Unit 4
International Financial Institutions & Regional Economic Cooperation
The World Bank is an international financial institution that provides loans and grants to the governments of poorer countries for the aim of pursuing capital projects. It comprises two institutions: the International Bank for Reconstruction and Development (IBRD), and therefore the International Development Association (IDA). The World Bank may be a component of the world Bank Group.
The World Bank's most recent stated goal is that the reduction of poverty.
World Bank Group
The World Bank Group is an extended family of 5 international organizations, and therefore the parent organization of the world Bank, the collective name given to the primary two listed organizations, the IBRD and therefore the IDA:
• International Bank for Reconstruction and Development (IBRD)
• International Development Association (IDA)
• International Finance Corporation (IFC)
• Multilateral Investment Guarantee Agency (MIGA)
• International Centre for Settlement of Investment Disputes (ICSID)
OBJECTIVES OF WORLD BANK
The following objectives are assigned by the World Bank:
1. To supply long-run capital to member countries for economic reconstruction and development.
2. To induce long-run capital investment for assuring Balance of Payments (BOP) equilibrium and balanced development of international trade.
3. To provide guarantee for loans granted to small and large units and other projects of member countries.
4. To ensure the implementation of development projects so on cause a smooth transference from a war-time to peace economy.
5. To market capital investment in member countries by the following ways;
(a) To provide guarantee on private loans or capital investment.
(b) If private capital isn't available even after providing guarantee, then IBRD provides loans for productive activities on considerate conditions.
IMPORTANCE
• The Bank's stated purpose is to "bridge the economic divide between poor and rich countries." It does this by turning "rich country resources into poor country growth." it's a long-term vision to "achieve sustainable poverty reduction."
• It focuses on improving education, health, and infrastructure. It also uses funds to modernize a country's financial sector, agriculture, and natural resources management.
• The Bank ensures the implementation of development projects so on bring about a smooth transference from a war-time to peace economy.
STRUCTURE OF WORLD BANK
Organization and Structure:
The organization of the bank consists of the Board of Governors, the Board of Executive Directors and therefore the Advisory Committee, the Loan Committee and therefore the president and other staff members. All the powers of the bank are vested within the Board of Governors which is that the supreme policy making body of the bank.
The board consists of 1 Governor and one Alternative Governor appointed for five years by each member country. Each Governor has the voting power which is said to the financial contribution of the govt. Which he represents.
The Board of Executive Directors consists of 21 members, 6 of them are appointed by the six largest shareholders, namely the USA, the UK, West Germany, France, Japan and India. The rest of the 15 members are elected by the remaining countries.
Each executive director holds voting power in proportion to the shares held by his government. The board of Executive Directors meets regularly once a month to hold on the routine working of the bank.
The president of the bank is pointed by the Board of Executive Directors. He's the Chief Executive of the Bank and he's liable for the conduct of the day-to-day business of the bank. The Advisory committees appointed by the Board of Directors.
It consists of seven members who are expects in several branches of banking. There's also another body referred to as the Loan Committee. This committee is consulted by the bank before any loan is extended to a member country.
FUNCTIONS OF WORLD BANK
World Bank is playing main role of providing loans for development works to member countries, especially to underdeveloped countries. The World Bank provides long-term loans for various development projects of 5 to twenty years duration.
The main functions are often explained with the assistance of the subsequent points:
1. World Bank provides various technical services to the member countries. For this purpose, the Bank has established “The Economic Development Institute” and a Staff College in Washington.
2. Bank can grant loans to a member country up to twenty of its shares within the paid-up capital.
3. The quantities of loans, interest rate and terms and conditions are determined by the Bank itself.
4. Generally, Bank grants loans for a specific project duly submitted to the Bank by the member country.
5. The debtor nation has got to repay either in reserve currencies or within the currency during which the loan was sanctioned.
6. Bank also provides loan to private investors belonging to member countries on its own guarantee, but for this loan private investors need to seek prior permission from those counties where this amount is going to be collected.
The International fund (IMF) is that the inter-governmental organization established to stabilize the rate of exchange within the international trade. It helps the member countries to enhance their Balance of Payment (BOP) condition thorough the adequate liquidity within the international market, promote the growth of global monetary cooperation, secure financial stability, facilitate international trade. It's one of the Bretton woods twins, which came into existence in 1945, is governed by and accountable to the 189 countries that structure its near-global membership.
The International monetary fund (IMF) and therefore the International Reconstruction and Development Bank (IBRD) were established in July 1944 together on the basis of Bretton Woods’s conference that's why they're also referred to as the Bretton Woods twins. India is that the founding member of the IMF.
IMF India
One of the founding members in IMF is India. It's also among the top 10 countries within the IMF. The list includes US, Japan, Italy, France, Germany, and so on. IMF includes a played a really crucial role within the economy of India. It’s provided with the economic assistance whenever required by India.
Furthermore, at the time of determination of policies, it provides appropriate consultancy. Earlier India was among the first five countries that had the highest quota within the IMF. Because of this status, India has been given a permanent position among the executive board of directors in IMF.
OBJECTIVES OF IMF
• The objectives of IMF are to stabilize the exchange rates and assist within the restructuring of the payment system globally.
• Furthermore, IMF also manages the economic policies for the global market.
• The countries that have low incomes can borrow the loan on concessional terms.
• It also provides assistance to the countries during the time of emergencies and helps them in maintaining the balance of payments.
• To promote international monetary co-operation.
• To ensure balanced international trade
• To ensure rate of exchange stability
• To eliminate or to reduce exchange restrictions by promoting the system of multilateral payments.
• To grant economic assistance to members countries for eliminating the adverse balance of payment
• To minimize the imbalances in quantum and duration of international trade.
IMPORTANCE OF IMF
The IMF assists member nations in several different capacities.
• Provides Loans to Member Nations:
Its most important function is its ability to provide loans to member nations in need of a bailout. The IMF can attach conditions to those loans, including prescribed economic policies, to which borrowing governments must comply.
• Fills Deficit Gaps:
If a country has a balance of payments deficit, the IMF can step in to fill the gap.
• Technical Support and Assistance:
It is a council and adviser to countries attempting a new economic policy. It also publishes papers on new economic topics.
Sceptics maintain that a country during a financial crisis might beg the IMF for a bailout, but it's unclear whether the country is in crisis because it made poor policy decisions knowing that IMF aid would function a backstop.
STRUCTURE OF IMF
The Fund has a Board of Governors, composed of as many governors as there are member states; 24 executive directors; and a managing director and staff.
Board of Governors
All powers of the IMF are vested in its Board of Governors, on which all member states are represented. Each member state appoints one governor and one alternate governor, who may vote when the principal governor is absent. A government customarily appoints its minister of finance, the president of its central bank, or another high-ranking official as its governor. For example, in December 2002, the United States governor was Secretary of the Treasury Paul O'Neill, and the alternate, Federal Reserve Board Chairman Alan Greenspan.
The principle that applies in most international bodies—one nation, one vote—does not apply within the IMF Board of Governors. Multiple votes are assigned to IMF member states, more votes being assigned to those subscribing larger quotas to the Fund's resources. Each member has 250 votes plus 1 additional vote for each SDR 100,000 of its quota. (The SDR is a world reserve asset created by the Fund. See section F.) The total number of votes of all IMF members was 2,172,621 on 12 December 2002, of which the us held about 17.1%, Germany and Japan about 6% each, and therefore the United Kingdom and France about 5% each.
Each governor is entitled to cast all the votes allotted to his country as a unit. On certain matters, however, voting power varies according to the utilization made from the Fund's resources by the respective member. IMF decisions are made by an easy majority of the votes cast, unless otherwise stipulated within the constitution. The Board of Governors regularly meets once a year. It may also be convened for other than annual meetings.
Except for such basic matters as admission of latest members, quota changes, and therefore the like, the Board of Governors delegates most of its powers to the chief Directors of the Fund.
The Board of Governors has an advisory committee, the International Monetary and Financial Committee (IMFC), formerly called the Interim Committee, which meets twice a year. Its composition reflects that of the executive Board; each country that appoints, and every group that elects, an executive director, also appoints a member to the IMFC. These members are governors of the Fund, ministers, or others of comparable rank.
Executive Board
The 24 executive directors (and 24 alternates) of the IMF are accountable for the Fund's general operations, and for this purpose they exercise all the powers delegated to them by the Board of Governors. They "function in continuous session" at the Fund's headquarters and meet as often as business may require, usually several times a week.
Of the 24 executive directors, five are appointed by the countries having the largest quotas (United States, Japan, Germany, France, and the United Kingdom), and the other 19 are elected by regional groups of the remaining members. The IMF's managing director also is chairman of the executive Board.
Managing Director and Staff
The managing director, who is chosen by the executive directors, is accountable for the conduct of the standard business of the Fund. He appointed for a five-year term and may not serve concurrently as a governor or executive of the IMF. The managing director chairs meetings of the chief directors but may vote only just in case of a tie.
The permanent headquarters of the IMF are at 700 19th Street, N.W., Washington, DC 20431. As of 21 August 2002, the staff consisted of about 2,650 persons from 140 countries.
