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BRICS: Boosting Economic Cooperation

June 02, 1:06 UTC+3
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KEY CONCLUSIONS:

  • Cooperation of the BRICS economies is evolving rapidly

The BRICS countries have set up relevant committees and organisations to coordinate their activities and identify promising projects, according to Bulelani Magwanishe, Deputy Minister of Trade and Industry of South Africa.

During its first year of operations, the BRICS New Development Bank financed projects for over USD 1.5 billion with a focus on green projects, according to Kundapur Vaman Kamath, President, New Development Bank (NDB).

Countries are cooperating at the level of particular industries or corporations: e. g. a number of transportation projects are underway or in the pipeline. Russian Railways are currently elaborating a project involving the conclusion of a concession agreement with respect to Brazil’s railways, said in his presentation Alexander Misharin, First Vice President, Russian Railways.

CHALLENGES:

  • Lack of transportation infrastructure and related logistics issues

“I realized it clearly during our trip to India. We saw there was clear demand for our products, however it was too difficult to organise the delivery of products, there were too many logistical issues making all the deliveries inefficient,” said Boris Dubrovsky, Governor of Chelyabinsk Region.

“Russia, China and India are all here in Eurasia... We ought to connect them with a railway taking into account that they do not share a connection now,” said Alexander Misharin, First Vice President, Russian Railways.

“Above all else, the logistical issues are impeding the progress,” said Azat Fazlyev, President, Chamber of Commerce and Industry of the Republic of Bashkortostan.

  • Weakness of the BRICS currencies

 “The local currencies historically were seen as not feasible, and you had to use the hard currency for lending.
 But clearly the trends seen in the exchange rates in the last year or two indicate the risk of relying on hard currencies, and not on local currencies. And again, there is no consensus amongst the BRICS countries that we should increase the use of local currencies, but we must work on that,” said Kundapur Vaman Kamath, President, New Development Bank (NDB).

  • Uneven economic development within the BRICS economies

“There is significant inequality in income distribution...for example, in South Africa and Brazil. The inequality may exist at the regional level, i. e. in regional income distribution. Russia and South Africa have one of the highest levels of inter-regional inequality, while India is a country with one of the highest levels of inequality in terms of the distribution of national wealth and assets,” said Yaroslav Lissovolik, Chief Economist, Member of the Management Board, Eurasian Development Bank (EDB).

SOLUTIONS:

  • Tighter cooperation at the regional, departmental and sectoral levels.

“We think that the idea we promote at the SCO, governor club, region club, where economic and cultural relations can be discussed, <...> I suggest that our experience should be studied and used by the BRICS,” said Boris Dubrovsky.

“The role of development banks, development institutions and their joint efforts, joint steps, including co-financing of projects is really important <...> The future of financing of such projects [HPP in Karelia] lies in the interaction between national and global development institutions,” said Yaroslav Lissovolik.

“We could think of setting up a working group on an international high-tech investment fund here at this summit,” said Vadim Kulikov, First Deputy CEO, Agency for Technological Development.

  • Large-scale and joint projects on transport infrastructure development.

 “If you want to grow, if you want to prosper, everybody understands that we should build roads,” said Xiao Sun, Deputy Director General, Cooperation Department, China Council for the Promotion of International Trade.

“We have engaged in active cooperation with our Indian partners. Today, an agreement will be signed on the upgrade of some sections and lines of Indian railways to carry trains at a speed of 200 km/h,” said Alexander Misharin.

“Together with our Chinese partners, we are running a project to develop high-speed traffic that has grown not only into the Silk Road and Moscow–Beijing concepts, but also gradually into a project called Eurasia, which involves the integration of the largest high-speed systems of Europe and Asia,” said Alexander Misharin.

  • Use of local currencies to finance investment projects of the New Development Bank within BRICS.

 “Investments in local currencies can help develop markets <...> We should increase the use of local currencies,” said Kundapur Vaman Kamath, President, New Development Bank (NDB).

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