Here come the BRICS 金砖 – the new economic powers in the 21st Century

3rd BRICS Leaders Meeting in 三亚, China, 14 April 2011

4th BRICS Leaders Meeting in New Delhi, India, 29-30 March 2012

In 2011 the BRIC Group (Brazil, Russia, India, and China) became BRICS with the addition of South Africa. The BRIC concept, conceived in 2001 by Jim O’Neill of Goldman Sachs, was embraced by the four original countries in 2008, when their foreign ministers met on the sidelines of a Russia-India-China (RIC) trilateral meeting. The addition of Brazil paved the way for the first BRIC summit in 2009

21st  Century economic powers

The BRICS economies are likely to be the most important source of future global growth. They represent more than a quarter of the Earth’s landmass, over 41pc of its population, almost 25pc of world GDP, and nearly half of all foreign-exchange and gold reserves. In 2030, of the world’s four largest economies, three will be BRICS countries. This has important implications for the developed countries in Europe and the US. For example, you cannot solve climate change without the BRICS. You cannot deal with global financial instability effectively without the BRICS. Even if the BRICS are unable to find common ground on a certain topic, it is likely that their views will strongly influence the attempt to find solutions.

The big challenge for the BRICS

The challenge at the moment for the BRICS is to articulate a common vision that will show the rest of the world that it is a powerful alliance. One of the biggest challenges it faces is to think outside of the box and to consider new ideas and to create something that doesn’t yet exist and doesn’t fall apart as soon as a bilateral problem comes up. There are very few powerful alliances in the world without any European or American participation. In this sense the BRICS is unique.

If the BRICS were able to speak with one voice on any issue in global affairs, they would immediately turn into an agenda-setter and a very powerful voice that neither the US nor Europe could ignore. They would provide a serious alternative to the established powers narrative in how to view the world. The US control of the public discourse globally is still quite strong because the emerging countries have not yet articulated an alternative vision.

 

How homogeneous are the BRICS

The BRICS were basically three countries (China, Russia and India) that were part of the Eurasian land mass plus Brazil which is geographically very far away from Eurasia. Russia, India and China have a lot of common history and have known each other for a long time meaning that, until South Africa joined, Brazil was a bit of the odd man out. Therefore the inclusion of South Africa has helped the BRICS become more of a global brand, capable of representing more continents and has also helped Brazil feel less excluded.

For Brazil, Russia, India, and South Africa, the BRICS grouping serves as a forum to underscore their rising economic strength and showcase their emergence as global players. But, for China, which is already recognised as a rising world power, the BRICS offers tangible – not just symbolic – benefits. Consequently, China is seeking, for example, to bring to birth a new common development bank that can help to mobilise savings between the BRICS countries. This proposal will be discussed at the New Delhi meeting this week. The Geo-Trade Blog will follow developments on the proposed new bank.

In terms of Brazil, the Brazilian Government continues to focus on its own region. There is strong acknowledgement in Brazil that it will always be part of the Americas region and that the economic and political ties with that region will always be a priority. Hence under the Rousseff and Lula administrations, the Government has sought to balance the BRICS with the US and other regional groupings such as MERCOSUR. 

 

Furthermore, China has shown itself so far to be a status quo power with respect to the UN system, it opposes enlargement of the Security Council’s permanent membership. It wishes to remain Asia’s sole country with a permanent seat – a stance that places it at odds with India. 

 

Finally how important economically are the BRICS at present

To get some idea of the magnitude of the BRICS compared with overall world exports. Trade within BRICS rose 15 fold from 2001-2010 to $230bn, a big rise of 28pc annual growth but in world terms this volume is still modest when compared with overall world exports in 2011 that amounted to $17.8trn.

A "New" Wonder Material – Super Concrete

Super Concrete viewing deck in the Netherlands

The Romans mixed crushed rock with burnt lime and water to build the Pantheon, which still holds the title of the world's largest unreinforced concrete dome. But modern concrete has typically proved miserably inferior and vulnerable to a slow deformation process called "concrete creep."