The IMF includes a regional office for Asia and therefore the Pacific, located in Tokyo
FUNCTIONS OF IMF
Some of the main functions of International monetary fund are as follows:
1. Exchange Stability:
The first important function of IMF is to take care of exchange stability and thereby to discourage any fluctuations within the rate of exchange. The Found ensures such stability by making necessary arrangements like—enforcing declaration of face value of currency of all members in terms of gold or US dollar, enforcing devaluation criteria, up to 10 per cent or more by more information or by taking permission from IMF respectively, forbidding members to go in for multiple exchange rates and also to buy or sell gold at prices other than declared par value.
2. Eliminating BOP Disequilibrium:
The Fund helps the member countries in eliminating or minimizing the short-period equilibrium of balance of payments either by selling or lending foreign currencies to the members. The Fund also helps its members towards removing the long period disequilibrium in their balance of payments. Just in case of fundamental changes within the economies of its members, the Fund can advise its members to change the par values of its currencies.
3. Determination of Par Value:
IMF enforces the system of determination of par values of the currencies of the members countries. As per the original Articles of Agreement of the IMF every member country must declare the par value of its currency in terms of gold or US dollars. Under the revised Articles, the members are given autonomy to float or change exchange rates as per demand supply conditions in the exchange market and also at par with internal price levels.
As per this text, IMF is exercising surveillance to confirm proper working and balance within the international medium of exchange, i.e., by avoiding manipulation within the exchange rates and by adopting intervention policy to counter short-term movements within the exchange value of the currency.
4. Stabilize Economies:
The IMF has a very important function to advise the member countries on various economic and monetary matters and thereby to assist stabilize their economies.
5. Credit Facilities:
IMF is maintaining various borrowing and credit facilities so on help the member countries in correcting disequilibrium in their balance of payments. These credit facilities include-basic credit facility, extended fund facility for a period of three years, compensatory financing facility, Lucifer stock facility for helping the primary producing countries, supplementary financing facility, special oil facility, trust fund, structural adjustment facility etc. The Fund also charges interest from the borrowing countries on their credit.
6. Maintaining Balance between Demand and supply of Currencies:
IMF is additionally entrusted with important function to take care of balance between demands and provide of various currencies. Accordingly, the fund can declare a currency as scarce currency which is in great demand and may increase its supply by borrowing it from the country concerned or by purchasing an equivalent currency in exchange of gold.
7. Technical Assistance:
The IMF is also performing a useful function to provide technical assistance to the member countries. Such technical assistance in given in two ways, i.e., firstly by granting the members countries the services of its specialists and experts and secondly by sending the outside experts.
Moreover, the Fund has also created two specialized new departments:
(a) Central Banking Services Department and
(b) Fiscal Affairs Department for sending specialists to member countries so on manage its central banks and also on fiscal management.
8. Reducing Tariffs:
The Fund also aims at reducing tariffs and other restrictions imposed on international trade by the member countries so on cease restrictions of remittance of funds or to avoid discriminating practices.
9. General Watch:
The IMF is also keeping a general watch on the monetary and fiscal policies followed by the member countries to make sure no flouting of the provisions of the charter.
The World Trade Organization (WTO) is an intergovernmental organization that's concerned with the regulation of international trade between nations. The WTO officially commenced on 1 January 1995 under the Marrakesh Agreement, signed by 123 nations on 15 April 1994, replacing the general Agreement on Tariffs and Trade (GATT), which commenced in 1948. It's the largest international economic organization within the world.
The WTO deals with regulation of trade goods, services and intellectual property between participating countries by providing a framework for negotiating trade agreements and a dispute resolution process aimed at enforcing participants' adherence to WTO agreements, which are signed by representatives of member governments and ratified by their parliaments. The WTO prohibits discrimination between trading partners, but provides exceptions for environmental protection, national security, and other important goals. Trade-related disputes are resolved by independent judges at the WTO through a dispute resolution process.
The WTO's current Director-General is Roberto Azevêdo, who leads a staff of over 600 people in Geneva, Switzerland. A trade facilitation agreement, a part of the Bali Package of decisions, was agreed by all members on 7 December 2013, the first comprehensive agreement within the organization's history. On 23 January 2017, the amendment to the WTO Trade Related Aspects of intellectual property Rights (TRIPS) Agreement marks the primary time since the organization opened in 1995 that WTO accords are amended, and this variation should secure for developing countries a legal pathway to access affordable remedies under WTO rules.
Studies show that the WTO boosted trade which barriers to trade would be higher within the absence of the WTO. The WTO has highly influenced the text of trade agreements, as "nearly all recent [preferential trade agreements (PTAs)] reference the WTO explicitly, often dozens of times across multiple chapters... In many of those same PTAs we find that substantial portions of treaty language—sometime the majority of a chapter—is copied verbatim from a WTO agreement."
OBJECTIVES OF WORLD TRADE ORGANISATION
The important objectives of WTO are:
1. To improve the standard of living of people within the member countries.
2. To ensure full employment and broad increase in effective demand.
3. To enlarge production and trade of goods.
4. To increase the trade of services.
5. To confirm optimum utilization of world resources.
6. To protect the environment.
7. To accept the concept of sustainable development.
IMPORTANCE OF WORLD TRADE ORGANISATION
1. The system helps promote peace
2. Disputes are handled constructively
3. Rules make life easier for all
4. Freer trade cuts the costs of living
5. It provides more choice of products and qualities
6. Trade raises incomes
7. Trade stimulates economic growth
8. The basic principles make life more efficient
9. Governments are shielded from lobbying
10. The system encourages good government
STRUCTURE OF WORLD TRADE ORGANISATION
The WTO has nearly 153 members accounting for over 97% of world trade. Around 30 others are negotiating membership. Decisions are made by the entire membership. This is often typically by consensus.
A majority vote is additionally possible but it's never been used in the WTO and was extremely rare under the WTO’s predecessor, GATT. The WTO’s agreements are ratified altogether members’ parliaments.
The WTO’s top level decision-making body is that the Ministerial Conferences which meets a minimum of once in every two years. Below this is often the overall Council (normally ambassadors and heads of delegation in Geneva, but sometimes officials sent from members’ capitals) which meets several times a year within the Geneva headquarters. The overall Council also meets as the trade policy Review Body and therefore the Disputes Settlement Body.
At the next level, the goods Council, Services Council and intellectual property (TRIPs) Council report back to the general Council. Numerous specialized committees, working groups and working parties deal with the individual agreements and other areas like, the environment, development, membership applications and regional trade agreements.
Secretariat:
The WTO secretariat, based in Geneva, has around 600 staff and is headed by a Director-General. Its annual budget is roughly 160 million Swiss Francs. It doesn't have branch offices outside Geneva. Since decisions are taken by the members themselves, the secretariat doesn't have the decision making the role those other international bureaucracies are given.
The secretariat s main duties to supply technical support for the various councils and committees and therefore the ministerial conferences, to provide technical assistance for developing countries, to analyse world trade and to explain WTO affairs to the general public and media. The secretariat also provides some forms of legal assistance within the dispute settlement process and advises governments wishing to become members of the WTO.
FUNCTIONS OF WORLD TRADE ORGANISATION
The main functions of WTO are discussed below:
1. To implement rules and provisions related to trade policy review mechanism.
2. To provide a platform to member countries to decide future strategies related to trade and tariff.
3. To provide facilities for implementation, administration and operation of multilateral and bilateral agreements of the world trade.
4. To administer the rules and processes related to dispute settlement.
5. To ensure the optimum use of world resources.
6. To assist international organizations like, IMF and IBRD for establishing coherence in Universal economic policy determination.
The South Asian Association for Regional Cooperation (SAARC) is that the regional intergovernmental organization and geopolitical union of states in South Asia. Its member states are Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka. SAARC comprises 3% of the world's area, 21% of the world's population and 4.21% (US$3.67 trillion) [3] of the worldwide economy, as of 2019.
SAARC was founded in Dhaka on 8 December 1985. Its secretariat is based in Kathmandu, Nepal. The organization promotes development of economic and regional integration. It launched the South Asian free trade Area in 2006. SAARC maintains permanent diplomatic relations at the United Nations as an observer and has developed links with multilateral entities, including the European Union.
It is dedicated to economic, technological, social and cultural development emphasizing collective self- reliance. In terms of population, its sphere of influence is that the largest of any regional organization: almost 1.5 billion combined population of its member states. In April 2007, Afghanistan became its eighth member.
OBJECTIVES OF SAARC:
The objectives of SAARC, as defined in its charter, are as follows:
i. Promote the welfare of the peoples of South Asia and improve their quality of life;
Ii. Accelerate economic growth, social progress and cultural development within the region by providing all individuals the opportunity to measure in dignity and realize their full potential;
Iii. Promote and strengthen collective self-reliance among the countries of South Asia;
Iv. Contribute to mutual trust, understanding and appreciation of one another’s problems;
v. Promote active collaboration and mutual assistance within the economic, social, cultural, technical and scientific fields;
Vi. Strengthen co-operation with other developing countries;
Vii. Strengthen co-operation among themselves in international forms on matters of common interest; and
Viii. Cooperate with international and regional organization with similar aims and purposes.
SAARC AND ITS IMPORTANCE
SAARC comprises 3% of the world's area, 21% of the world's population and three .8% (US$2.9 trillion) of the global economy.
Creating synergies: it's the world’s most densely populated region and one in all the most fertile areas. SAARC countries have common tradition, dress, food and culture and political aspects thereby synergizing their actions.
