Information Bulletin of the BRICS Trade Union Forum
Monitoring of the economic, social and labor situation in the BRICS countries
Monitoring of the economic, social and labor situation in the BRICS countries
Issue 23.2024
2024.06.03 — 2024.06.09
International relations
Foreign policy in the context of BRICS
Tigran Avetisyan: Small Countries Within BRICS Can Increase Their Participation in the Global Economy (Тигран Аветисян: Малые страны БРИКС могут увеличить свое участие в мировой экономике) / Russia, June, 2024
Keywords: expert_opinion, emerging_market
2024-06-08
2024-06-08
Russia
Source: infobrics.org
Tigran Avetisyan: Small Countries Within BRICS Can Increase Their Participation in the Global EconomySmall states and nations within the framework of BRICS could become more significant players in international economic cooperation.
This was stated to the publication BRICS-Info by an expert on sustainable development Tigran Avetisyan. According to him, the international community is currently going through a period of global transformation of the architecture of security and cooperation. And in this process, the key role belongs to global players – the United States, China, the EU and Russia. In particular, the participation of such structures as BRICS can become an option to increase the subjectivity of small countries and peoples of the world.
«The most urgent issue for small countries is determining their place in the global economy. Even on the example of some small states, we see a tendency of their activation in regional and sub-regional integration associations. However, we are talking about participation in projects in which the largest states play a leading role. Thus, in fact, small states find themselves tied to the interests of big players. And this is not a completely constructive approach from the point of view of the interests of small countries», - Tigran Avetisyan claimed.
According to the expert, it is critically important in this aspect to build a format in which the association of small states could become a single subject of interaction with big players. In addition, small countries are a heterogeneous entity, and the development strategies of each of them are very individual and depend on the availability of resources, the level of socio-economic development of the country, specialization, degree of involvement in international trade, etc. Such features can be taken into account within the framework of international associations such as BRICS - for a whole range of reasons.
«BRICS is an open association for many countries of the world. Within the framework of the association, there is no such informal hierarchy as, for example, in the G-7. In this sense, BRICS is fundamentally different from other formats of international cooperation and interaction - the EU, the UN and the G7. BRICS is built on the basis of equality of all members. This is very important because the equality of all participants is critically important for the subjectivity of small states in making decisions on vital issues», - Tigran Avetisyan claimed.
The thesis of the openness of the BRICS is also important in the context of the possibility of intensifying joint trade between the member countries of the international association. Famously, the rapid and effective elimination of trade barriers is critically important for creating a space for the free movement of goods, services, financial and human resources. Taking into account the equality of all participants in the international association, for the interests of small states it is, in fact, the determining factor of participation in the activities of the structure.
«Within the framework of BRICS, a partnership should be built to promote the economic subjectivity of small states. As for how effective the indicators of the intensification of international trade are, you should refer to statistics. Only in the period of 2017 to 2022, the volume of trade between the five existing BRICS members increased by 56% and amounted to $422 billion. Such a pace and such dynamics correspond to the interests of small countries and peoples», - Tigran Avetisyan concluded.
Source: infobrics.org
Tigran Avetisyan: Small Countries Within BRICS Can Increase Their Participation in the Global EconomySmall states and nations within the framework of BRICS could become more significant players in international economic cooperation.
This was stated to the publication BRICS-Info by an expert on sustainable development Tigran Avetisyan. According to him, the international community is currently going through a period of global transformation of the architecture of security and cooperation. And in this process, the key role belongs to global players – the United States, China, the EU and Russia. In particular, the participation of such structures as BRICS can become an option to increase the subjectivity of small countries and peoples of the world.
«The most urgent issue for small countries is determining their place in the global economy. Even on the example of some small states, we see a tendency of their activation in regional and sub-regional integration associations. However, we are talking about participation in projects in which the largest states play a leading role. Thus, in fact, small states find themselves tied to the interests of big players. And this is not a completely constructive approach from the point of view of the interests of small countries», - Tigran Avetisyan claimed.
According to the expert, it is critically important in this aspect to build a format in which the association of small states could become a single subject of interaction with big players. In addition, small countries are a heterogeneous entity, and the development strategies of each of them are very individual and depend on the availability of resources, the level of socio-economic development of the country, specialization, degree of involvement in international trade, etc. Such features can be taken into account within the framework of international associations such as BRICS - for a whole range of reasons.
«BRICS is an open association for many countries of the world. Within the framework of the association, there is no such informal hierarchy as, for example, in the G-7. In this sense, BRICS is fundamentally different from other formats of international cooperation and interaction - the EU, the UN and the G7. BRICS is built on the basis of equality of all members. This is very important because the equality of all participants is critically important for the subjectivity of small states in making decisions on vital issues», - Tigran Avetisyan claimed.
The thesis of the openness of the BRICS is also important in the context of the possibility of intensifying joint trade between the member countries of the international association. Famously, the rapid and effective elimination of trade barriers is critically important for creating a space for the free movement of goods, services, financial and human resources. Taking into account the equality of all participants in the international association, for the interests of small states it is, in fact, the determining factor of participation in the activities of the structure.
«Within the framework of BRICS, a partnership should be built to promote the economic subjectivity of small states. As for how effective the indicators of the intensification of international trade are, you should refer to statistics. Only in the period of 2017 to 2022, the volume of trade between the five existing BRICS members increased by 56% and amounted to $422 billion. Such a pace and such dynamics correspond to the interests of small countries and peoples», - Tigran Avetisyan concluded.
Europe will eventually have to choose between the US and BRICS
(Европе в конечном итоге придется выбирать между США и БРИКС.) / Russia, June, 2024
(Европе в конечном итоге придется выбирать между США и БРИКС.) / Russia, June, 2024
Keywords: expert_opinion, political_issues
2024-06-06
2024-06-06
Russia
Source: russiancouncil.ru
Just two decades ago, for the first time ever, the great continent of Eurasia was dominated by one power – which, as it happened, wasn’t even Eurasian itself. Indeed, in the continent’s West, NATO, led by the US, was going through a Big Bang expansion, admitting seven new members between the Baltic, the Black Sea, and the Adriatic. US-inspired and -supported color revolutions, first in Georgia and then in Ukraine, were pointing to the next candidates to join the alliance. In the south of Eurasia, the United States, having invaded Iraq, was ruling the region supreme from Baghdad. Having routed the Afghan Taliban, US forces were also entrenched in Kabul, supported as they were by military bases in the neighboring Central Asian nations, Uzbekistan and Kyrgyzstan.
Of Eurasia’s own premier powers, China was happily integrating into the global economy, where the Washington consensus was still law; India was shedding the last vestiges of Fabian socialism, and ready to embrace globalization, which logically prioritized relations with America; and Russia, recovering from the economic, social and technological collapse that resulted from the downfall of the Soviet Union, was still hoping to build strategic partnerships with the US and NATO. American power was at its peak; Washington literally had the world in its hands.
Alas, the US, the only power in world history to achieve the position of a global hegemon while unchallenged by any other major player, has miserably misused its mightily strong hand – and its vaunted soft power. Rather than setting out to organize a genuine multipolar system based on mutual recognition of each nation’s core interests, with itself, at least initially, as a primus inter pares (which would be Franklin D Roosevelt’s method), it proceeded to enhance its exclusive and comprehensive dominance. Washington was pushing Russia ever harder with each step in NATO’s creeping enlargement to the east; it wrecked arms control with Moscow and the nuclear deal with Tehran; and it continued to constantly provoke China over Taiwan – while launching a trade and technology war against Beijing to hamstring its prime economic competitor.
In the meantime, Russia, India and China – the three leading non-Western countries in Eurasia, as well as many of the continent’s other important independent players, continued to rise economically, as well as consolidate their cooperation. In purchasing-power terms, they currently represent, respectively, the fourth-, -third, and the top largest economies in the world. For about a decade, China has been also promoting its massive Belt and Road Initiative; India began exploring and then expanding its world role; and Russia, with four other former Soviet republics, built a Eurasian Economic Union.