French researcher Joseph Davidovits uncovered the chemistry of geopolymers, or super-cements. Davidovits also promulgated the theory that the Egyptian pyramids were built using a similar type of geopolymer limestone concrete - an idea supported by X-ray and microscopic study samples.

Recently the US Air Force Research laboratory has backed using geopolymers to build runways, rocket nozzles, and even glue for satellite components. Iran, situated geographically in an earthquake zone has similarly invested in the idea of super-strong concrete, its engineers have developed some of the toughest building materials in the world.

The new super concrete – ultra-high performance concrete (UHPC)

Super concrete  is based on the traditional ingredients of sand and cement. But, in addition, pure powdered quartz (rather than the tainted variety that makes up most sand) and various reinforcing metals and fibres are added to it. This is why super concrete can withstand more compression than other forms of concrete. Super concrete is also more flexible and durable than conventional concrete. It can withstand pressure many times higher than normal concrete can and therefore can be used to make lighter and more slender structures.
 

For this reason, Iranian civil engineers are interested in using it in structures as diverse as dams and sewage pipes and are working on improving it still further. Researchers in the University of Hamadan in Iran for example, are using polypropylene fibres and quartz flour, known as fume, in their mix. It has the flexibility to absorb far heavier blows than regular concrete. Furthermore researchers at the Ottawa University in Canada are working on enhancing the molecular structure of cement. One way to enhance the internal structure of concrete is to use nanoparticles. For example, using different types of metal-oxide nanoparticles such as oxides of iron, aluminium, zirconium, titanium and copper. At the nanoscale materials can take on extraordinary properties. Although it has been demonstrated only in small samples, it might be possible, using such nanoparticles, to produce concrete that is four times stronger than the current ultra-high performance concrete. 

 

Uses for both civil and military purposes

Super concrete also has considerable military applications. A study, published in 1995, showed that although the compressive strength of concrete was enhanced only slightly by the addition of polymer fibres, its impact resistance improved sevenfold. Hence super concrete has the potential to withstand the impact of big blasts.

An Australian study carried out between 2004 and 2006 confirmed that super concrete resists blasts as well as direct hits. The tests, carried out in Australia, involved a charge equivalent to six tonnes of TNT. This fractured panels made of super concrete, but did not shatter them. Nor did it shake free and throw out fragments, as would have happened had the test been carried out on normal concrete.

The New Geo-Trade Order - the Chinosphere, the Hispanosphere and the Anglosphere

Culture Map from the World Values Survey

In a recent paper published by a London think-tank, the Legatum Institute, its author the Geographer, Joel Kotkin, looks at the world through the prism of culture. The ties of history and habit and of shared experiences and common customs can explain a lot about who does business with whom. For example research shows that two countries that share a common language trade 42pc more with each other. Two countries that once shared imperial ties trade a massive 188pc more. Imperial ties affect trade patterns more than membership of a common currency which boosted trade by only 114pc. 

The Chinosphere

China's growing might is reinforced by its links with the overseas Chinese. Around 70m ethnic Chinese live outside mainland China. Some are descended from those that moved abroad during China's imperial expansion from the 12th to 15th centuries, settling in what is now Indonesia, Vietnam, Malaysia and Myanmar. More recently many have migrated to the US and to other developed countries. 

Overseas Chinese are the biggest innovators in mainland China, around 68pc of the foreign direct investment that China received in 2009 came from places where ethnic Chinese are the biggest group such as Hong Kong, Singapore and Taiwan. Moreover China's government has funded hundreds of Confucius institutes to teach the Chinese language and nurture China's soft power abroad. In business, cultural ties matter because they lower transaction costs. And cultural affinity can super charge communication and foster instant trust the glue of successful business. In this way kinship still counts to foster relationships. Chinese-Americans naturally do business with Shanghai and Singapore.

The Hispanosphere and the Anglosphere

In a similar vein research shows, for the hispanosphere and the anglosphere, the two great European cultural blocks, that the flows of people and information are a massive 93pc higher when compared with traffic flows with the rest of the world. Moreover it is calculated that Spain's ties with its old ultramar provinces in América Latina are even closer than Britain's with its ex-colonies in the US, Ireland, Canada, Australia and New Zealand.