Common solutions: All the SAARC countries have common problems and issues like poverty, illiteracy, malnutrition, natural disasters, internal conflicts, industrial and technological backwardness, low GDP and poor socio-economic condition and uplift their living standards thereby creating common areas of development and progress having common solutions.
SAARC ACHIEVEMENTS
• Free Trade Area (FTA): SAARC is relatively a new organization within the global arena. The member countries have established a free trade Area (FTA) which can increase their internal trade and lessen the trade gap of some states considerably.
• SAPTA: South Asia Preferential Trading Agreement for promoting trade amongst the member countries came into effect in 1995.
• SAFTA: A free trade Agreement confined to goods, but excluding all services like information technology. Agreement was signed to scale back customs duties of all traded goods to zero by the year 2016.
• SAARC Agreement on trade Services (SATIS): SATIS is following the GATS-plus 'positive list' approach for trade services liberalization.
• SAARC University: Establish a SAARC university in India, a food bank and also an energy reserve in Pakistan.
SIGNIFICANCE FOR INDIA
• Neighbourhood first: Primacy to the country’s immediate neighbours.
• Geostrategic significance: Can counter China (OBOR initiative) through engaging Nepal, Bhutan, the Maldives and Sri Lanka in development process and economic cooperation.
• Regional stability: SAARC can help in creation of mutual trust and peace within the region.
• Global leadership role: It offers India a platform to showcase its leadership within the region by taking up extra responsibilities.
• Game changer for India’s Act East Policy: by linking South Asian economies with South East Asian will bring further economic integration and prosperity to India mainly within the Services Sector.
STRUCTURE OF SAARC
The SAARC comprises following layers of organizational structure:
1.Council
At the top, there's the Council represented by the heads of the government of the member countries. The council the apex political affairs body. It meets once in 2 years’ time.
2. Council of Minister
It is to assist the council. It’s represented by the foreign minister of the member countries.
Its functions include:
• Formulation of policies
• Review of functioning
• Deciding new areas of cooperation
• Decide about general issues of common of interest of the SAARC member.
3. Standing committee
It is comprised by the foreign secretariat of the member government. Its major functions are:
• To monitor and co-ordinate the programs
• To determine inter-sectored priorities.
• To mobilize cooperation within and outside the region
• To influence the modalities of financing.
4. Programming Committee:
It includes the senior official of the member governments.
Its functions include:
• Scrutinizing the budget of the secretarial.
• Finalizing the annual schedule.
• External activities assigned by the standing committee.
• Analyses the respects of the technical committee.
5. Technical Committee:
It includes the represented of the member nations.
Its function is:
• To formulate project and programmer
• To monitor and execute the projects
• To submit reports.
The Technical Committee convers the areas such as: Agriculture, Communication, Environment, Rural Development, Health and Population, Science and Technology, Tourism and Transport.
6. Secretarial:
The SAARC secretarial is located in Nepal.
Its function includes:
• Coordination, execution and monitoring of SAARC activities
• Servicing the SAARC meetings
• Work as communication link between the SAARC and other international forum.
• The secretariats are headed by the secretary-General appointed by the Council of Ministers. These are 8 Director (One from each member nation) and therefore the general service staff.
FUNCTIONS OF SAARC
The main functions of SAARC are mentioned below.
• To maintain the cooperation during this region
• To prevent the common problems
• To ensure strong relationship among the SAARC country
• To remove the poverty during this region permanently
• To prevent the terrorism in this region.
BRICS is that the acronym coined for an association of 5 major emerging national economies: Brazil, Russia, India, China and South Africa |African country| African nation" South Africa. Originally the first four were grouped as "BRIC" (or "the BRICs"), before the induction of South Africa in 2010. The BRICS members are known for his or her significant influence on regional affairs; all are members of G20. Since 2009, the BRICS nations have met annually at formal summits. China hosted the 9th BRICS summit in Xiamen on September 2017, while Brazil hosted the most recent 11th BRICS summit on 13-14 November 2019.
In 2015, the five BRICS countries represented over 3.1 billion people, or about 41% of the world population; four out of 5 members (excluding South Africa at #24) were within the top 10 of the worlds by population. As of 2018, these five nations had a combined nominal GDP of US$18.6 trillion, about 23.2% of the gross world product, a combined GDP (PPP) of around US$40.55 trillion (32% of World's GDP PPP), and an estimated US$4.46 trillion in combined foreign reserves. The BRICS have received both praise and criticism from numerous commentators. Bilateral relations among BRICS nations are conducted mainly on the basis of non-interference, equality, and mutual benefit.
OBJECTIVES OF BRICS
• Increasing trade co-operation by making an exclusive trade bloc. This came handy because after western sanctions, Russia integrated its economy with BRICS and saved its economy from utter collapse.
• Using currency other than US Dollar. Since Dollar may be a dominant currency and US can control the flow of dollar, BRICS helps within the countries operating with alternative currencies.
• Increasing regional co-operation. Trade is said to everything. India and China were the sole countries which didn't condemn Russia for what happened in Crimea. This happened because there's big money among the countries.
• The original objective was that developed countries used to dominate the trade with developing countries. So, there was a separate trade bloc made for developing countries for trade co-operation.
FUNCTIONS OF BRICS
With this study, researchers from Süd wind Institute (project lead) and Ecologic Institute inform the European Parliament about how the five emerging economies known collectively as the BRICS (Brazil, Russia, India, China and South Africa) are emerging as development assistance donors and potential partners within the developing world. The authors discuss how South-South cooperation is becoming more significant and what challenges it poses to the EU's ODA agenda. Finally, the study provides a series of recommendations for European policy makers.
The BRICS are the world's leading emerging economies. Especially within the last decade, they need been characterized by rapid economic growth and industrialization. Their role in world affairs is thus changing from that of developing countries who are recipients of aid to (again) significant donors of funds. This poses new challenges to the EU’s ODA agenda and has led the EU to re-focus its relationship with these potential partner countries. This study explores these challenges and provides recommendations to the EU on the way to address them.
Although the BRICS haven't reached the level of industrialization that characterizes traditional donors and are still plagued by persistent inequality and poverty, the BRICS have begun to disburse significant investment and foreign assistance funds to other developing countries. South Africa, for instance, has become the leading economy in Africa, and as such, is expected to lead peace and security efforts, promote regional economic integration and fund development projects. Similarly, Brazil and India are commencing to exert influence on their less developed neighbours and China is becoming a serious source of foreign direct investment within the developing world. These changes are giving rise to so called "South-South cooperation," which isn't only modifying the relationship between developing countries but also that between developing and industrialized countries.
Thus, the objective of this study is to tell the European Parliament about how the BRICS are emerging as development assistance donors and potential partners. The authors provide an overview of how development aid has evolved over the past decade, how financing from the BRICS impacts development cooperation, and the way development policies differ among the BRICS. The authors also discuss how these changes pose new challenges to the EU's ODA agenda. Finally, the study provides a series of recommendations for European policy makers. The authors' main conclusion is that eye-to-eye dialogue and trilateral cooperation are the best means of addressing BRICS as new stakeholders in 21st century development politics.
References:
- Https://www.toppr.com/ask/question/economic-development-is-characterized-by-which-of-the-following/
- Bajpai A .D .N., Caubey S.K. Et al, Leading Issues of Indian Economy, Atlantic Publishers and Distributers.
- Magazines / Journals Reports
- Ruddar Datta and K.P.M. Sundaram, Indian Economy, S. Chand and Co., New Delhi
Unit 4
International Financial Institutions & Regional Economic Cooperation
The World Bank is an international financial institution that provides loans and grants to the governments of poorer countries for the aim of pursuing capital projects. It comprises two institutions: the International Bank for Reconstruction and Development (IBRD), and therefore the International Development Association (IDA). The World Bank may be a component of the world Bank Group.
The World Bank's most recent stated goal is that the reduction of poverty.
World Bank Group
The World Bank Group is an extended family of 5 international organizations, and therefore the parent organization of the world Bank, the collective name given to the primary two listed organizations, the IBRD and therefore the IDA:
• International Bank for Reconstruction and Development (IBRD)
• International Development Association (IDA)
• International Finance Corporation (IFC)
• Multilateral Investment Guarantee Agency (MIGA)
• International Centre for Settlement of Investment Disputes (ICSID)
OBJECTIVES OF WORLD BANK
The following objectives are assigned by the World Bank:
1. To supply long-run capital to member countries for economic reconstruction and development.
2. To induce long-run capital investment for assuring Balance of Payments (BOP) equilibrium and balanced development of international trade.
3. To provide guarantee for loans granted to small and large units and other projects of member countries.
4. To ensure the implementation of development projects so on cause a smooth transference from a war-time to peace economy.
5. To market capital investment in member countries by the following ways;
(a) To provide guarantee on private loans or capital investment.
(b) If private capital isn't available even after providing guarantee, then IBRD provides loans for productive activities on considerate conditions.
IMPORTANCE
• The Bank's stated purpose is to "bridge the economic divide between poor and rich countries." It does this by turning "rich country resources into poor country growth." it's a long-term vision to "achieve sustainable poverty reduction."
• It focuses on improving education, health, and infrastructure. It also uses funds to modernize a country's financial sector, agriculture, and natural resources management.
• The Bank ensures the implementation of development projects so on bring about a smooth transference from a war-time to peace economy.