Moscow, Beijing, and Delhi, along with Brasilia, became the founding members of BRICS. This year, at the BRICS summit in Russia’s Kazan, the group will for the first time include the leaders of Iran, Egypt, Ethiopia, Saudi Arabia, and the United Arab Emirates. Another major Eurasian institution is the Shanghai Cooperation Organization (SCO), which began as a forum for China, Russia, and the Central Asian states, but now includes also India, Pakistan, and Iran, with Belarus to be admitted soon. A number of other Eurasian countries, from Turkey to Thailand and from the Malpes to Mongolia, have voiced their intention to join either BRICS or SCO.
To counter that trend among the members of what we increasingly call the World Majority, Washington has raised the profile of NATO in the Indo-Pacific; strengthened its Cold War-era bilateral and trilateral alliances in the Western Pacific, and founded a new one, AUKUS, in the South Pacific. The Americans are also seeking to cultivate India, as a pivotal great power, within the Quad group. All these multiple arrangements are completely dominated by the US and are aimed at containing and deterring Washington’s designated primary adversaries: China, Russia, Iran, and North Korea – with one overriding goal of defending America’s hegemonic position.
In contrast to that, neither BRICS nor the SCO is dominated by a single power, or a tandem/triumvirate of nations. BRICS’s recent expansion also suggests that it does not aspire to become a version of the West’s G7, as an elitist steering group, or directoire, for the non-Western world. The SCO includes no less than four nuclear powers, each of which pursues a clearly independent foreign policy, inspired by a distinct mode of strategic thinking and serving a set of well-defined national interests. Indeed, the BRICS/SCO diplomatic culture features sovereign equality, dialogue, respect for national interests and civilizational values, and consensus.
Neither BRICS nor the SCO is overtly anti-American or anti-Western: their main focus is internal rather than external, and they have their work cut out for them. Of course, Russia, China, India, Iran and others insist on doing business without outside interference, not to speak of foreign diktat. They don’t want to dominate Eurasia: they live there, it is their home – unlike the ever-restless “indispensable nation” thousands of miles away. In Ukraine, the main issue for Russia has been national security, not some “resurrection of an empire”; in Taiwan, Beijing has advocated national reunification on a version of the Hong Kong model, again a far cry from an imperial design.
Yet, Americans have a good reason to fear Russia prevailing in Ukraine. This will deal a heavy blow to their leadership position inside the Western bloc, as well as to their residual hegemonic role elsewhere in the world. Washington would not take this lightly, and can be relied upon to do everything in its power to prevent it. Apart from the 16,000 sanctions imposed so far on Russia, and the hundreds of billions of dollars spent on the war in Ukraine, the US and its friends will try to drive wedges among BRICS/SCO nations, and undermine the domestic positions of leaders not to their liking – something they are experienced in and well-equipped for.
One obvious issue the US will exploit is the Sino-Indian relations, which could give them a chance to turn Delhi against Beijing, and to weaken Indo-Russian relations. So far, they haven’t succeeded: much as Indians need foreign investment and advance technology to fully develop their nation’s vast potential, they see their country as a great power, not an instrument in someone’s schemes. With Indian self-image and self-esteem rising fast, it is hard to imagine that Delhi will do Washington’s bidding.
The countries of Eurasia have little to fear from Russia achieving its goals in Ukraine. The emerging mutual security space within the SCO will make the continent – minus Western Europe, for the time being – far more stable, whether in terms of strategic stability in major-power relations, regional security systems (like the one proposed by Russia in the Gulf), or the risks of terrorism. New financial arrangements within the BRICS group will make dollar-free transactions among the members safer; new Eurasia-wide logistics can provide for better connectivity within the world’s largest and most perse continent. Eventually, the countries of Western Europe – or far western Eurasia, if you like – will have to make a choice between staying in the US orbit as America’s power continues to shrink, or reaching out east to a vast and vibrant new world next door.
Source: russiancouncil.ru
Just two decades ago, for the first time ever, the great continent of Eurasia was dominated by one power – which, as it happened, wasn’t even Eurasian itself. Indeed, in the continent’s West, NATO, led by the US, was going through a Big Bang expansion, admitting seven new members between the Baltic, the Black Sea, and the Adriatic. US-inspired and -supported color revolutions, first in Georgia and then in Ukraine, were pointing to the next candidates to join the alliance. In the south of Eurasia, the United States, having invaded Iraq, was ruling the region supreme from Baghdad. Having routed the Afghan Taliban, US forces were also entrenched in Kabul, supported as they were by military bases in the neighboring Central Asian nations, Uzbekistan and Kyrgyzstan.
Of Eurasia’s own premier powers, China was happily integrating into the global economy, where the Washington consensus was still law; India was shedding the last vestiges of Fabian socialism, and ready to embrace globalization, which logically prioritized relations with America; and Russia, recovering from the economic, social and technological collapse that resulted from the downfall of the Soviet Union, was still hoping to build strategic partnerships with the US and NATO. American power was at its peak; Washington literally had the world in its hands.
Alas, the US, the only power in world history to achieve the position of a global hegemon while unchallenged by any other major player, has miserably misused its mightily strong hand – and its vaunted soft power. Rather than setting out to organize a genuine multipolar system based on mutual recognition of each nation’s core interests, with itself, at least initially, as a primus inter pares (which would be Franklin D Roosevelt’s method), it proceeded to enhance its exclusive and comprehensive dominance. Washington was pushing Russia ever harder with each step in NATO’s creeping enlargement to the east; it wrecked arms control with Moscow and the nuclear deal with Tehran; and it continued to constantly provoke China over Taiwan – while launching a trade and technology war against Beijing to hamstring its prime economic competitor.
In the meantime, Russia, India and China – the three leading non-Western countries in Eurasia, as well as many of the continent’s other important independent players, continued to rise economically, as well as consolidate their cooperation. In purchasing-power terms, they currently represent, respectively, the fourth-, -third, and the top largest economies in the world. For about a decade, China has been also promoting its massive Belt and Road Initiative; India began exploring and then expanding its world role; and Russia, with four other former Soviet republics, built a Eurasian Economic Union.
Moscow, Beijing, and Delhi, along with Brasilia, became the founding members of BRICS. This year, at the BRICS summit in Russia’s Kazan, the group will for the first time include the leaders of Iran, Egypt, Ethiopia, Saudi Arabia, and the United Arab Emirates. Another major Eurasian institution is the Shanghai Cooperation Organization (SCO), which began as a forum for China, Russia, and the Central Asian states, but now includes also India, Pakistan, and Iran, with Belarus to be admitted soon. A number of other Eurasian countries, from Turkey to Thailand and from the Malpes to Mongolia, have voiced their intention to join either BRICS or SCO.
To counter that trend among the members of what we increasingly call the World Majority, Washington has raised the profile of NATO in the Indo-Pacific; strengthened its Cold War-era bilateral and trilateral alliances in the Western Pacific, and founded a new one, AUKUS, in the South Pacific. The Americans are also seeking to cultivate India, as a pivotal great power, within the Quad group. All these multiple arrangements are completely dominated by the US and are aimed at containing and deterring Washington’s designated primary adversaries: China, Russia, Iran, and North Korea – with one overriding goal of defending America’s hegemonic position.
In contrast to that, neither BRICS nor the SCO is dominated by a single power, or a tandem/triumvirate of nations. BRICS’s recent expansion also suggests that it does not aspire to become a version of the West’s G7, as an elitist steering group, or directoire, for the non-Western world. The SCO includes no less than four nuclear powers, each of which pursues a clearly independent foreign policy, inspired by a distinct mode of strategic thinking and serving a set of well-defined national interests. Indeed, the BRICS/SCO diplomatic culture features sovereign equality, dialogue, respect for national interests and civilizational values, and consensus.
Neither BRICS nor the SCO is overtly anti-American or anti-Western: their main focus is internal rather than external, and they have their work cut out for them. Of course, Russia, China, India, Iran and others insist on doing business without outside interference, not to speak of foreign diktat. They don’t want to dominate Eurasia: they live there, it is their home – unlike the ever-restless “indispensable nation” thousands of miles away. In Ukraine, the main issue for Russia has been national security, not some “resurrection of an empire”; in Taiwan, Beijing has advocated national reunification on a version of the Hong Kong model, again a far cry from an imperial design.
