The Role Of Brics In International Trade And Investments Literature Review
With this article we examine current state and development trends of foreign direct investment of the BRICS countries, acting at the present time as a new factor in the development of the global economy and international relations. Statistical data analysis concerning with the volume of the involved foreign capital has shown that Russia is lagging behind the other BRICS countries (China in the first place) by the share of FDI in the total investment in the world. Despite a number of existing strengths of Russia, determining its investment attractiveness along with other developing countries to foreign capital, however, Russia is less attractive in the BRICS group for the foreign investment.
Development of the BRICS alliance is based on a simple idea - huge population, vast territory and rapid economic development of Brazil, Russia, India and China are destined to become the upcoming world leaders instead of the traditional leaders - the Western democracies. If globalization is really going to be a radical leveler standard of living in those states whose leadership and thorough approach to benefitting from it, the simple law of numbers when compared with Brazil, Russia, China and India are not on the side of the West.
Of course, each country has weaknesses that impede the effective implementation of their geopolitical potential alone. Brazil, for example, characterized by a weak technological capacity, lack of unity of interests of the elites and the people, by virtue of the presence of contradictions racial diversity. India has a major weakness is the imperfection of the parliamentary model of democracy. Simple and effective steps taken by China, for the effective development of the economy, while India's parliamentary system makes discussions last for years. In South Africa, the main problem is the racial controversy. Russia's problems are demographic problems and growing dependence on energy exports, and thus on the world prices for oil and gas.
Quite a few weaknesses in China. We list only some of them: increasing environmental pollution; decrease in the birth rate, worsening the potential labor force; technological dependence on the West; imperfect legislation; focus inward rather than outward, reducing geopolitical influence.
BRICS problem, however, lies in the fact that there are common questions of interest to all five. For example, India and China - traditional rivals in the region with unresolved territorial issues, and most importantly - serious competitors for scarce energy resources now. Brazil is concerned about the growth of Chinese exports and, in fact, joined the US demands for Beijing to reconsider "undervalued" Yuan exchange rate. In addition, Brazil and South Africa, are clear regional leaders are wary of the growing influence of China in South America and Africa, respectively: China for several years been a leader in terms of growth of investment in both continents.
Together, Brazil, Russia, India and China produces 25% of world GDP. According to the calculations Reuters, China accounts for 13% world nominal GDP, India - 5.5%, Russia - 3.7%, Brazil - 2.9%.
The growing investment power of the BRICS countries illustrates the fact that many of these TNC`s countries appear in the rankings UNCTAD and Fortune, as world leaders with their brand name, management skills and competitive business models: Sinopec Group (China), State Grid (China), Gazprom (Russia), Lukoil (Russia), Vale SA (Brazil), Tata (India), ONGC Videsh (India). In recent years, major acquisitions abroad carried whether TNCs (especially state-owned enterprises) because of the BRICS countries. In 2010, the 7 was carried out major investment transactions, which are estimated 3 billion Dollars, with the participation of developing countries and countries with economies in transition (their share was 12%) (Unctad.org, 2012).
Attractiveness of individual countries and regions for foreign investors for period 2005-2011 years. (In% of respondents, the survey was conducted among 812 respondents), representations in research "Ernst & Young» ('Ernst & Young's 2011 European attractiveness survey', 2011), Therefore shows that China and India are the most attractive countries for investment in the group BRICS. BRICS countries attract investors a variety of factors and conditions. Before all these countries - the totality of the world of labor and raw materials. Among the common conditions, increase the attractiveness of the BRICS countries and highlights the macroeconomic characteristics, international investors consider the dynamic economic development, guaranteeing present return on investment, the timely and full service foreign debt.
Cia.gov,. (2015). The World Factbook. Retrieved 24 February 2015, from https://www.cia.gov/library/publications/the-world-factbook/rankorder/2147rank.html
Unctad.org,. (2012). World Investment Report 2011: Non-Equity Modes of International Production and Development.. Retrieved 22 February 2015, from http://www.unctad.org
Ernst & Young's 2011 European attractiveness survey. (2011). Retrieved 23 February 2015, from http://www.eyeim.com/pdf/11EDA220_europe_attractiveness_2011_web_resolution.pdf