STRUCTURE OF WORLD BANK
Organization and Structure:
The organization of the bank consists of the Board of Governors, the Board of Executive Directors and therefore the Advisory Committee, the Loan Committee and therefore the president and other staff members. All the powers of the bank are vested within the Board of Governors which is that the supreme policy making body of the bank.
The board consists of 1 Governor and one Alternative Governor appointed for five years by each member country. Each Governor has the voting power which is said to the financial contribution of the govt. Which he represents.
The Board of Executive Directors consists of 21 members, 6 of them are appointed by the six largest shareholders, namely the USA, the UK, West Germany, France, Japan and India. The rest of the 15 members are elected by the remaining countries.
Each executive director holds voting power in proportion to the shares held by his government. The board of Executive Directors meets regularly once a month to hold on the routine working of the bank.
The president of the bank is pointed by the Board of Executive Directors. He's the Chief Executive of the Bank and he's liable for the conduct of the day-to-day business of the bank. The Advisory committees appointed by the Board of Directors.
It consists of seven members who are expects in several branches of banking. There's also another body referred to as the Loan Committee. This committee is consulted by the bank before any loan is extended to a member country.
FUNCTIONS OF WORLD BANK
World Bank is playing main role of providing loans for development works to member countries, especially to underdeveloped countries. The World Bank provides long-term loans for various development projects of 5 to twenty years duration.
The main functions are often explained with the assistance of the subsequent points:
1. World Bank provides various technical services to the member countries. For this purpose, the Bank has established “The Economic Development Institute” and a Staff College in Washington.
2. Bank can grant loans to a member country up to twenty of its shares within the paid-up capital.
3. The quantities of loans, interest rate and terms and conditions are determined by the Bank itself.
4. Generally, Bank grants loans for a specific project duly submitted to the Bank by the member country.
5. The debtor nation has got to repay either in reserve currencies or within the currency during which the loan was sanctioned.
6. Bank also provides loan to private investors belonging to member countries on its own guarantee, but for this loan private investors need to seek prior permission from those counties where this amount is going to be collected.
The International fund (IMF) is that the inter-governmental organization established to stabilize the rate of exchange within the international trade. It helps the member countries to enhance their Balance of Payment (BOP) condition thorough the adequate liquidity within the international market, promote the growth of global monetary cooperation, secure financial stability, facilitate international trade. It's one of the Bretton woods twins, which came into existence in 1945, is governed by and accountable to the 189 countries that structure its near-global membership.
The International monetary fund (IMF) and therefore the International Reconstruction and Development Bank (IBRD) were established in July 1944 together on the basis of Bretton Woods’s conference that's why they're also referred to as the Bretton Woods twins. India is that the founding member of the IMF.
IMF India
One of the founding members in IMF is India. It's also among the top 10 countries within the IMF. The list includes US, Japan, Italy, France, Germany, and so on. IMF includes a played a really crucial role within the economy of India. It’s provided with the economic assistance whenever required by India.
Furthermore, at the time of determination of policies, it provides appropriate consultancy. Earlier India was among the first five countries that had the highest quota within the IMF. Because of this status, India has been given a permanent position among the executive board of directors in IMF.
OBJECTIVES OF IMF
• The objectives of IMF are to stabilize the exchange rates and assist within the restructuring of the payment system globally.
• Furthermore, IMF also manages the economic policies for the global market.
• The countries that have low incomes can borrow the loan on concessional terms.
• It also provides assistance to the countries during the time of emergencies and helps them in maintaining the balance of payments.
• To promote international monetary co-operation.
• To ensure balanced international trade
• To ensure rate of exchange stability
• To eliminate or to reduce exchange restrictions by promoting the system of multilateral payments.
• To grant economic assistance to members countries for eliminating the adverse balance of payment
• To minimize the imbalances in quantum and duration of international trade.
IMPORTANCE OF IMF
The IMF assists member nations in several different capacities.
• Provides Loans to Member Nations:
Its most important function is its ability to provide loans to member nations in need of a bailout. The IMF can attach conditions to those loans, including prescribed economic policies, to which borrowing governments must comply.
• Fills Deficit Gaps:
If a country has a balance of payments deficit, the IMF can step in to fill the gap.
• Technical Support and Assistance:
It is a council and adviser to countries attempting a new economic policy. It also publishes papers on new economic topics.
Sceptics maintain that a country during a financial crisis might beg the IMF for a bailout, but it's unclear whether the country is in crisis because it made poor policy decisions knowing that IMF aid would function a backstop.
STRUCTURE OF IMF
The Fund has a Board of Governors, composed of as many governors as there are member states; 24 executive directors; and a managing director and staff.
Board of Governors
All powers of the IMF are vested in its Board of Governors, on which all member states are represented. Each member state appoints one governor and one alternate governor, who may vote when the principal governor is absent. A government customarily appoints its minister of finance, the president of its central bank, or another high-ranking official as its governor. For example, in December 2002, the United States governor was Secretary of the Treasury Paul O'Neill, and the alternate, Federal Reserve Board Chairman Alan Greenspan.
The principle that applies in most international bodies—one nation, one vote—does not apply within the IMF Board of Governors. Multiple votes are assigned to IMF member states, more votes being assigned to those subscribing larger quotas to the Fund's resources. Each member has 250 votes plus 1 additional vote for each SDR 100,000 of its quota. (The SDR is a world reserve asset created by the Fund. See section F.) The total number of votes of all IMF members was 2,172,621 on 12 December 2002, of which the us held about 17.1%, Germany and Japan about 6% each, and therefore the United Kingdom and France about 5% each.
Each governor is entitled to cast all the votes allotted to his country as a unit. On certain matters, however, voting power varies according to the utilization made from the Fund's resources by the respective member. IMF decisions are made by an easy majority of the votes cast, unless otherwise stipulated within the constitution. The Board of Governors regularly meets once a year. It may also be convened for other than annual meetings.
Except for such basic matters as admission of latest members, quota changes, and therefore the like, the Board of Governors delegates most of its powers to the chief Directors of the Fund.
The Board of Governors has an advisory committee, the International Monetary and Financial Committee (IMFC), formerly called the Interim Committee, which meets twice a year. Its composition reflects that of the executive Board; each country that appoints, and every group that elects, an executive director, also appoints a member to the IMFC. These members are governors of the Fund, ministers, or others of comparable rank.
Executive Board
The 24 executive directors (and 24 alternates) of the IMF are accountable for the Fund's general operations, and for this purpose they exercise all the powers delegated to them by the Board of Governors. They "function in continuous session" at the Fund's headquarters and meet as often as business may require, usually several times a week.
Of the 24 executive directors, five are appointed by the countries having the largest quotas (United States, Japan, Germany, France, and the United Kingdom), and the other 19 are elected by regional groups of the remaining members. The IMF's managing director also is chairman of the executive Board.
Managing Director and Staff
The managing director, who is chosen by the executive directors, is accountable for the conduct of the standard business of the Fund. He appointed for a five-year term and may not serve concurrently as a governor or executive of the IMF. The managing director chairs meetings of the chief directors but may vote only just in case of a tie.
The permanent headquarters of the IMF are at 700 19th Street, N.W., Washington, DC 20431. As of 21 August 2002, the staff consisted of about 2,650 persons from 140 countries.
The IMF includes a regional office for Asia and therefore the Pacific, located in Tokyo
FUNCTIONS OF IMF
Some of the main functions of International monetary fund are as follows:
1. Exchange Stability:
The first important function of IMF is to take care of exchange stability and thereby to discourage any fluctuations within the rate of exchange. The Found ensures such stability by making necessary arrangements like—enforcing declaration of face value of currency of all members in terms of gold or US dollar, enforcing devaluation criteria, up to 10 per cent or more by more information or by taking permission from IMF respectively, forbidding members to go in for multiple exchange rates and also to buy or sell gold at prices other than declared par value.
2. Eliminating BOP Disequilibrium:
The Fund helps the member countries in eliminating or minimizing the short-period equilibrium of balance of payments either by selling or lending foreign currencies to the members. The Fund also helps its members towards removing the long period disequilibrium in their balance of payments. Just in case of fundamental changes within the economies of its members, the Fund can advise its members to change the par values of its currencies.
3. Determination of Par Value:
IMF enforces the system of determination of par values of the currencies of the members countries. As per the original Articles of Agreement of the IMF every member country must declare the par value of its currency in terms of gold or US dollars. Under the revised Articles, the members are given autonomy to float or change exchange rates as per demand supply conditions in the exchange market and also at par with internal price levels.
As per this text, IMF is exercising surveillance to confirm proper working and balance within the international medium of exchange, i.e., by avoiding manipulation within the exchange rates and by adopting intervention policy to counter short-term movements within the exchange value of the currency.
4. Stabilize Economies:
The IMF has a very important function to advise the member countries on various economic and monetary matters and thereby to assist stabilize their economies.
5. Credit Facilities:
IMF is maintaining various borrowing and credit facilities so on help the member countries in correcting disequilibrium in their balance of payments. These credit facilities include-basic credit facility, extended fund facility for a period of three years, compensatory financing facility, Lucifer stock facility for helping the primary producing countries, supplementary financing facility, special oil facility, trust fund, structural adjustment facility etc. The Fund also charges interest from the borrowing countries on their credit.