Yet, Americans have a good reason to fear Russia prevailing in Ukraine. This will deal a heavy blow to their leadership position inside the Western bloc, as well as to their residual hegemonic role elsewhere in the world. Washington would not take this lightly, and can be relied upon to do everything in its power to prevent it. Apart from the 16,000 sanctions imposed so far on Russia, and the hundreds of billions of dollars spent on the war in Ukraine, the US and its friends will try to drive wedges among BRICS/SCO nations, and undermine the domestic positions of leaders not to their liking – something they are experienced in and well-equipped for.
One obvious issue the US will exploit is the Sino-Indian relations, which could give them a chance to turn Delhi against Beijing, and to weaken Indo-Russian relations. So far, they haven’t succeeded: much as Indians need foreign investment and advance technology to fully develop their nation’s vast potential, they see their country as a great power, not an instrument in someone’s schemes. With Indian self-image and self-esteem rising fast, it is hard to imagine that Delhi will do Washington’s bidding.
The countries of Eurasia have little to fear from Russia achieving its goals in Ukraine. The emerging mutual security space within the SCO will make the continent – minus Western Europe, for the time being – far more stable, whether in terms of strategic stability in major-power relations, regional security systems (like the one proposed by Russia in the Gulf), or the risks of terrorism. New financial arrangements within the BRICS group will make dollar-free transactions among the members safer; new Eurasia-wide logistics can provide for better connectivity within the world’s largest and most perse continent. Eventually, the countries of Western Europe – or far western Eurasia, if you like – will have to make a choice between staying in the US orbit as America’s power continues to shrink, or reaching out east to a vast and vibrant new world next door.
Briefing by Foreign Ministry Spokeswoman Maria Zakharova, St Petersburg, June 7, 2024
(Брифинг официального представителя МИД Марии Захаровой, Санкт-Петербург, 7 июня 2024 г.) / Russia, June, 2024
(Брифинг официального представителя МИД Марии Захаровой, Санкт-Петербург, 7 июня 2024 г.) / Russia, June, 2024
Keywords: foreign_ministers_meeting, mofa, sergey_lavrov
2024-06-07
2024-06-07
Russia
Source: mid.ru
Foreign Minister Sergey Lavrov’s participation in BRICS Foreign Ministers’ Meeting
On June 10-11, Foreign Minister Sergey Lavrov will take part in a full meeting of the BRICS Foreign Ministers in Nizhny Novgorod. A separate meeting with several countries of the Global South and East will take place as part of this session.
The upcoming meeting will focus on topical issues on the international agenda, improvement of the global governance system with an emphasis on increasing the role of developing countries, conflict resolution, and interaction at leading multilateral platforms.
In the BRICS format, the ministers will discuss the progress in implementing the BRICS leaders’ agreements, including the development of modalities for establishing the category of partner states, and outline further steps to develop a strategic partnership, including during the Russian chairmanship. Particular focus will be placed on preparations for the upcoming 16th BRICS Summit in Kazan.
Ahead of the ministerial meeting, the traditional meeting of BRICS sherpas/sous-Sherpas will take place.
We will promptly update you on the main meetings. The press centre is working to cover events. A series of Sergey Lavrov’s bilateral meetings is planned, with further updates to follow.
On June 10-12, Foreign Minister of the Republic of Cuba Bruno Rodriguez Parrilla will be on an official visit to Russia.
On June 10-11, he will visit Nizhny Novgorod to take part in the Meeting of the BRICS Ministers of Foreign Affairs/International Relations, including in the BRICS Plus/Outreach format.
On June 12, the foreign ministers of Russia and Cuba will hold talks to discuss a wide range of issues related to further promoting bilateral strategic partnership in political, trade, economic, scientific, technical, cultural, humanitarian, and other spheres.
A discussion is planned on current international and regional issues, key aspects of cooperation at the UN, including within the Group of Friends for the Defence of the UN Charter, and at other multilateral platforms. The focus will be on issues related to Russia and Cuba’s active involvement in the process of forming a new, more equitable polycentric world order.
Moscow and Havana consistently advocate for ensuring compliance with generally recognised norms of international law, such as the principles of respect for national sovereignty and non-interference in the internal affairs of states.
The talks will also address the topic of countering illegitimate unilateral sanctions the United States and other countries of the collective West use as a weapon of blackmail and pressure, as well as for their attempts to destroy states.
Nobody knows better than Havana what sanctions and life under sanctions are. Russia has always supported Cuba, providing assistance and taking every effort to prove and show the monstrosity of the sanctions policy unleashed by the West against countries that it considers necessary to “rebuild” for its own profit, not only through practical assistance, but also through upholding international legal norms.
Source: mid.ru
Foreign Minister Sergey Lavrov’s participation in BRICS Foreign Ministers’ Meeting
On June 10-11, Foreign Minister Sergey Lavrov will take part in a full meeting of the BRICS Foreign Ministers in Nizhny Novgorod. A separate meeting with several countries of the Global South and East will take place as part of this session.
The upcoming meeting will focus on topical issues on the international agenda, improvement of the global governance system with an emphasis on increasing the role of developing countries, conflict resolution, and interaction at leading multilateral platforms.
In the BRICS format, the ministers will discuss the progress in implementing the BRICS leaders’ agreements, including the development of modalities for establishing the category of partner states, and outline further steps to develop a strategic partnership, including during the Russian chairmanship. Particular focus will be placed on preparations for the upcoming 16th BRICS Summit in Kazan.
Ahead of the ministerial meeting, the traditional meeting of BRICS sherpas/sous-Sherpas will take place.
We will promptly update you on the main meetings. The press centre is working to cover events. A series of Sergey Lavrov’s bilateral meetings is planned, with further updates to follow.
Foreign Minister of Cuba Bruno Rodriguez Parrilla’s visit to Russia
On June 10-12, Foreign Minister of the Republic of Cuba Bruno Rodriguez Parrilla will be on an official visit to Russia.
On June 10-11, he will visit Nizhny Novgorod to take part in the Meeting of the BRICS Ministers of Foreign Affairs/International Relations, including in the BRICS Plus/Outreach format.
On June 12, the foreign ministers of Russia and Cuba will hold talks to discuss a wide range of issues related to further promoting bilateral strategic partnership in political, trade, economic, scientific, technical, cultural, humanitarian, and other spheres.
A discussion is planned on current international and regional issues, key aspects of cooperation at the UN, including within the Group of Friends for the Defence of the UN Charter, and at other multilateral platforms. The focus will be on issues related to Russia and Cuba’s active involvement in the process of forming a new, more equitable polycentric world order.
Moscow and Havana consistently advocate for ensuring compliance with generally recognised norms of international law, such as the principles of respect for national sovereignty and non-interference in the internal affairs of states.
The talks will also address the topic of countering illegitimate unilateral sanctions the United States and other countries of the collective West use as a weapon of blackmail and pressure, as well as for their attempts to destroy states.
Nobody knows better than Havana what sanctions and life under sanctions are. Russia has always supported Cuba, providing assistance and taking every effort to prove and show the monstrosity of the sanctions policy unleashed by the West against countries that it considers necessary to “rebuild” for its own profit, not only through practical assistance, but also through upholding international legal norms.
Investment and Finance
Investment and finance in BRICS
From chokepoints to bridges: a different look at the world map (От узких мест до мостов: другой взгляд на карту мира) / Russia, June, 2024
Keywords: expert_opinion, economic_challenges
2024-06-05
2024-06-05
Russia
Source: brics-plus-analytics.org
In the midst of geopolitical storms and supply disruptions the focus of analysts and observers has been on the geographical chokepoints in the world economy such as the Suez canal (nearly 22% of global seaborne container trade passed through the canal in 2023[1]), the Straight of Hormuz (about a fifth of the volume of the world’s total oil consumption passes through the Strait on a daily basis[2]), the Straight of Malacca (ships passing through the Straight carry around 30% of all traded goods globally[3]) and the Panama canal (5% of total global container trade and nearly 46% of the trade from the US East Coast to East Asia[4]). But while looking through geopolitical prisms at these chokepoints may be a reflection of the times we live in, a different perspective at the world map reveals a set of critical locations in the world economy (sometimes positioned in the neighborhood of the chokepoints) that serve as bridges connecting the largest economies in their respective regions. Some of these “bridge hubs” have already transcended their regional realms to take on a connectivity role that is global in scale.