Interestingly, the World Values Survey divides the world into big cultural zones as the chart above shows on the basis of common values. The Anglosphere is currently the world's biggest economic block, it accounts for more than 25pc of the world's GDP. It produces more scientific papers than any other country. In addition, English is the closest the world has to a lingua franca. It has dominated international business and diplomacy in the 20th century and into the 21st century. 

Language Diversity in the 21st century

The Chart below shows the US, China, Mexico and Russia have over 100 languages each, but score relatively low on the diversity index, because English, Chinese, Spanish and Russian have grown to the point where they threaten to destroy the many tiny native languages. By contrast, linguistic rivalry and relative poverty have kept a single language from dominating countries like India and Nigeria, which score high on the diversity index. Both poverty and geography combine to make Congo and Papua New Guinea the most linguistically diverse countries in the world.

Chart of Language Diversity in 21st Century Source: The Economist

Nollywood - Nigeria's thriving Lagos based film industry

Nollywood the second most prolific film industry in the world after India’s Bollywood.

In Lagos, Nigeria's financial capital, and other cities in the South, it's possible to imagine that Nigeria is going to be the next Brazil, an emerging giant. In the North, blighted by environmental degradation, struggling agriculture and collapsed industry, life is no better than in neighbouring Chad, Niger or Mali.

Lagos, the Nigerian business capital, is said by locals to have produced more films than there are stars in the sky. The streets are flooded with camera crews shooting on location. It is hard to avoid Nigerian films in Africa. Public buses show them, as do many restaurants and hotels. Nollywood, produces about 50 full-length features a week, making it the world’s second most prolific film industry after India’s Bollywood. 

Nigerian films are as popular through out Africa as they are at home. It is said that Ivorian rebels in the bush stop fighting when a shipment of DVDs arrives from Lagos. Zambian mothers say their children talk with accents learnt from Nigerian films.Millions of Africans watch Nigerian films every day. 

How did Nollywood come about?

The first true Nollywood film resulted from a failed business venture. In 1992 Kenneth Nnebue, a market trader, ordered a large consignment of blank videotapes from Taiwan. Finding them hard to sell, he hired a theatre director to make a cheap film and copied it onto the tapes to boost their appeal. “Living in Bondage”, the story of a farmer in a big city who loses his wife and is haunted by her ghost, sold more than half a million copies.

Interestingly the market traders still control Nollywood to this day. They make films for home consumption. DVD discs sell for a dollar. Print runs can reach a million. Studios, both in the physical and the corporate sense of the term, are unknown. Market traders double as financiers. All scenes are shot on location and with a shoestring budget of no more than $100,000. Most of the financiers are based in the massive, chaotic market of Idumota in Lagos. 

As soon as a film is released, pirates rip it off. It takes the pirates just two weeks to copy a new film and distribute it across Africa. The merchants must take their money during that fortnight, known as the “mating season”, before their discs become commodities. As soon as the mating season is over they start thinking about the next film.

The merchants curse the pirates, but in a way they are a blessing. Pirate gangs were probably Nollywood’s first exporters. They knew how to cross tricky borders and distribute goods across a disparate continent where vast tracts of land are inaccessible. Sometimes they filled empty bags with films when returning from an arms delivery. Often they used films to bribe bored guards at remote borders. The pirates created the pan-African market for Nollywood films. 

The Secret of Nollywood's success 

One of the key ingredients of success is that the actors in Nollywood films speak English, rather than one of Nigeria’s 514 native languages. Large parts of the continent are familiar with English due to colonialism, and Nollywood’s influence is continuing to spread the language more widely. A further ingredient that adds to their success is that the films’ plots have strong pan-African appeal. They often revolve around the difficulties of new arrivals in big cities, an experience familiar across the continent. The epic film “One God One Nation” portrays a Muslim man and a Christian woman who struggle to marry. “Caught in the Act” (see poster below) shows a wife who is wrongly accused by her own mother-in-law of abducting a child. The overarching theme of Nollywood films is Africa’s trials and tribulations of living in the 21st Century in an increasingly globalised world.

Film Poster for Caught in the Act