6. Maintaining Balance between Demand and supply of Currencies:
IMF is additionally entrusted with important function to take care of balance between demands and provide of various currencies. Accordingly, the fund can declare a currency as scarce currency which is in great demand and may increase its supply by borrowing it from the country concerned or by purchasing an equivalent currency in exchange of gold.
7. Technical Assistance:
The IMF is also performing a useful function to provide technical assistance to the member countries. Such technical assistance in given in two ways, i.e., firstly by granting the members countries the services of its specialists and experts and secondly by sending the outside experts.
Moreover, the Fund has also created two specialized new departments:
(a) Central Banking Services Department and
(b) Fiscal Affairs Department for sending specialists to member countries so on manage its central banks and also on fiscal management.
8. Reducing Tariffs:
The Fund also aims at reducing tariffs and other restrictions imposed on international trade by the member countries so on cease restrictions of remittance of funds or to avoid discriminating practices.
9. General Watch:
The IMF is also keeping a general watch on the monetary and fiscal policies followed by the member countries to make sure no flouting of the provisions of the charter.
The World Trade Organization (WTO) is an intergovernmental organization that's concerned with the regulation of international trade between nations. The WTO officially commenced on 1 January 1995 under the Marrakesh Agreement, signed by 123 nations on 15 April 1994, replacing the general Agreement on Tariffs and Trade (GATT), which commenced in 1948. It's the largest international economic organization within the world.
The WTO deals with regulation of trade goods, services and intellectual property between participating countries by providing a framework for negotiating trade agreements and a dispute resolution process aimed at enforcing participants' adherence to WTO agreements, which are signed by representatives of member governments and ratified by their parliaments. The WTO prohibits discrimination between trading partners, but provides exceptions for environmental protection, national security, and other important goals. Trade-related disputes are resolved by independent judges at the WTO through a dispute resolution process.
The WTO's current Director-General is Roberto Azevêdo, who leads a staff of over 600 people in Geneva, Switzerland. A trade facilitation agreement, a part of the Bali Package of decisions, was agreed by all members on 7 December 2013, the first comprehensive agreement within the organization's history. On 23 January 2017, the amendment to the WTO Trade Related Aspects of intellectual property Rights (TRIPS) Agreement marks the primary time since the organization opened in 1995 that WTO accords are amended, and this variation should secure for developing countries a legal pathway to access affordable remedies under WTO rules.
Studies show that the WTO boosted trade which barriers to trade would be higher within the absence of the WTO. The WTO has highly influenced the text of trade agreements, as "nearly all recent [preferential trade agreements (PTAs)] reference the WTO explicitly, often dozens of times across multiple chapters... In many of those same PTAs we find that substantial portions of treaty language—sometime the majority of a chapter—is copied verbatim from a WTO agreement."
OBJECTIVES OF WORLD TRADE ORGANISATION
The important objectives of WTO are:
1. To improve the standard of living of people within the member countries.
2. To ensure full employment and broad increase in effective demand.
3. To enlarge production and trade of goods.
4. To increase the trade of services.
5. To confirm optimum utilization of world resources.
6. To protect the environment.
7. To accept the concept of sustainable development.
IMPORTANCE OF WORLD TRADE ORGANISATION
1. The system helps promote peace
2. Disputes are handled constructively
3. Rules make life easier for all
4. Freer trade cuts the costs of living
5. It provides more choice of products and qualities
6. Trade raises incomes
7. Trade stimulates economic growth
8. The basic principles make life more efficient
9. Governments are shielded from lobbying
10. The system encourages good government
STRUCTURE OF WORLD TRADE ORGANISATION
The WTO has nearly 153 members accounting for over 97% of world trade. Around 30 others are negotiating membership. Decisions are made by the entire membership. This is often typically by consensus.
A majority vote is additionally possible but it's never been used in the WTO and was extremely rare under the WTO’s predecessor, GATT. The WTO’s agreements are ratified altogether members’ parliaments.
The WTO’s top level decision-making body is that the Ministerial Conferences which meets a minimum of once in every two years. Below this is often the overall Council (normally ambassadors and heads of delegation in Geneva, but sometimes officials sent from members’ capitals) which meets several times a year within the Geneva headquarters. The overall Council also meets as the trade policy Review Body and therefore the Disputes Settlement Body.
At the next level, the goods Council, Services Council and intellectual property (TRIPs) Council report back to the general Council. Numerous specialized committees, working groups and working parties deal with the individual agreements and other areas like, the environment, development, membership applications and regional trade agreements.
Secretariat:
The WTO secretariat, based in Geneva, has around 600 staff and is headed by a Director-General. Its annual budget is roughly 160 million Swiss Francs. It doesn't have branch offices outside Geneva. Since decisions are taken by the members themselves, the secretariat doesn't have the decision making the role those other international bureaucracies are given.
The secretariat s main duties to supply technical support for the various councils and committees and therefore the ministerial conferences, to provide technical assistance for developing countries, to analyse world trade and to explain WTO affairs to the general public and media. The secretariat also provides some forms of legal assistance within the dispute settlement process and advises governments wishing to become members of the WTO.
FUNCTIONS OF WORLD TRADE ORGANISATION
The main functions of WTO are discussed below:
1. To implement rules and provisions related to trade policy review mechanism.
2. To provide a platform to member countries to decide future strategies related to trade and tariff.
3. To provide facilities for implementation, administration and operation of multilateral and bilateral agreements of the world trade.
4. To administer the rules and processes related to dispute settlement.
5. To ensure the optimum use of world resources.
6. To assist international organizations like, IMF and IBRD for establishing coherence in Universal economic policy determination.
The South Asian Association for Regional Cooperation (SAARC) is that the regional intergovernmental organization and geopolitical union of states in South Asia. Its member states are Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka. SAARC comprises 3% of the world's area, 21% of the world's population and 4.21% (US$3.67 trillion) [3] of the worldwide economy, as of 2019.
SAARC was founded in Dhaka on 8 December 1985. Its secretariat is based in Kathmandu, Nepal. The organization promotes development of economic and regional integration. It launched the South Asian free trade Area in 2006. SAARC maintains permanent diplomatic relations at the United Nations as an observer and has developed links with multilateral entities, including the European Union.
It is dedicated to economic, technological, social and cultural development emphasizing collective self- reliance. In terms of population, its sphere of influence is that the largest of any regional organization: almost 1.5 billion combined population of its member states. In April 2007, Afghanistan became its eighth member.
OBJECTIVES OF SAARC:
The objectives of SAARC, as defined in its charter, are as follows:
i. Promote the welfare of the peoples of South Asia and improve their quality of life;
Ii. Accelerate economic growth, social progress and cultural development within the region by providing all individuals the opportunity to measure in dignity and realize their full potential;
Iii. Promote and strengthen collective self-reliance among the countries of South Asia;
Iv. Contribute to mutual trust, understanding and appreciation of one another’s problems;
v. Promote active collaboration and mutual assistance within the economic, social, cultural, technical and scientific fields;
Vi. Strengthen co-operation with other developing countries;
Vii. Strengthen co-operation among themselves in international forms on matters of common interest; and
Viii. Cooperate with international and regional organization with similar aims and purposes.
SAARC AND ITS IMPORTANCE
SAARC comprises 3% of the world's area, 21% of the world's population and three .8% (US$2.9 trillion) of the global economy.
Creating synergies: it's the world’s most densely populated region and one in all the most fertile areas. SAARC countries have common tradition, dress, food and culture and political aspects thereby synergizing their actions.
Common solutions: All the SAARC countries have common problems and issues like poverty, illiteracy, malnutrition, natural disasters, internal conflicts, industrial and technological backwardness, low GDP and poor socio-economic condition and uplift their living standards thereby creating common areas of development and progress having common solutions.
SAARC ACHIEVEMENTS
• Free Trade Area (FTA): SAARC is relatively a new organization within the global arena. The member countries have established a free trade Area (FTA) which can increase their internal trade and lessen the trade gap of some states considerably.
• SAPTA: South Asia Preferential Trading Agreement for promoting trade amongst the member countries came into effect in 1995.
• SAFTA: A free trade Agreement confined to goods, but excluding all services like information technology. Agreement was signed to scale back customs duties of all traded goods to zero by the year 2016.
• SAARC Agreement on trade Services (SATIS): SATIS is following the GATS-plus 'positive list' approach for trade services liberalization.
• SAARC University: Establish a SAARC university in India, a food bank and also an energy reserve in Pakistan.
SIGNIFICANCE FOR INDIA
• Neighbourhood first: Primacy to the country’s immediate neighbours.
• Geostrategic significance: Can counter China (OBOR initiative) through engaging Nepal, Bhutan, the Maldives and Sri Lanka in development process and economic cooperation.
• Regional stability: SAARC can help in creation of mutual trust and peace within the region.
• Global leadership role: It offers India a platform to showcase its leadership within the region by taking up extra responsibilities.
• Game changer for India’s Act East Policy: by linking South Asian economies with South East Asian will bring further economic integration and prosperity to India mainly within the Services Sector.
STRUCTURE OF SAARC
The SAARC comprises following layers of organizational structure:
1.Council
At the top, there's the Council represented by the heads of the government of the member countries. The council the apex political affairs body. It meets once in 2 years’ time.
2. Council of Minister
It is to assist the council. It’s represented by the foreign minister of the member countries.