In what follows I refer to “bridge economies” as countries, regions or platforms that perform the role of connecting other national economies, regions or platforms in various segments of the economy ranging from transportation to financial intermediation. In this sense serving as a bridge already presupposes a certain degree of openness of the economic system. And while every economy to a varying degree serves as a bridge, being also a source of positive economic spillover effects, there are some unique cases in the world economy where small open economies deliver a disproportionately large “bridge effect” at the regional and global levels. In this respect, what the world map shows is that in the major regions/regional blocs of the world economy there is an intriguing combination of two of the largest economies being connected by a small economy that serves as a bridge between these two regional heavyweights. These small countries serving as regional bridges also exhibit the features of being neutral and among the most economically advanced in their respective regions:
What are the ways to gauge the impact of such “bridge economies” on the international arena and how could one quantify their economic contribution to connectivity in the global economy? One possible guide is to look at the scale of exports of transport services (in absolute terms and on a per capita basis) and on that count the World Bank data suggests that in 2021 economies such as Switzerland, Singapore and UAE were among the global leaders. In particular, Switzerland was 15th in the world, just behind the Netherlands and Spain, with nearly USD 39 bn in exports. UAE was 19th with nearly USD 31 bn, while Singapore was 23rd with USD 23 bn in transport exports[8]. UAE and Switzerland separately export more transportation services than all of South Asia combined. On a per capita basis the scale of transport exports within the Switzerland/UAE/Singapore triad was among the highest for the top 30 economies in the absolute ranking. In fact, on a per capita basis Switzerland is the leader across the largest exporters of transport services in the world. Switzerland despite being a landlocked country was higher on a per capita basis than the Netherlands as well as Belgium that in turn relied on the ports of Rotterdam and Antwerp for their transportation export proceeds.
While the measure of exports of transport services may be informative for our purposes, it is far from being an exhaustive and precise indicator on how connectivity works across countries. Indeed, the “bridge dividends” may also include the leading role that the country is playing in advancing regional integration as well as such factors as “digital intermediation”/serving as data hubs, financial intermediation/financial services exports, FDI hubs and a key role in FDI inflows into the region. In this respect, a wider measure of the contribution delivered by a “bridge economy” could be roughly approximated by the scale of services exports, including transportation, financial and IT services supplied to other economies.
Using this wider measure of exports of services across countries the “bridge economies” fare even better in absolute and relative terms. In particular, in 2022 Singapore (8) is in the top 10 in absolute terms exporting USD 291.3 bn worth of services – placing third in Asia after China and almost on par with India[9]. Switzerland is 12th with services exports of USD 151.6 bn, just ahead of Luxembourg – another small country locked between two largest Western European economies. Austria ranks 23rd with services exports of more than USD 83 bn; and while Uruguay is 83rd globally in absolute terms, it ranks 5th in South America and well ahead most of its regional peers on a per capita basis. Singapore and UAE are in the top-5 of developing countries’ services exports in absolute terms, Switzerland is in the top 10 in the developed world[10].
The high ranking of Switzerland and Austria in the above rankings is particularly impressive given the country’s landlocked status and the fact that nearly 80% of trade flows in goods are transported via sea shipments[11]. In fact, Switzerland and Austria are the only landlocked economies in the top-25 of the country list of the largest exporters of transportation services. The cases of UAE and Singapore are easier to explain on the basis of the role that the countries’ ports play in the regional and global flows of goods. As regards the port of Singapore, it is the largest transshipment port in the world – at any one time, there are about 1,000 vessels in the Singapore port. The Sea Transport Industry is a key pillar of the Singapore Maritime Cluster, which accounts for nearly 7% of the nation’s Gross Domestic Product (GDP) and employs 170,000 people[12].
In the United Arab Emirates the port of Dubai (Jebel Ali) is the largest cargo port in the Middle East. The country’s transport and storage sector is not only the second-largest component of GDP (after wholesale & retail trade and ahead of financial & insurance activities), it has also featured as the fastest-growing sector since the end of the Covid pandemic and the most significant contributor to Dubai’s GDP growth in recent quarters[13]. The UAE is aiming to further strengthen its position as the key transportation hub in the global economy with plans to build the largest airport in the world[14] and the announcement of a rail and shipping corridor linking the UAE with India and the EU.
The port of Montevideo while currently only 9th in South America (15th in Latin America) in terms of its throughput, is demonstrating the fastest growth rate of nearly 50% in the past 5 years among the top-20 ports of the Latin America region[15]. The port is also receiving sizeable financing from the financial sector to expand its operations[16]. As stated by the World Bank, “Uruguay is geographically well positioned to act as a gateway for regional trade and as a regional transit hub. The Port of Montevideo, Uruguay’s principal port, is centrally located in the River Plate Basin and is a central gateway to the south-eastern and central markets of South America. It further serves as the entrance point to the Paraguay-Paraná river system, which not only connects with the hinterlands of Argentina and Uruguay, but also the landlocked countries’ Paraguay and Bolivia, as well as interior parts of south-western Brazil. Due to its geographic location, the port of Montevideo has been a strategic access point to these markets from the end of the 19th century”[17].
In the end, some of the most successful small countries in their respective regions have not only benefitted from their unique in-between/bridge geography, but also from the creation of regional ecosystems that propagated superior economic policies and cooperation across the region. In this sense, the rise of the small “bridge economies” was the result of a virtuous circle between the in-between geography, the economic policies pursued at the national level and the improvement in the regional conditions associated with regional integration and the creation of advanced integration blocs such as ASEAN and GCC.
The important point, however, is that absolutely any country has the potential to benefit from its connectivity/bridge status – indeed, a “bridge strategy” of connecting regional neighbors, participating in regional integration initiatives, contributing to financial and digital intermediation should be part of the national economic development strategy of any economy. There may also be more scope for such “bridge countries” to join international alliances/networks/platforms – indeed, the small open economies singled out above could benefit from building a platform that provides scope for exchanging best “bridge practices”, connecting their respective regional arrangements, as well as expanding the network effects of the respective national “bridge platforms” to other parts of the globe.
Going forward in addition to the likes of Switzerland, Austria, Singapore, UAE and Uruguay there may be the potential for the emergence of a new generation of “breakout bridge economies” that would benefit from the growing economic interaction among some of the largest economies of the Global South. In particular, greater economic cooperation and trade between the two BRICS giants – India and China – could benefit such in-between economies as Nepal, Bhutan, Myanmar, Bangladesh. Stronger growth impulses and a high intensity of trade between Argentina and Brazil could benefit not only Uruguay, but also the landlocked economies such as Paraguay and Bolivia. Mongolia is seeking to capitalize on the sizeable rise in the trade flows between another BRICS pair – China and Russia[18]. Climate change could also be a factor in the longer term rendering the largest ports vulnerable to rising sea levels, disrupting the operation of key canals and potentially raising the relative importance of in-land bridge economies. With global chokepoints increasingly encountering capacity constraints and disruptions, the world economy needs a rising number of alternatives as well as regions/countries/sub-regions/municipalities serving as “bridge economies” to overcome limitations to growth.
Yaroslav Lissovolik, Founder, BRICS+ Analytics
Image by Kanenori via Pixabay
[1] https://unctad.org/publication/navigating-troubled-waters-impact-global-trade-disruption-shipping-routes-red-sea-black#:~:text=In%202023%2C%20approximately%2022%25%20of,Sea%20and%20the%20Atlantic%20Ocean.
[2] https://www.reuters.com/business/energy/strait-hormuz-worlds-most-important-oil-artery-2023-10-20/
[3] https://www.weforum.org/agenda/2024/02/worlds-busiest-ocean-shipping-routes-trade/#:~:text=Around%2094%2C000%20ships%20pass%20through,of%20all%20traded%20goods%20globally.
