To overcome this, he calls for reforms in global institutions and active sharing of expertise among members
Prime Minister Manmohan Singh on Thursday identified supply-side factors such as energy, food, water and capital that could upset the growth story of BRICS (Brazil, Russia, India, China and South Africa) in the medium term.
“Our responses to these challenges may be different but there is much common interest that binds us all together.” Though the positive BRICS narrative was based on a model of catch-up growth, the supply side factors could impede the entire story, he cautioned, inaugurating the fourth BRICS Summit here.
The Prime Minister advocated reforms in most global institutions and active sharing of expertise among the five nations to overcome the adverse effects of supply side factors in not just the developing world but Europe as well.
Terming the global situation mixed, Dr. Singh said the healthy pace of economic growth by the developing countries and their rising share in global trade and output could face obstacles such as volatility in food and energy prices, challenge of reconciling growth with environmental objectives, the political uncertainty in West Asia and the rise of terrorism and extremism.
Of the four potential supply side constraints, he identified capital as the one that should be tackled urgently. BRICS must address the expansion of the capital base of the World Bank and other multinational development banks to enable them “perform their appropriate role” in financing infrastructure development. Side by side, BRICS was examining a proposal for a South-South development bank that would be funded and managed by the developing countries.
Besides collectively addressing financing requirements, BRICS must band together on the global stage to address deficiencies in global governance, because institutions of global political and economic governance created more than six decades ago had not kept pace with the changing reality of the world.
“While some progress has been made in international financial institutions, there is lack of movement on the political side. BRICS should speak with one voice on important issues such as the reform of the U.N. Security Council.”
Besides cooperating internationally, many of the constraints that could impede the growth story could be partially addressed by learning from each other. India, for instance, could make its ongoing skill upgrade programme more efficient, tackle income disparity issues, ensure green growth and cope with pressures on its urban centres by learning from the experiences of other BRICS countries on how they were dealing with these problems.
Intra-BRICS complementarities could be leveraged by promoting greater business-to-business interaction, liberal business visas, removing barriers to trade and investment flows and avoiding protectionist measures. “Inevitably, we will handle the problem differently, but it may be useful for us to share experiences in this area,” Dr. Singh said.
But continued prosperity of BRICS was also linked to the geopolitical environment. “In our restricted session, we discussed the ongoing turmoil in West Asia and agreed to work together for a peaceful resolution of the crisis. We must avoid political disruptions that create volatilities in global energy markets and affect trade flows,” he concluded.