Its functions include:
• Formulation of policies
• Review of functioning
• Deciding new areas of cooperation
• Decide about general issues of common of interest of the SAARC member.
3. Standing committee
It is comprised by the foreign secretariat of the member government. Its major functions are:
• To monitor and co-ordinate the programs
• To determine inter-sectored priorities.
• To mobilize cooperation within and outside the region
• To influence the modalities of financing.
4. Programming Committee:
It includes the senior official of the member governments.
Its functions include:
• Scrutinizing the budget of the secretarial.
• Finalizing the annual schedule.
• External activities assigned by the standing committee.
• Analyses the respects of the technical committee.
5. Technical Committee:
It includes the represented of the member nations.
Its function is:
• To formulate project and programmer
• To monitor and execute the projects
• To submit reports.
The Technical Committee convers the areas such as: Agriculture, Communication, Environment, Rural Development, Health and Population, Science and Technology, Tourism and Transport.
6. Secretarial:
The SAARC secretarial is located in Nepal.
Its function includes:
• Coordination, execution and monitoring of SAARC activities
• Servicing the SAARC meetings
• Work as communication link between the SAARC and other international forum.
• The secretariats are headed by the secretary-General appointed by the Council of Ministers. These are 8 Director (One from each member nation) and therefore the general service staff.
FUNCTIONS OF SAARC
The main functions of SAARC are mentioned below.
• To maintain the cooperation during this region
• To prevent the common problems
• To ensure strong relationship among the SAARC country
• To remove the poverty during this region permanently
• To prevent the terrorism in this region.
BRICS is that the acronym coined for an association of 5 major emerging national economies: Brazil, Russia, India, China and South Africa |African country| African nation" South Africa. Originally the first four were grouped as "BRIC" (or "the BRICs"), before the induction of South Africa in 2010. The BRICS members are known for his or her significant influence on regional affairs; all are members of G20. Since 2009, the BRICS nations have met annually at formal summits. China hosted the 9th BRICS summit in Xiamen on September 2017, while Brazil hosted the most recent 11th BRICS summit on 13-14 November 2019.
In 2015, the five BRICS countries represented over 3.1 billion people, or about 41% of the world population; four out of 5 members (excluding South Africa at #24) were within the top 10 of the worlds by population. As of 2018, these five nations had a combined nominal GDP of US$18.6 trillion, about 23.2% of the gross world product, a combined GDP (PPP) of around US$40.55 trillion (32% of World's GDP PPP), and an estimated US$4.46 trillion in combined foreign reserves. The BRICS have received both praise and criticism from numerous commentators. Bilateral relations among BRICS nations are conducted mainly on the basis of non-interference, equality, and mutual benefit.
OBJECTIVES OF BRICS
• Increasing trade co-operation by making an exclusive trade bloc. This came handy because after western sanctions, Russia integrated its economy with BRICS and saved its economy from utter collapse.
• Using currency other than US Dollar. Since Dollar may be a dominant currency and US can control the flow of dollar, BRICS helps within the countries operating with alternative currencies.
• Increasing regional co-operation. Trade is said to everything. India and China were the sole countries which didn't condemn Russia for what happened in Crimea. This happened because there's big money among the countries.
• The original objective was that developed countries used to dominate the trade with developing countries. So, there was a separate trade bloc made for developing countries for trade co-operation.
FUNCTIONS OF BRICS
With this study, researchers from Süd wind Institute (project lead) and Ecologic Institute inform the European Parliament about how the five emerging economies known collectively as the BRICS (Brazil, Russia, India, China and South Africa) are emerging as development assistance donors and potential partners within the developing world. The authors discuss how South-South cooperation is becoming more significant and what challenges it poses to the EU's ODA agenda. Finally, the study provides a series of recommendations for European policy makers.
The BRICS are the world's leading emerging economies. Especially within the last decade, they need been characterized by rapid economic growth and industrialization. Their role in world affairs is thus changing from that of developing countries who are recipients of aid to (again) significant donors of funds. This poses new challenges to the EU’s ODA agenda and has led the EU to re-focus its relationship with these potential partner countries. This study explores these challenges and provides recommendations to the EU on the way to address them.
Although the BRICS haven't reached the level of industrialization that characterizes traditional donors and are still plagued by persistent inequality and poverty, the BRICS have begun to disburse significant investment and foreign assistance funds to other developing countries. South Africa, for instance, has become the leading economy in Africa, and as such, is expected to lead peace and security efforts, promote regional economic integration and fund development projects. Similarly, Brazil and India are commencing to exert influence on their less developed neighbours and China is becoming a serious source of foreign direct investment within the developing world. These changes are giving rise to so called "South-South cooperation," which isn't only modifying the relationship between developing countries but also that between developing and industrialized countries.
Thus, the objective of this study is to tell the European Parliament about how the BRICS are emerging as development assistance donors and potential partners. The authors provide an overview of how development aid has evolved over the past decade, how financing from the BRICS impacts development cooperation, and the way development policies differ among the BRICS. The authors also discuss how these changes pose new challenges to the EU's ODA agenda. Finally, the study provides a series of recommendations for European policy makers. The authors' main conclusion is that eye-to-eye dialogue and trilateral cooperation are the best means of addressing BRICS as new stakeholders in 21st century development politics.
References:
- Https://www.toppr.com/ask/question/economic-development-is-characterized-by-which-of-the-following/
- Bajpai A .D .N., Caubey S.K. Et al, Leading Issues of Indian Economy, Atlantic Publishers and Distributers.
- Magazines / Journals Reports
- Ruddar Datta and K.P.M. Sundaram, Indian Economy, S. Chand and Co., New Delhi
Unit 4
International Financial Institutions & Regional Economic Cooperation
The World Bank is an international financial institution that provides loans and grants to the governments of poorer countries for the aim of pursuing capital projects. It comprises two institutions: the International Bank for Reconstruction and Development (IBRD), and therefore the International Development Association (IDA). The World Bank may be a component of the world Bank Group.
The World Bank's most recent stated goal is that the reduction of poverty.
World Bank Group
The World Bank Group is an extended family of 5 international organizations, and therefore the parent organization of the world Bank, the collective name given to the primary two listed organizations, the IBRD and therefore the IDA:
• International Bank for Reconstruction and Development (IBRD)
• International Development Association (IDA)
• International Finance Corporation (IFC)
• Multilateral Investment Guarantee Agency (MIGA)
• International Centre for Settlement of Investment Disputes (ICSID)
OBJECTIVES OF WORLD BANK
The following objectives are assigned by the World Bank:
1. To supply long-run capital to member countries for economic reconstruction and development.
2. To induce long-run capital investment for assuring Balance of Payments (BOP) equilibrium and balanced development of international trade.
3. To provide guarantee for loans granted to small and large units and other projects of member countries.
4. To ensure the implementation of development projects so on cause a smooth transference from a war-time to peace economy.
5. To market capital investment in member countries by the following ways;
(a) To provide guarantee on private loans or capital investment.
(b) If private capital isn't available even after providing guarantee, then IBRD provides loans for productive activities on considerate conditions.
IMPORTANCE
• The Bank's stated purpose is to "bridge the economic divide between poor and rich countries." It does this by turning "rich country resources into poor country growth." it's a long-term vision to "achieve sustainable poverty reduction."
• It focuses on improving education, health, and infrastructure. It also uses funds to modernize a country's financial sector, agriculture, and natural resources management.
• The Bank ensures the implementation of development projects so on bring about a smooth transference from a war-time to peace economy.
STRUCTURE OF WORLD BANK
Organization and Structure:
The organization of the bank consists of the Board of Governors, the Board of Executive Directors and therefore the Advisory Committee, the Loan Committee and therefore the president and other staff members. All the powers of the bank are vested within the Board of Governors which is that the supreme policy making body of the bank.
The board consists of 1 Governor and one Alternative Governor appointed for five years by each member country. Each Governor has the voting power which is said to the financial contribution of the govt. Which he represents.
The Board of Executive Directors consists of 21 members, 6 of them are appointed by the six largest shareholders, namely the USA, the UK, West Germany, France, Japan and India. The rest of the 15 members are elected by the remaining countries.
Each executive director holds voting power in proportion to the shares held by his government. The board of Executive Directors meets regularly once a month to hold on the routine working of the bank.
The president of the bank is pointed by the Board of Executive Directors. He's the Chief Executive of the Bank and he's liable for the conduct of the day-to-day business of the bank. The Advisory committees appointed by the Board of Directors.
It consists of seven members who are expects in several branches of banking. There's also another body referred to as the Loan Committee. This committee is consulted by the bank before any loan is extended to a member country.
FUNCTIONS OF WORLD BANK
World Bank is playing main role of providing loans for development works to member countries, especially to underdeveloped countries. The World Bank provides long-term loans for various development projects of 5 to twenty years duration.
The main functions are often explained with the assistance of the subsequent points:
1. World Bank provides various technical services to the member countries. For this purpose, the Bank has established “The Economic Development Institute” and a Staff College in Washington.
2. Bank can grant loans to a member country up to twenty of its shares within the paid-up capital.
3. The quantities of loans, interest rate and terms and conditions are determined by the Bank itself.
4. Generally, Bank grants loans for a specific project duly submitted to the Bank by the member country.
5. The debtor nation has got to repay either in reserve currencies or within the currency during which the loan was sanctioned.