[4] https://www.bcg.com/publications/2024/these-four-chokepoints-are-threatening-global-trade
[5] https://www.thenationalnews.com/business/economy/2023/04/12/doubling-re-exports-to-significantly-boost-uae-gdp-minister-says/
[6] https://www.eda.admin.ch/aboutswitzerland/en/home/swiss-stories/bauwerk-im-dienste-europas.html#:~:text=The%20NRLA%20is%20the%20biggest,Base%20Tunnel%20(15.4%20km).
[7]https://pism.pl/publications/Austria_in_Central_Europe_The_Aspiration_to_Become_a_BridgeBuilder
[8]https://wits.worldbank.org/CountryProfile/en/Country/WLD/Year/2021/TradeFlow/Export/Partner/by-country/Product/86-89_Transport
[9] https://data.worldbank.org/indicator/BX.GSR.NFSV.CD?most_recent_value_desc=true
[10] https://hbs.unctad.org/total-trade-in-services/
[11] https://unctad.org/topic/transport-and-trade-logistics/review-of-maritime-transport
[12] https://www.mpa.gov.sg/docs/mpalibraries/media-releases/older/annexes—sea-transport-(bunkering)-idp-factsheet-and-videos.pdf?sfvrsn=5802e7a2_0
[13] https://www.emiratesnbdresearch.com/en/articles/dubai-transport-amp-storage-sector-to-remain-a-key-driver-of-growth
[14] https://www.businesstoday.in/latest/world/story/dubai-starts-work-on-worlds-largest-airport-al-maktoum-international-airport-400-gates-5-runways-planned-427277-2024-04-28
[15] https://www.porteconomics.eu/ranking-2023-of-latin-american-ports-and-container-terminals-the-seesaw-game/
[16] https://www.bbva.com/en/uy/bid-invest-and-bbva-to-finance-the-expansion-of-the-port-of-montevideo/
[17] https://documents1.worldbank.org/curated/zh/411251468317096531/pdf/523030ESW0Gray1e0only1910BOX353800B.pdf
[18] https://www.scmp.com/economy/china-economy/article/3249585/between-china-and-russia-landlocked-mongolia-eyes-summit-enhance-ties-geopolitical-pressures-mount
Source: brics-plus-analytics.org
In the midst of geopolitical storms and supply disruptions the focus of analysts and observers has been on the geographical chokepoints in the world economy such as the Suez canal (nearly 22% of global seaborne container trade passed through the canal in 2023[1]), the Straight of Hormuz (about a fifth of the volume of the world’s total oil consumption passes through the Strait on a daily basis[2]), the Straight of Malacca (ships passing through the Straight carry around 30% of all traded goods globally[3]) and the Panama canal (5% of total global container trade and nearly 46% of the trade from the US East Coast to East Asia[4]). But while looking through geopolitical prisms at these chokepoints may be a reflection of the times we live in, a different perspective at the world map reveals a set of critical locations in the world economy (sometimes positioned in the neighborhood of the chokepoints) that serve as bridges connecting the largest economies in their respective regions. Some of these “bridge hubs” have already transcended their regional realms to take on a connectivity role that is global in scale.
In what follows I refer to “bridge economies” as countries, regions or platforms that perform the role of connecting other national economies, regions or platforms in various segments of the economy ranging from transportation to financial intermediation. In this sense serving as a bridge already presupposes a certain degree of openness of the economic system. And while every economy to a varying degree serves as a bridge, being also a source of positive economic spillover effects, there are some unique cases in the world economy where small open economies deliver a disproportionately large “bridge effect” at the regional and global levels. In this respect, what the world map shows is that in the major regions/regional blocs of the world economy there is an intriguing combination of two of the largest economies being connected by a small economy that serves as a bridge between these two regional heavyweights. These small countries serving as regional bridges also exhibit the features of being neutral and among the most economically advanced in their respective regions:
- UAE: situated between the two largest economies of the MENA region (Saudi Arabia and Iran), the country plays a crucial role in the regional integration initiatives of the Gulf Cooperation Council (GCC), while also bordering one of the key global chokepoints – the Straight of Hormuz. The country is also an important re-export hub that is targeting further increases in receipts coming on the back of the growing intermediation of trade flows[5].
- Switzerland: this small landlocked country in Western Europe connects not two, but three of the region’s largest economies – Germany, France and Italy. Switzerland plays a critical role in the north-south connectivity in Europe – the 2,500 km-long north-south corridor between Rotterdam/Antwerp & Genoa is one of Europe’s main freight routes, with Switzerland supplying its critical New Rail Link through the Alps (NRLA) link[6]. The NRLA comprises the Lötschberg Base Tunnel (34.6 km), the Gotthard Base Tunnel (57.1 km – the longest railway tunnel in the world) and the Ceneri Base Tunnel (15.4 km).
- Singapore: situated between the two ASEAN heavyweights – Malaysia and Indonesia – the city-state borders another chokepoint – the Straight of Malacca. In the ASEAN region there is no land border between its two largest economies – Indonesia and Thailand – but a lot of the trade connectivity between the two largest ASEAN economies is intermediated by the port of Singapore. Singapore shares maritime borders with Indonesia and Malaysia, while Thailand controls the land route in the Malay peninsula via Malaysia to Singapore.
- Uruguay: situated in between the two largest economies of South America – Brazil and Argentina – the country is also a crucial driver of the integration within the MERCOSUR regional integration bloc. It is one of the regional leaders in digital economy, trade openness and financial sector development.
What are the ways to gauge the impact of such “bridge economies” on the international arena and how could one quantify their economic contribution to connectivity in the global economy? One possible guide is to look at the scale of exports of transport services (in absolute terms and on a per capita basis) and on that count the World Bank data suggests that in 2021 economies such as Switzerland, Singapore and UAE were among the global leaders. In particular, Switzerland was 15th in the world, just behind the Netherlands and Spain, with nearly USD 39 bn in exports. UAE was 19th with nearly USD 31 bn, while Singapore was 23rd with USD 23 bn in transport exports[8]. UAE and Switzerland separately export more transportation services than all of South Asia combined. On a per capita basis the scale of transport exports within the Switzerland/UAE/Singapore triad was among the highest for the top 30 economies in the absolute ranking. In fact, on a per capita basis Switzerland is the leader across the largest exporters of transport services in the world. Switzerland despite being a landlocked country was higher on a per capita basis than the Netherlands as well as Belgium that in turn relied on the ports of Rotterdam and Antwerp for their transportation export proceeds.
While the measure of exports of transport services may be informative for our purposes, it is far from being an exhaustive and precise indicator on how connectivity works across countries. Indeed, the “bridge dividends” may also include the leading role that the country is playing in advancing regional integration as well as such factors as “digital intermediation”/serving as data hubs, financial intermediation/financial services exports, FDI hubs and a key role in FDI inflows into the region. In this respect, a wider measure of the contribution delivered by a “bridge economy” could be roughly approximated by the scale of services exports, including transportation, financial and IT services supplied to other economies.
Using this wider measure of exports of services across countries the “bridge economies” fare even better in absolute and relative terms. In particular, in 2022 Singapore (8) is in the top 10 in absolute terms exporting USD 291.3 bn worth of services – placing third in Asia after China and almost on par with India[9]. Switzerland is 12th with services exports of USD 151.6 bn, just ahead of Luxembourg – another small country locked between two largest Western European economies. Austria ranks 23rd with services exports of more than USD 83 bn; and while Uruguay is 83rd globally in absolute terms, it ranks 5th in South America and well ahead most of its regional peers on a per capita basis. Singapore and UAE are in the top-5 of developing countries’ services exports in absolute terms, Switzerland is in the top 10 in the developed world[10].
The high ranking of Switzerland and Austria in the above rankings is particularly impressive given the country’s landlocked status and the fact that nearly 80% of trade flows in goods are transported via sea shipments[11]. In fact, Switzerland and Austria are the only landlocked economies in the top-25 of the country list of the largest exporters of transportation services. The cases of UAE and Singapore are easier to explain on the basis of the role that the countries’ ports play in the regional and global flows of goods. As regards the port of Singapore, it is the largest transshipment port in the world – at any one time, there are about 1,000 vessels in the Singapore port. The Sea Transport Industry is a key pillar of the Singapore Maritime Cluster, which accounts for nearly 7% of the nation’s Gross Domestic Product (GDP) and employs 170,000 people[12].
