil is the world’s seventh largest economy
India the ninth
Russia the eleventh, measured in U.S. dollars (2010).
Among the four counrties, China is the only country that has experienced the most rapid economic growth in the current decade followed by India.
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FIGURE 17.1 China and India In the World Economy, 1700-1950
India and china produced a significant share of the world’s Gross Domestic Product before the industrial revolution but rapidly fell behind after about 1820. In 1700, China had approximately 0.23% of the world GDP while china was approximately 0.21%. In 195p the GDP of both China and India combined was 0.09%. This was a gradual decrease in the GDP of the Brics.
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Economic Reforms in the BRIC Economies
Reform of the Communist system in China began in 1978 Prior to reform, private enterprise did not exis
All decisions were made from the top-down
India’s reforms began in the 1980’s and gained momentum in the 1990’s in response to a balance of payments crisis
Prior to reform, India was best characterized socialist
Heavy industry was state owned
Private industry was heavily regulated
Structural transformation of China has been the main driver of BRICs from an export driven economy to an economy that relies on domestic consumption. India is the only country among the BRICs that has shown the signs of strong potential for growth. BRICs economy has shown a mixed performance in terms of social development. Russia outperforms the other three BRICs countries in terms o Basic Human Needs.
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Mercosur
Mercosur is a south America’s Fractious trade bloc
Can be challenged or boosted by economic challenge and political shifts.
Was created in 1991 and comprises of Argentina, Brazil, Uruguay and Paraguay.
Mercosur is a political and economic bloc that comprises Brazil, Argentina, Uruguay and Paraguay.
The bloc stated in 1991 when Brazil and Argentina were seeking to improve relations .
The four countries signed the Treaty of Asuncion which is an accord calling for the free movement of goods and services and factors of production between countries.
Venezuela Joined the bloc in 2012 but was suspended in 2016. Today the four countries have a combined GDP of roughly $#.4 trillion making it one of the largest economic bloc in the world.
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Democratic Ideas of Mercosur
To cement the return to democracy of the region because all of its founding members emerged from dictatorships in 1980s.
Signing of the Ushuaia Protocol on Democratic commitment.
The group signed the Ushuaia Protocol on Demographic Commitment stating that, the full force of the democratic institution is essential to the integration of Mercosur States and that a rupture in democratic order would cause member suspension.
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Flagging Integration
Mercosur inked the economic operations with other countries.
The trade jumped from $4 billion to more than $40 billion in a decade
The countries failed to coordinate their trade policies towards third countries
Mercosur inked the economic operations with other countries i.e Bolivia, Chile, Israel and Peru in the first decade.
The trade jumped from $4 billion to more than $40 billion in a decade (1990-2000). In 1999 the bloc began trade negotiations with the European Union (EU).
The countries failed to coordinate their trade policies towards third countries
Devaluation of Brazil’s Currency in 1999 and Argentinas’s financial crisis in 2001 slowed the regional intergration.
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ALADI
ALADI is an acronym of American Integration Association.
Started in 1980
Has 13 members
Is one of the earliest trade blocs in Latin America created in 1980.
ALADI members are
Argentina
Bolivia
Brazil
Chile
Columbia
Cuba
Ecuador
Mexico
Nicaragua
Paraguay
Panama
Peru
Uruguay
Venezuela
ALADI treats countries differently according to their development level and work towards creation of a Latin American Common Market through different mechanisms such as regional Tariff Preference that gives international trade tariff benefits to the members.
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Other non-regional blocs
Brazil participates in a variety of other political and economic blocs that only comprised of Latin American Countries.
Brazil participates in a variety of other political and economic blocs that only comprised of Latin American Countries.
Some of the blocs include Union of South American Nations (USAN), South American Union (UZAN) and UNASUL.
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OEA
OEA stands for Organization of American states.
Was created in 1948 with the aim of promoting regional solidarity.
The bloc has 35 Members.
The aims of OEA are:
Strengthening democracy
Peacekeeping operations
Defense of human rights
Fostering trade
Fight against drug trafficking
Promoting sustainable development.
the members are Antigua and Barbuda, Bahamas, Barbados, Belize, Bolivia, Brazil, Canada, Chile, Colombia, Costarica, Cuba, Dominica, Dominican Republic, Ecuador, Guyana, El Salvador, Grenada, Guatemala, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and he Grenadines, Suriname, Trinidad, USA, Uruguay and Venezuela.
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UNASUR
Stands for Union of South American Nations.
Was created in 2008.
Brings together the Andean Community of Nations and Mercosur.
UNASUR aims at building a space where social, cultural, political and economic articulation can be held.
Among the top priorities of are the elimination of socioeconomic inequalities , social inclusion and citizen participation as well as strengthening democracy.
The countries are Argentina, Brasil, Bolivia, Chile, Equador, Guyana, peru, Suriname, Uruguay, Venezuela.
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CELAC
This is an acronym for Community of Latin American and Caribbean states.
Was officially created in 2011.
Has 33 members from Latin America and the Caribbean.
CELAC was created to deepen Latin America integration and to reduce the influence that USA exercised on Latin American matters in OEA meetings.
The countries are: Antigua and Barbuda,Argentina, Bahamas, Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Cuba, Dominica, Dominican Republic, Ecuador, El Salvador, Grenada, Guatemala, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and he Grenadines, Suriname, Trinidad and Tobago, Uruguay and Venezuela
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G-20
Is an informal international bloc.
The main aim of G-20 is to bring the developing and industrialized countries to discuss the matters like global economic stability.
Was created as an answer to the 1990s financial crisis.
G-20 is headed by European Union.
The countries are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, USA and UK.
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References
Badar, A. I., & de Araújo, E. C. (2015). Emergence of BRICS as an economic bloc. Transnational Corporations Review, 7(1), 110-120. doi:http://dx.doi.org/10.5148/tncr.2015.7107
Canen, A., & Grant, N. (1999). Intercultural perspective and knowledge for equity in the mercosul countries: Limits and potentials in educational policies. Comparative Education, 35(3), 319-330. Retrieved from https://search.proquest.com/docview/195135407?accountid=151051
Gerber, J. (2013) International Economics. Sixth Edition Publisher: Prentice Hall
Saidu, Yauba,M.D., M.Sc, De Angelis, D., PhD, Aiolli, S., PhD., Stefano, G., M.D., & Georges, A. M., PhD. (2013). Product registration in developing countries: A proposal for an integrated regional licensing system among countries in regional economic blocs. Therapeutic Innovation & Regulatory Science, 47(3), 327-335. Retrieved from https://search.proquest.com/docview/1367980119?accountid=151051