6. Bank also provides loan to private investors belonging to member countries on its own guarantee, but for this loan private investors need to seek prior permission from those counties where this amount is going to be collected.
The International fund (IMF) is that the inter-governmental organization established to stabilize the rate of exchange within the international trade. It helps the member countries to enhance their Balance of Payment (BOP) condition thorough the adequate liquidity within the international market, promote the growth of global monetary cooperation, secure financial stability, facilitate international trade. It's one of the Bretton woods twins, which came into existence in 1945, is governed by and accountable to the 189 countries that structure its near-global membership.
The International monetary fund (IMF) and therefore the International Reconstruction and Development Bank (IBRD) were established in July 1944 together on the basis of Bretton Woods’s conference that's why they're also referred to as the Bretton Woods twins. India is that the founding member of the IMF.
IMF India
One of the founding members in IMF is India. It's also among the top 10 countries within the IMF. The list includes US, Japan, Italy, France, Germany, and so on. IMF includes a played a really crucial role within the economy of India. It’s provided with the economic assistance whenever required by India.
Furthermore, at the time of determination of policies, it provides appropriate consultancy. Earlier India was among the first five countries that had the highest quota within the IMF. Because of this status, India has been given a permanent position among the executive board of directors in IMF.
OBJECTIVES OF IMF
• The objectives of IMF are to stabilize the exchange rates and assist within the restructuring of the payment system globally.
• Furthermore, IMF also manages the economic policies for the global market.
• The countries that have low incomes can borrow the loan on concessional terms.
• It also provides assistance to the countries during the time of emergencies and helps them in maintaining the balance of payments.
• To promote international monetary co-operation.
• To ensure balanced international trade
• To ensure rate of exchange stability
• To eliminate or to reduce exchange restrictions by promoting the system of multilateral payments.
• To grant economic assistance to members countries for eliminating the adverse balance of payment
• To minimize the imbalances in quantum and duration of international trade.
IMPORTANCE OF IMF
The IMF assists member nations in several different capacities.
• Provides Loans to Member Nations:
Its most important function is its ability to provide loans to member nations in need of a bailout. The IMF can attach conditions to those loans, including prescribed economic policies, to which borrowing governments must comply.
• Fills Deficit Gaps:
If a country has a balance of payments deficit, the IMF can step in to fill the gap.
• Technical Support and Assistance:
It is a council and adviser to countries attempting a new economic policy. It also publishes papers on new economic topics.
Sceptics maintain that a country during a financial crisis might beg the IMF for a bailout, but it's unclear whether the country is in crisis because it made poor policy decisions knowing that IMF aid would function a backstop.
STRUCTURE OF IMF
The Fund has a Board of Governors, composed of as many governors as there are member states; 24 executive directors; and a managing director and staff.
Board of Governors
All powers of the IMF are vested in its Board of Governors, on which all member states are represented. Each member state appoints one governor and one alternate governor, who may vote when the principal governor is absent. A government customarily appoints its minister of finance, the president of its central bank, or another high-ranking official as its governor. For example, in December 2002, the United States governor was Secretary of the Treasury Paul O'Neill, and the alternate, Federal Reserve Board Chairman Alan Greenspan.
The principle that applies in most international bodies—one nation, one vote—does not apply within the IMF Board of Governors. Multiple votes are assigned to IMF member states, more votes being assigned to those subscribing larger quotas to the Fund's resources. Each member has 250 votes plus 1 additional vote for each SDR 100,000 of its quota. (The SDR is a world reserve asset created by the Fund. See section F.) The total number of votes of all IMF members was 2,172,621 on 12 December 2002, of which the us held about 17.1%, Germany and Japan about 6% each, and therefore the United Kingdom and France about 5% each.
Each governor is entitled to cast all the votes allotted to his country as a unit. On certain matters, however, voting power varies according to the utilization made from the Fund's resources by the respective member. IMF decisions are made by an easy majority of the votes cast, unless otherwise stipulated within the constitution. The Board of Governors regularly meets once a year. It may also be convened for other than annual meetings.
Except for such basic matters as admission of latest members, quota changes, and therefore the like, the Board of Governors delegates most of its powers to the chief Directors of the Fund.
The Board of Governors has an advisory committee, the International Monetary and Financial Committee (IMFC), formerly called the Interim Committee, which meets twice a year. Its composition reflects that of the executive Board; each country that appoints, and every group that elects, an executive director, also appoints a member to the IMFC. These members are governors of the Fund, ministers, or others of comparable rank.
Executive Board
The 24 executive directors (and 24 alternates) of the IMF are accountable for the Fund's general operations, and for this purpose they exercise all the powers delegated to them by the Board of Governors. They "function in continuous session" at the Fund's headquarters and meet as often as business may require, usually several times a week.
Of the 24 executive directors, five are appointed by the countries having the largest quotas (United States, Japan, Germany, France, and the United Kingdom), and the other 19 are elected by regional groups of the remaining members. The IMF's managing director also is chairman of the executive Board.
Managing Director and Staff
The managing director, who is chosen by the executive directors, is accountable for the conduct of the standard business of the Fund. He appointed for a five-year term and may not serve concurrently as a governor or executive of the IMF. The managing director chairs meetings of the chief directors but may vote only just in case of a tie.
The permanent headquarters of the IMF are at 700 19th Street, N.W., Washington, DC 20431. As of 21 August 2002, the staff consisted of about 2,650 persons from 140 countries.
The IMF includes a regional office for Asia and therefore the Pacific, located in Tokyo
FUNCTIONS OF IMF
Some of the main functions of International monetary fund are as follows:
1. Exchange Stability:
The first important function of IMF is to take care of exchange stability and thereby to discourage any fluctuations within the rate of exchange. The Found ensures such stability by making necessary arrangements like—enforcing declaration of face value of currency of all members in terms of gold or US dollar, enforcing devaluation criteria, up to 10 per cent or more by more information or by taking permission from IMF respectively, forbidding members to go in for multiple exchange rates and also to buy or sell gold at prices other than declared par value.
2. Eliminating BOP Disequilibrium:
The Fund helps the member countries in eliminating or minimizing the short-period equilibrium of balance of payments either by selling or lending foreign currencies to the members. The Fund also helps its members towards removing the long period disequilibrium in their balance of payments. Just in case of fundamental changes within the economies of its members, the Fund can advise its members to change the par values of its currencies.
3. Determination of Par Value:
IMF enforces the system of determination of par values of the currencies of the members countries. As per the original Articles of Agreement of the IMF every member country must declare the par value of its currency in terms of gold or US dollars. Under the revised Articles, the members are given autonomy to float or change exchange rates as per demand supply conditions in the exchange market and also at par with internal price levels.
As per this text, IMF is exercising surveillance to confirm proper working and balance within the international medium of exchange, i.e., by avoiding manipulation within the exchange rates and by adopting intervention policy to counter short-term movements within the exchange value of the currency.
4. Stabilize Economies:
The IMF has a very important function to advise the member countries on various economic and monetary matters and thereby to assist stabilize their economies.
5. Credit Facilities:
IMF is maintaining various borrowing and credit facilities so on help the member countries in correcting disequilibrium in their balance of payments. These credit facilities include-basic credit facility, extended fund facility for a period of three years, compensatory financing facility, Lucifer stock facility for helping the primary producing countries, supplementary financing facility, special oil facility, trust fund, structural adjustment facility etc. The Fund also charges interest from the borrowing countries on their credit.
6. Maintaining Balance between Demand and supply of Currencies:
IMF is additionally entrusted with important function to take care of balance between demands and provide of various currencies. Accordingly, the fund can declare a currency as scarce currency which is in great demand and may increase its supply by borrowing it from the country concerned or by purchasing an equivalent currency in exchange of gold.
7. Technical Assistance:
The IMF is also performing a useful function to provide technical assistance to the member countries. Such technical assistance in given in two ways, i.e., firstly by granting the members countries the services of its specialists and experts and secondly by sending the outside experts.
Moreover, the Fund has also created two specialized new departments:
(a) Central Banking Services Department and
(b) Fiscal Affairs Department for sending specialists to member countries so on manage its central banks and also on fiscal management.
8. Reducing Tariffs:
The Fund also aims at reducing tariffs and other restrictions imposed on international trade by the member countries so on cease restrictions of remittance of funds or to avoid discriminating practices.
9. General Watch:
The IMF is also keeping a general watch on the monetary and fiscal policies followed by the member countries to make sure no flouting of the provisions of the charter.
The World Trade Organization (WTO) is an intergovernmental organization that's concerned with the regulation of international trade between nations. The WTO officially commenced on 1 January 1995 under the Marrakesh Agreement, signed by 123 nations on 15 April 1994, replacing the general Agreement on Tariffs and Trade (GATT), which commenced in 1948. It's the largest international economic organization within the world.
The WTO deals with regulation of trade goods, services and intellectual property between participating countries by providing a framework for negotiating trade agreements and a dispute resolution process aimed at enforcing participants' adherence to WTO agreements, which are signed by representatives of member governments and ratified by their parliaments. The WTO prohibits discrimination between trading partners, but provides exceptions for environmental protection, national security, and other important goals. Trade-related disputes are resolved by independent judges at the WTO through a dispute resolution process.