In the United Arab Emirates the port of Dubai (Jebel Ali) is the largest cargo port in the Middle East. The country’s transport and storage sector is not only the second-largest component of GDP (after wholesale & retail trade and ahead of financial & insurance activities), it has also featured as the fastest-growing sector since the end of the Covid pandemic and the most significant contributor to Dubai’s GDP growth in recent quarters[13]. The UAE is aiming to further strengthen its position as the key transportation hub in the global economy with plans to build the largest airport in the world[14] and the announcement of a rail and shipping corridor linking the UAE with India and the EU.
The port of Montevideo while currently only 9th in South America (15th in Latin America) in terms of its throughput, is demonstrating the fastest growth rate of nearly 50% in the past 5 years among the top-20 ports of the Latin America region[15]. The port is also receiving sizeable financing from the financial sector to expand its operations[16]. As stated by the World Bank, “Uruguay is geographically well positioned to act as a gateway for regional trade and as a regional transit hub. The Port of Montevideo, Uruguay’s principal port, is centrally located in the River Plate Basin and is a central gateway to the south-eastern and central markets of South America. It further serves as the entrance point to the Paraguay-Paraná river system, which not only connects with the hinterlands of Argentina and Uruguay, but also the landlocked countries’ Paraguay and Bolivia, as well as interior parts of south-western Brazil. Due to its geographic location, the port of Montevideo has been a strategic access point to these markets from the end of the 19th century”[17].
In the end, some of the most successful small countries in their respective regions have not only benefitted from their unique in-between/bridge geography, but also from the creation of regional ecosystems that propagated superior economic policies and cooperation across the region. In this sense, the rise of the small “bridge economies” was the result of a virtuous circle between the in-between geography, the economic policies pursued at the national level and the improvement in the regional conditions associated with regional integration and the creation of advanced integration blocs such as ASEAN and GCC.
The important point, however, is that absolutely any country has the potential to benefit from its connectivity/bridge status – indeed, a “bridge strategy” of connecting regional neighbors, participating in regional integration initiatives, contributing to financial and digital intermediation should be part of the national economic development strategy of any economy. There may also be more scope for such “bridge countries” to join international alliances/networks/platforms – indeed, the small open economies singled out above could benefit from building a platform that provides scope for exchanging best “bridge practices”, connecting their respective regional arrangements, as well as expanding the network effects of the respective national “bridge platforms” to other parts of the globe.
Going forward in addition to the likes of Switzerland, Austria, Singapore, UAE and Uruguay there may be the potential for the emergence of a new generation of “breakout bridge economies” that would benefit from the growing economic interaction among some of the largest economies of the Global South. In particular, greater economic cooperation and trade between the two BRICS giants – India and China – could benefit such in-between economies as Nepal, Bhutan, Myanmar, Bangladesh. Stronger growth impulses and a high intensity of trade between Argentina and Brazil could benefit not only Uruguay, but also the landlocked economies such as Paraguay and Bolivia. Mongolia is seeking to capitalize on the sizeable rise in the trade flows between another BRICS pair – China and Russia[18]. Climate change could also be a factor in the longer term rendering the largest ports vulnerable to rising sea levels, disrupting the operation of key canals and potentially raising the relative importance of in-land bridge economies. With global chokepoints increasingly encountering capacity constraints and disruptions, the world economy needs a rising number of alternatives as well as regions/countries/sub-regions/municipalities serving as “bridge economies” to overcome limitations to growth.
Yaroslav Lissovolik, Founder, BRICS+ Analytics
Image by Kanenori via Pixabay
[1] https://unctad.org/publication/navigating-troubled-waters-impact-global-trade-disruption-shipping-routes-red-sea-black#:~:text=In%202023%2C%20approximately%2022%25%20of,Sea%20and%20the%20Atlantic%20Ocean.
[2] https://www.reuters.com/business/energy/strait-hormuz-worlds-most-important-oil-artery-2023-10-20/
[3] https://www.weforum.org/agenda/2024/02/worlds-busiest-ocean-shipping-routes-trade/#:~:text=Around%2094%2C000%20ships%20pass%20through,of%20all%20traded%20goods%20globally.
[4] https://www.bcg.com/publications/2024/these-four-chokepoints-are-threatening-global-trade
[5] https://www.thenationalnews.com/business/economy/2023/04/12/doubling-re-exports-to-significantly-boost-uae-gdp-minister-says/
[6] https://www.eda.admin.ch/aboutswitzerland/en/home/swiss-stories/bauwerk-im-dienste-europas.html#:~:text=The%20NRLA%20is%20the%20biggest,Base%20Tunnel%20(15.4%20km).
[7]https://pism.pl/publications/Austria_in_Central_Europe_The_Aspiration_to_Become_a_BridgeBuilder
[8]https://wits.worldbank.org/CountryProfile/en/Country/WLD/Year/2021/TradeFlow/Export/Partner/by-country/Product/86-89_Transport
[9] https://data.worldbank.org/indicator/BX.GSR.NFSV.CD?most_recent_value_desc=true
[10] https://hbs.unctad.org/total-trade-in-services/
[11] https://unctad.org/topic/transport-and-trade-logistics/review-of-maritime-transport
[12] https://www.mpa.gov.sg/docs/mpalibraries/media-releases/older/annexes—sea-transport-(bunkering)-idp-factsheet-and-videos.pdf?sfvrsn=5802e7a2_0
[13] https://www.emiratesnbdresearch.com/en/articles/dubai-transport-amp-storage-sector-to-remain-a-key-driver-of-growth
[14] https://www.businesstoday.in/latest/world/story/dubai-starts-work-on-worlds-largest-airport-al-maktoum-international-airport-400-gates-5-runways-planned-427277-2024-04-28
[15] https://www.porteconomics.eu/ranking-2023-of-latin-american-ports-and-container-terminals-the-seesaw-game/
[16] https://www.bbva.com/en/uy/bid-invest-and-bbva-to-finance-the-expansion-of-the-port-of-montevideo/
[17] https://documents1.worldbank.org/curated/zh/411251468317096531/pdf/523030ESW0Gray1e0only1910BOX353800B.pdf
[18] https://www.scmp.com/economy/china-economy/article/3249585/between-china-and-russia-landlocked-mongolia-eyes-summit-enhance-ties-geopolitical-pressures-mount
India’s post-electoral priorities (Приоритеты Индии после выборов) / Russia, June, 2024
Keywords: economic_challenges, expert_opinion
2024-06-07
2024-06-07
Russia
Source: brics-plus-analytics.org
India’s election results this week have surprised most observers across the globe as the governing BJP party sustained substantial losses to its representation in the country’s Lok Sabha legislature. While together with allies from the National Democratic Alliance (NDA) Narendra Modi’s BJP party managed to secure a majority in the lower house of India’s parliament (293 seats out of a total of 543), the opposition INDIA alliance secured 232 seats, with the Indian National Congress (INC) garnering 99 seats compared to 52 in the 2019 elections. The election results have already been taken by some commentators as a sign that the high growth rates demonstrated by India’s economy are not translating sufficiently into higher employment rates and a rise in living standards. The post-electoral challenge for Modi’s government will be to find ways for the economy to tackle unemployment and spread the growth dividends across a wider strata of the country’s population.
Going into the electoral period this year India’s growth performance appeared to be on track to solidify the position of the ruling BJP party. In January-March 2024 India’s GDP growth reached 7.8% exceeding expectations of 6.7% growth (Reuters poll), with the official growth projection for the fiscal year 2023-24 being revised upwards to 8.2% from the earlier estimate of 7.6%[1]. Given the positive growth dynamics, S&P Global raised its sovereign rating outlook for India to “positive” from “stable”, adding that “regardless of the outcome of the national elections… [the agency] expected broad continuity in India’s economic reforms and fiscal policies”[2].
