The rise of BRIC countries represents a fundamental shift in global economy and the developing world needs a legitimate seat at the table so that shared challenges are better addressed, according to Senator John Kerry.
“It is certainly true that the rise of the so-called ‘BRIC countries’ — Brazil, Russia, India and China — represents a fundamental global economic shift,” Senator John Kerry, chairman of Senate Foreign Relations Committee, said at a Congressional hearing on global economy yesterday.
“Twenty years ago, the President’s most important global financial trip would have been to Europe. Today it is to Beijing.
“Clearly, the developing world needs a legitimate seat at the table so that all of us can better address our shared challenges,” Mr. Kerry said.
“When Mr. Obama announced from Pittsburgh that the G20 would replace the G8, Singaporean Prime Minister Lee Kuan Yew called it an implicit acknowledgement that the post-World War II order had come to an end,” he said.
“We have already begun this process by recognising the G20 as the premier economic coordinating forum, and it has made encouraging progress since.
“A year ago, at the height of the crisis, it convened for the first time at the leader’s level and launched the largest and most coordinated fiscal and monetary stimulus ever undertaken,” Mr. Kerry said.
In his statement, the Senator said the global economy has changed, quickly and profoundly.
“Twenty years ago, worldwide capital flows were less than 20 per cent of what they are today. Ten years ago, much of Asia was in economic disarray,” he said.
“Today, the old order has been shaken up by new realities, emerging powers, and entirely new financial entities.
“Increasingly, the economic policies of any single nation, no matter how powerful, are inadequate to meet the demands of a world where both risk and capital move globally,” Mr. Kerry said.
Noting that the U.S. should be prudent in its response, Mr. Kerry said: “Capital is flowing back into many emerging markets, and the budgets of many donor nations around the world are strained.
“We must ask ourselves: Do these institutions truly need additional funds right now? If so, how much is appropriate? And finally, should new funding be provided temporarily or permanently?”
Any increase in funding, he argued, must be coupled with a reevaluation to ensure that these institutions - IMF and World Bank - are actually fulfilling their mandate to focus on the world’s poor.
Our own funds and development spending are limited, and our focus should not be on the needs of middle income countries, he noted.
“The G20 has singled out climate change and food security as challenges demanding greater attention, and I agree. Banks deciding whether to fund major energy projects in developing countries, particularly middle—income countries, should take care not to lock them into a high-carbon future that will be costly for all of us - and especially devastating for the world’s poorest,” he said