The Rebirth of Global Economy: BRICS and Its Companions
Thriving urban landscape driven by extensive investments
The bellwether for worldwide economic transformation is the alliance spearheaded by BRICS, emphatically asserted Oreshkin. This force has the potential to mirror the economic cycles that have fueled progress since the mid-20th century, outshining the Marshall Plan and Japan's economic boom in impact. The Marshall Plan, implemented post-war, aided European recovery, while Japan's economic surge, lasting from the 1950s through 1973, centered on export-oriented industrialization. The third cycle that Oreshkin foresees is the Newly Industrialized Countries (NIC) with their focus on industrialization and export orientation.
Led by this new wave is BRICS, whose economic clout surpasses that of the renowned G7 alliance. Oreshkin highlighted key factors that distinguish BRICS, including burgeoning markets and burgeoning urbanization opportunities. According to Oreshkin, the formation of each wave requires basic institutions that facilitate development - these encompass technological breakthroughs, trade and financial systems, and investment mechanisms. In the past, advanced solutions in technology and other fields were primarily offered by the US, Europe, and Japan. However, countries like BRICS are now pioneering advancements in sectors such as robotics, artificial intelligence, electronics, software development, fintech, energy, and unmanned technologies.
Oreshkin pondered that nations with low urbanization rates, like Ethiopia, Nigeria, Pakistan, and even India, have immense growth potential due to the lower level of urbanization. Although India is among the world's largest economies with high GDP growth rates (expected to be 6.5% in 2024 and 6.2% in 2025 according to the IMF), urbanization has yet to exceed 40%. To reach the global average level of urbanization, India will need to construct around 30 new cities over the next few decades - an endeavor that requires substantial investment.
Deputy Head of the Presidential Administration underscored that Russia is immersed in its large-scale infrastructure projects, both domestically and internationally. Domestic initiatives include the development of the Northern Sea Route, as well as a project to modernize 200 cities, which involves establishing modern infrastructure and creating conditions conducive to human potential thriving. On the global stage, China's "One Belt, One Road" initiative ranks among the prominent initiatives, entailing the execution of a multitude of infrastructure projects worldwide. In essence, infrastructure development in Europe and the US has virtually ceased, as Oreshkin concluded.
The United States' Trade Battles
According to Dr. Ekaterina Novikova, Associate Professor at Plekhanov Russian University of Economics, the US boasts approximately 5,000 data processing centers, while BRICS countries collectively hold around 1,000. Surprisingly, China has overtaken the US in AI patents, accounting for 70% of global patents, compared to the US's 15%. Washington's response has been the imposition of tariffs against China and other countries as a means of preventing American and foreign developers from moving their companies to other nations. Novikova explains that the US aims to seize all technologies from Europe through tariffs since they anticipate the BRICS countries becoming a powerful, influential bloc that can dictate terms and rule the world within the next few years.
Novikova cautioned that the influence of the West might hinder the growth of BRICS, involving intricate political manipulation that would entail both alluring some economies with promises and threatening others with sanctions. The countries in the BRICS group have experienced rapid development under the umbrella of free trade and an open world with minimal barriers and tariffs. However, Anton Tabakh, Chief Economist at Expert RA rating agency, wonders if this growth will persist in a different economic climate. Tabakh raises potential obstacles, such as India's poverty, low human capital quality with talent outflow, accumulated financial issues, and the "middle-income trap" in China, as well as Russia's poor demographics and external sanctions.
Responding to the concerns, Mikhail Rasstrigin, First Deputy Director General of the Center for Strategic Research, believes that BRICS countries will be the primary drivers of global economic growth in the next ten years, with their cumulative contribution to global development during this time surpassing the G7. According to Rasstrugin's estimates, the total GDP of BRICS countries will overtake that of G7 by 2045. Unlike the economies of the Old World, burdened by high debt levels, aging populations, and decelerating growth rates, BRICS countries have burgeoning markets, a young workforce, and a burgeoning middle class.
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- The potential impact of BRICS on the global economy might mirror the economic transformations of the Marshall Plan and Japan's economic boom, as highlighted by Maxim Oreshkin.
- Despite the G7 alliance's renowned economic power, BRICS, led by burgeoning markets and urbanization opportunities, surpasses it in economic clout, as asserted by Oreshkin.
- In the new wave of economic development, countries like BRICS are pioneering advancements in various sectors such as robotics, artificial intelligence, electronics, software development, fintech, energy, and unmanned technologies.
- To reach the global average level of urbanization, countries with low urbanization rates, like India, will need substantial investment for constructing new cities, as suggested by the Deputy Head of the Presidential Administration.