The problem is that this high growth in India is not resulting in sufficient increases in employment – in fact according to CMIE’s Consumer Pyramids Household Survey, unemployment in India rose to 8.1% in April 2024 from 7.4% in March 2024 (official data exhibits lower unemployment figures of less than 6% in the 2023 fiscal year). The increase in the unemployment rate was registered in urban and rural parts of India, with rural unemployment staging an increase to 7.8% in April from 7.1% in March[3]. A Reuters poll undertaken in April 16-23 of this year showed that the majority of economists – 15 of 26 – singled out the need to reduce unemployment as the most significant challenge for the government after the elections[4].
The unemployment problem is particularly acute in the youth segment of the population – the data from the International Labor organization (ILO) shows that in 2023 India had the highest youth unemployment rate (18%) across BRICS-5 economies apart from South Africa where youth unemployment exceeded 50%[5]. Furthermore, according to the ILO India’s unemployment is particularly high for young cohorts with higher education compared to those without any education/schooling – the unemployment rate for young cohorts with secondary of higher education was 18.4%, more than 5 times higher than the 3.4% unemployment rate for those who cannot read and write[6]. Another important dimension in India’s unemployment problem is the low female labour force participation rate (FLFPR) – the lowest among the BRICS-5 economies. While in other BRICS-5 economies female labour force participation is above 50%, data from the Periodic Labour Force Survey in India showed that in 2017 the FLFPR indicator reached a low of 23%, recovering however, to 37% in the 2022-23 period[7].
Possible remedies to high unemployment may include active labour market policies as well as greater integration of the business sector/enterprises with the educational system with more focus placed on early job matching in universities for students and improved connectivity with corporates in students’ job search. Prioritizing the development of the country’s services sector rather than overemphasizing the centrality of manufacturing (a sector that is becoming increasingly competitive in Asia[8]) may also provide more scope for employment growth. Indeed, trade in services grew by 9% in 2023 – well above the rates of growth in merchandize global trade[9]. At the same time, India’s exports of services are well below potential, notably lower than in China and just ahead of Singapore[10]. More of the job creation in the global economy is likely to take place in services given the rising importance of human capital development (education, healthcare), green transition and AI – all areas that are crucial for the future of India’s economy. Reinforcing linkages with India’s diaspora (the largest in the world) and developing the potential for overseas employment/education possibilities for India’s young cohorts may also merit analysis. A further track to addressing India’s structural imbalances, including those in the labour market, is a more open trade policy that would allow for greater market access for India’s exports, most notably in the fast-growing regions of the Global South.
In terms of foreign trade policy India could explore a number of options. The most obvious and perhaps the most pressing one is to develop the regional integration platforms in South Asia – whether via the South Asian Association for Regional Cooperation (SAARC) or the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). A greater intensity of trade flows within India’s regional perimeter would be conducive to increasing FDI inflows into the country’s economy from the relatively subdued levels that prevailed in the past several years. Another possibility is for India to revisit the possibility of participating in the Regional Comprehensive Economic Partnership (RCEP) – one of the largest blocs in the global economy that brings together some of the fastest growing economies in the world. Further options have to do with expanding and/or multilateralizing some of the trade accords (Free Trade Areas (FTAs) and Preferential Trade Accords (PTAs)) concluded by India with individual economies such as Chile and regional blocs such as ASEAN and MERCOSUR.
One of the possible platforms for multilateralizing/combining the numerous existing trade accords as well as ongoing trade liberalization discussions could be a BRICS+ platform for regional integration arrangements of the Global South economies. India’s ongoing trade talks with such blocs from the developing world as the Eurasian Economic Union (EAEU), BIMSTEC, South African Customs Union (SACU) as well as IBSA (India, Brazil, South Africa) could be brought together under the umbrella of BRICS+ “integration of integrations” with palpable effects for boosting South-South trade cooperation and opening markets in the Global South to India’s exports.
In devising its foreign trade policy India could also explore the possible conditions and clauses in trade agreements that would expand the employment possibilities for its labour force. Some of these provisions may be seen in the recent FTA concluded by India with EFTA countries. In particular, “the EFTA countries have agreed to various promotional activities to encourage EFTA investment in India… [with] a target of USD 100 billion in investment and one million jobs over the next 15 years”[11]. Similar conditions/clauses could be utilized to raise the employment-creation effects arising from other trade agreements that are in the process of negotiations. In order to boost employment creation in the services and IT sectors India could explore the benefits of participating in Digital Economic Agreements (DEAs) that are actively advanced by Singapore and its ASEAN partners. Finally, India would also greatly benefit from a revitalized and more effective World Trade Organization (WTO), in which it could play a leading role in representing the interests of the Global South and in participating in the new rounds of multilateral trade liberalization.
Overall, the post-electoral setting is challenging for India, but the good news is that there is no lack of options and opportunities to build on some of the advances in growth attained in recent periods. India’s success in attaining higher growth rates and in reducing poverty levels would be transformational for the Global South and the global economy. In case India were to emulate China’s progress in poverty reduction the world economy would receive a tremendous boost to growth and consumption through a widening “middle class” in the developing world. A more open Indian economy could become a major driver of reversing the current trend towards protectionism and economic fragmentation. The world economy in such a scenario would become increasingly dependent on further growth and openness in India and China – the two BRICS giants could then potentially develop a more cooperative relationship that is increasingly rooted in mutual economic interests. Granted, this is all a “blue sky” scenario, a scenario that is not altogether unrealistic, however, but very much dependent on India’s post-electoral course of action.
Yaroslav Lissovolik, Founder, BRICS+ Analytics
Image by SaraCanizal via Pixabay
[1] https://www.reuters.com/world/india/indias-march-qtr-gdp-growth-78-yy-2024-05-31/
[2] https://www.reuters.com/world/india/sp-revises-outlook-indias-sovereign-rating-positive-stable-2024-05-29/
[3]https://www.cmie.com/kommon/bin/sr.php?kall=warticle&dt=20240502160006&msec=476#:~:text=Unemployment%20rate%20in%20India%20rose,7.1%20per%20cent%20in%20March.
[4] https://www.reuters.com/world/india/unemployment-biggest-worry-india-worlds-fastest-growing-economy-2024-04-24/
[5] https://www.dw.com/en/india-high-youth-unemployment-poses-massive-challenge/a-69018952#:~:text=Youth%20unemployment%20rate%20a%20big%20worry&text=youth%20unemployment%20rate.-,Nearly%2016%25%20of%20urban%20youth%20in%20the%2015%2D29%20age,at%20as%20high%20as%2045.4%25.
[6] https://www.dw.com/en/india-high-youth-unemployment-poses-massive-challenge/a-69018952#:~:text=Youth%20unemployment%20rate%20a%20big%20worry&text=youth%20unemployment%20rate.-,Nearly%2016%25%20of%20urban%20youth%20in%20the%2015%2D29%20age,at%20as%20high%20as%2045.4%25
[7] https://www.orfonline.org/research/the-female-workforce-in-india-emerging-trends-and-insights#:~:text=Data%20from%20the%20Periodic%20Labour,survey%20(2021%2D22).
[8] https://www.chathamhouse.org/2024/06/achieve-developed-india-modis-new-government-will-prioritize-manufacturing-sector-better-or
[9] https://www.wto.org/english/news_e/news24_e/tfore_10apr24_e.htm
[10] https://unctad.org/system/files/official-document/statinf2023d3_en.pdf
[11] https://www.ey.com/en_ch/tax-alerts/india-efta-economic-partnership-agreement#:~:text=The%20EFTA%20countries%20committing%20to,enter%20into%20force%20by%202025.
Source: brics-plus-analytics.org
India’s election results this week have surprised most observers across the globe as the governing BJP party sustained substantial losses to its representation in the country’s Lok Sabha legislature. While together with allies from the National Democratic Alliance (NDA) Narendra Modi’s BJP party managed to secure a majority in the lower house of India’s parliament (293 seats out of a total of 543), the opposition INDIA alliance secured 232 seats, with the Indian National Congress (INC) garnering 99 seats compared to 52 in the 2019 elections. The election results have already been taken by some commentators as a sign that the high growth rates demonstrated by India’s economy are not translating sufficiently into higher employment rates and a rise in living standards. The post-electoral challenge for Modi’s government will be to find ways for the economy to tackle unemployment and spread the growth dividends across a wider strata of the country’s population.
Going into the electoral period this year India’s growth performance appeared to be on track to solidify the position of the ruling BJP party. In January-March 2024 India’s GDP growth reached 7.8% exceeding expectations of 6.7% growth (Reuters poll), with the official growth projection for the fiscal year 2023-24 being revised upwards to 8.2% from the earlier estimate of 7.6%[1]. Given the positive growth dynamics, S&P Global raised its sovereign rating outlook for India to “positive” from “stable”, adding that “regardless of the outcome of the national elections… [the agency] expected broad continuity in India’s economic reforms and fiscal policies”[2].
The problem is that this high growth in India is not resulting in sufficient increases in employment – in fact according to CMIE’s Consumer Pyramids Household Survey, unemployment in India rose to 8.1% in April 2024 from 7.4% in March 2024 (official data exhibits lower unemployment figures of less than 6% in the 2023 fiscal year). The increase in the unemployment rate was registered in urban and rural parts of India, with rural unemployment staging an increase to 7.8% in April from 7.1% in March[3]. A Reuters poll undertaken in April 16-23 of this year showed that the majority of economists – 15 of 26 – singled out the need to reduce unemployment as the most significant challenge for the government after the elections[4].
The unemployment problem is particularly acute in the youth segment of the population – the data from the International Labor organization (ILO) shows that in 2023 India had the highest youth unemployment rate (18%) across BRICS-5 economies apart from South Africa where youth unemployment exceeded 50%[5]. Furthermore, according to the ILO India’s unemployment is particularly high for young cohorts with higher education compared to those without any education/schooling – the unemployment rate for young cohorts with secondary of higher education was 18.4%, more than 5 times higher than the 3.4% unemployment rate for those who cannot read and write[6]. Another important dimension in India’s unemployment problem is the low female labour force participation rate (FLFPR) – the lowest among the BRICS-5 economies. While in other BRICS-5 economies female labour force participation is above 50%, data from the Periodic Labour Force Survey in India showed that in 2017 the FLFPR indicator reached a low of 23%, recovering however, to 37% in the 2022-23 period[7].
Possible remedies to high unemployment may include active labour market policies as well as greater integration of the business sector/enterprises with the educational system with more focus placed on early job matching in universities for students and improved connectivity with corporates in students’ job search. Prioritizing the development of the country’s services sector rather than overemphasizing the centrality of manufacturing (a sector that is becoming increasingly competitive in Asia[8]) may also provide more scope for employment growth. Indeed, trade in services grew by 9% in 2023 – well above the rates of growth in merchandize global trade[9]. At the same time, India’s exports of services are well below potential, notably lower than in China and just ahead of Singapore[10]. More of the job creation in the global economy is likely to take place in services given the rising importance of human capital development (education, healthcare), green transition and AI – all areas that are crucial for the future of India’s economy. Reinforcing linkages with India’s diaspora (the largest in the world) and developing the potential for overseas employment/education possibilities for India’s young cohorts may also merit analysis. A further track to addressing India’s structural imbalances, including those in the labour market, is a more open trade policy that would allow for greater market access for India’s exports, most notably in the fast-growing regions of the Global South.
In terms of foreign trade policy India could explore a number of options. The most obvious and perhaps the most pressing one is to develop the regional integration platforms in South Asia – whether via the South Asian Association for Regional Cooperation (SAARC) or the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). A greater intensity of trade flows within India’s regional perimeter would be conducive to increasing FDI inflows into the country’s economy from the relatively subdued levels that prevailed in the past several years. Another possibility is for India to revisit the possibility of participating in the Regional Comprehensive Economic Partnership (RCEP) – one of the largest blocs in the global economy that brings together some of the fastest growing economies in the world. Further options have to do with expanding and/or multilateralizing some of the trade accords (Free Trade Areas (FTAs) and Preferential Trade Accords (PTAs)) concluded by India with individual economies such as Chile and regional blocs such as ASEAN and MERCOSUR.
One of the possible platforms for multilateralizing/combining the numerous existing trade accords as well as ongoing trade liberalization discussions could be a BRICS+ platform for regional integration arrangements of the Global South economies. India’s ongoing trade talks with such blocs from the developing world as the Eurasian Economic Union (EAEU), BIMSTEC, South African Customs Union (SACU) as well as IBSA (India, Brazil, South Africa) could be brought together under the umbrella of BRICS+ “integration of integrations” with palpable effects for boosting South-South trade cooperation and opening markets in the Global South to India’s exports.
In devising its foreign trade policy India could also explore the possible conditions and clauses in trade agreements that would expand the employment possibilities for its labour force. Some of these provisions may be seen in the recent FTA concluded by India with EFTA countries. In particular, “the EFTA countries have agreed to various promotional activities to encourage EFTA investment in India… [with] a target of USD 100 billion in investment and one million jobs over the next 15 years”[11]. Similar conditions/clauses could be utilized to raise the employment-creation effects arising from other trade agreements that are in the process of negotiations. In order to boost employment creation in the services and IT sectors India could explore the benefits of participating in Digital Economic Agreements (DEAs) that are actively advanced by Singapore and its ASEAN partners. Finally, India would also greatly benefit from a revitalized and more effective World Trade Organization (WTO), in which it could play a leading role in representing the interests of the Global South and in participating in the new rounds of multilateral trade liberalization.
Overall, the post-electoral setting is challenging for India, but the good news is that there is no lack of options and opportunities to build on some of the advances in growth attained in recent periods. India’s success in attaining higher growth rates and in reducing poverty levels would be transformational for the Global South and the global economy. In case India were to emulate China’s progress in poverty reduction the world economy would receive a tremendous boost to growth and consumption through a widening “middle class” in the developing world. A more open Indian economy could become a major driver of reversing the current trend towards protectionism and economic fragmentation. The world economy in such a scenario would become increasingly dependent on further growth and openness in India and China – the two BRICS giants could then potentially develop a more cooperative relationship that is increasingly rooted in mutual economic interests. Granted, this is all a “blue sky” scenario, a scenario that is not altogether unrealistic, however, but very much dependent on India’s post-electoral course of action.
Yaroslav Lissovolik, Founder, BRICS+ Analytics
Image by SaraCanizal via Pixabay
[1] https://www.reuters.com/world/india/indias-march-qtr-gdp-growth-78-yy-2024-05-31/
[2] https://www.reuters.com/world/india/sp-revises-outlook-indias-sovereign-rating-positive-stable-2024-05-29/
[3]https://www.cmie.com/kommon/bin/sr.php?kall=warticle&dt=20240502160006&msec=476#:~:text=Unemployment%20rate%20in%20India%20rose,7.1%20per%20cent%20in%20March.
[4] https://www.reuters.com/world/india/unemployment-biggest-worry-india-worlds-fastest-growing-economy-2024-04-24/
[5] https://www.dw.com/en/india-high-youth-unemployment-poses-massive-challenge/a-69018952#:~:text=Youth%20unemployment%20rate%20a%20big%20worry&text=youth%20unemployment%20rate.-,Nearly%2016%25%20of%20urban%20youth%20in%20the%2015%2D29%20age,at%20as%20high%20as%2045.4%25.
[6] https://www.dw.com/en/india-high-youth-unemployment-poses-massive-challenge/a-69018952#:~:text=Youth%20unemployment%20rate%20a%20big%20worry&text=youth%20unemployment%20rate.-,Nearly%2016%25%20of%20urban%20youth%20in%20the%2015%2D29%20age,at%20as%20high%20as%2045.4%25
[7] https://www.orfonline.org/research/the-female-workforce-in-india-emerging-trends-and-insights#:~:text=Data%20from%20the%20Periodic%20Labour,survey%20(2021%2D22).
[8] https://www.chathamhouse.org/2024/06/achieve-developed-india-modis-new-government-will-prioritize-manufacturing-sector-better-or
[9] https://www.wto.org/english/news_e/news24_e/tfore_10apr24_e.htm
[10] https://unctad.org/system/files/official-document/statinf2023d3_en.pdf
[11] https://www.ey.com/en_ch/tax-alerts/india-efta-economic-partnership-agreement#:~:text=The%20EFTA%20countries%20committing%20to,enter%20into%20force%20by%202025.
Archive