The WTO's current Director-General is Roberto Azevêdo, who leads a staff of over 600 people in Geneva, Switzerland. A trade facilitation agreement, a part of the Bali Package of decisions, was agreed by all members on 7 December 2013, the first comprehensive agreement within the organization's history. On 23 January 2017, the amendment to the WTO Trade Related Aspects of intellectual property Rights (TRIPS) Agreement marks the primary time since the organization opened in 1995 that WTO accords are amended, and this variation should secure for developing countries a legal pathway to access affordable remedies under WTO rules.
Studies show that the WTO boosted trade which barriers to trade would be higher within the absence of the WTO. The WTO has highly influenced the text of trade agreements, as "nearly all recent [preferential trade agreements (PTAs)] reference the WTO explicitly, often dozens of times across multiple chapters... In many of those same PTAs we find that substantial portions of treaty language—sometime the majority of a chapter—is copied verbatim from a WTO agreement."
OBJECTIVES OF WORLD TRADE ORGANISATION
The important objectives of WTO are:
1. To improve the standard of living of people within the member countries.
2. To ensure full employment and broad increase in effective demand.
3. To enlarge production and trade of goods.
4. To increase the trade of services.
5. To confirm optimum utilization of world resources.
6. To protect the environment.
7. To accept the concept of sustainable development.
IMPORTANCE OF WORLD TRADE ORGANISATION
1. The system helps promote peace
2. Disputes are handled constructively
3. Rules make life easier for all
4. Freer trade cuts the costs of living
5. It provides more choice of products and qualities
6. Trade raises incomes
7. Trade stimulates economic growth
8. The basic principles make life more efficient
9. Governments are shielded from lobbying
10. The system encourages good government
STRUCTURE OF WORLD TRADE ORGANISATION
The WTO has nearly 153 members accounting for over 97% of world trade. Around 30 others are negotiating membership. Decisions are made by the entire membership. This is often typically by consensus.
A majority vote is additionally possible but it's never been used in the WTO and was extremely rare under the WTO’s predecessor, GATT. The WTO’s agreements are ratified altogether members’ parliaments.
The WTO’s top level decision-making body is that the Ministerial Conferences which meets a minimum of once in every two years. Below this is often the overall Council (normally ambassadors and heads of delegation in Geneva, but sometimes officials sent from members’ capitals) which meets several times a year within the Geneva headquarters. The overall Council also meets as the trade policy Review Body and therefore the Disputes Settlement Body.
At the next level, the goods Council, Services Council and intellectual property (TRIPs) Council report back to the general Council. Numerous specialized committees, working groups and working parties deal with the individual agreements and other areas like, the environment, development, membership applications and regional trade agreements.
Secretariat:
The WTO secretariat, based in Geneva, has around 600 staff and is headed by a Director-General. Its annual budget is roughly 160 million Swiss Francs. It doesn't have branch offices outside Geneva. Since decisions are taken by the members themselves, the secretariat doesn't have the decision making the role those other international bureaucracies are given.
The secretariat s main duties to supply technical support for the various councils and committees and therefore the ministerial conferences, to provide technical assistance for developing countries, to analyse world trade and to explain WTO affairs to the general public and media. The secretariat also provides some forms of legal assistance within the dispute settlement process and advises governments wishing to become members of the WTO.
FUNCTIONS OF WORLD TRADE ORGANISATION
The main functions of WTO are discussed below:
1. To implement rules and provisions related to trade policy review mechanism.
2. To provide a platform to member countries to decide future strategies related to trade and tariff.
3. To provide facilities for implementation, administration and operation of multilateral and bilateral agreements of the world trade.
4. To administer the rules and processes related to dispute settlement.
5. To ensure the optimum use of world resources.
6. To assist international organizations like, IMF and IBRD for establishing coherence in Universal economic policy determination.
The South Asian Association for Regional Cooperation (SAARC) is that the regional intergovernmental organization and geopolitical union of states in South Asia. Its member states are Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka. SAARC comprises 3% of the world's area, 21% of the world's population and 4.21% (US$3.67 trillion) [3] of the worldwide economy, as of 2019.
SAARC was founded in Dhaka on 8 December 1985. Its secretariat is based in Kathmandu, Nepal. The organization promotes development of economic and regional integration. It launched the South Asian free trade Area in 2006. SAARC maintains permanent diplomatic relations at the United Nations as an observer and has developed links with multilateral entities, including the European Union.
It is dedicated to economic, technological, social and cultural development emphasizing collective self- reliance. In terms of population, its sphere of influence is that the largest of any regional organization: almost 1.5 billion combined population of its member states. In April 2007, Afghanistan became its eighth member.
OBJECTIVES OF SAARC:
The objectives of SAARC, as defined in its charter, are as follows:
i. Promote the welfare of the peoples of South Asia and improve their quality of life;
Ii. Accelerate economic growth, social progress and cultural development within the region by providing all individuals the opportunity to measure in dignity and realize their full potential;
Iii. Promote and strengthen collective self-reliance among the countries of South Asia;
Iv. Contribute to mutual trust, understanding and appreciation of one another’s problems;
v. Promote active collaboration and mutual assistance within the economic, social, cultural, technical and scientific fields;
Vi. Strengthen co-operation with other developing countries;
Vii. Strengthen co-operation among themselves in international forms on matters of common interest; and
Viii. Cooperate with international and regional organization with similar aims and purposes.
SAARC AND ITS IMPORTANCE
SAARC comprises 3% of the world's area, 21% of the world's population and three .8% (US$2.9 trillion) of the global economy.
Creating synergies: it's the world’s most densely populated region and one in all the most fertile areas. SAARC countries have common tradition, dress, food and culture and political aspects thereby synergizing their actions.
Common solutions: All the SAARC countries have common problems and issues like poverty, illiteracy, malnutrition, natural disasters, internal conflicts, industrial and technological backwardness, low GDP and poor socio-economic condition and uplift their living standards thereby creating common areas of development and progress having common solutions.
SAARC ACHIEVEMENTS
• Free Trade Area (FTA): SAARC is relatively a new organization within the global arena. The member countries have established a free trade Area (FTA) which can increase their internal trade and lessen the trade gap of some states considerably.
• SAPTA: South Asia Preferential Trading Agreement for promoting trade amongst the member countries came into effect in 1995.
• SAFTA: A free trade Agreement confined to goods, but excluding all services like information technology. Agreement was signed to scale back customs duties of all traded goods to zero by the year 2016.
• SAARC Agreement on trade Services (SATIS): SATIS is following the GATS-plus 'positive list' approach for trade services liberalization.
• SAARC University: Establish a SAARC university in India, a food bank and also an energy reserve in Pakistan.
SIGNIFICANCE FOR INDIA
• Neighbourhood first: Primacy to the country’s immediate neighbours.
• Geostrategic significance: Can counter China (OBOR initiative) through engaging Nepal, Bhutan, the Maldives and Sri Lanka in development process and economic cooperation.
• Regional stability: SAARC can help in creation of mutual trust and peace within the region.
• Global leadership role: It offers India a platform to showcase its leadership within the region by taking up extra responsibilities.
• Game changer for India’s Act East Policy: by linking South Asian economies with South East Asian will bring further economic integration and prosperity to India mainly within the Services Sector.
STRUCTURE OF SAARC
The SAARC comprises following layers of organizational structure:
1.Council
At the top, there's the Council represented by the heads of the government of the member countries. The council the apex political affairs body. It meets once in 2 years’ time.
2. Council of Minister
It is to assist the council. It’s represented by the foreign minister of the member countries.
Its functions include:
• Formulation of policies
• Review of functioning
• Deciding new areas of cooperation
• Decide about general issues of common of interest of the SAARC member.
3. Standing committee
It is comprised by the foreign secretariat of the member government. Its major functions are:
• To monitor and co-ordinate the programs
• To determine inter-sectored priorities.
• To mobilize cooperation within and outside the region
• To influence the modalities of financing.
4. Programming Committee:
It includes the senior official of the member governments.
Its functions include:
• Scrutinizing the budget of the secretarial.
• Finalizing the annual schedule.
• External activities assigned by the standing committee.
• Analyses the respects of the technical committee.
5. Technical Committee:
It includes the represented of the member nations.
Its function is:
• To formulate project and programmer
• To monitor and execute the projects
• To submit reports.
The Technical Committee convers the areas such as: Agriculture, Communication, Environment, Rural Development, Health and Population, Science and Technology, Tourism and Transport.
6. Secretarial:
The SAARC secretarial is located in Nepal.
Its function includes:
• Coordination, execution and monitoring of SAARC activities
• Servicing the SAARC meetings
• Work as communication link between the SAARC and other international forum.
• The secretariats are headed by the secretary-General appointed by the Council of Ministers. These are 8 Director (One from each member nation) and therefore the general service staff.
FUNCTIONS OF SAARC
The main functions of SAARC are mentioned below.
• To maintain the cooperation during this region
• To prevent the common problems
• To ensure strong relationship among the SAARC country
• To remove the poverty during this region permanently
• To prevent the terrorism in this region.
BRICS is that the acronym coined for an association of 5 major emerging national economies: Brazil, Russia, India, China and South Africa |African country| African nation" South Africa. Originally the first four were grouped as "BRIC" (or "the BRICs"), before the induction of South Africa in 2010. The BRICS members are known for his or her significant influence on regional affairs; all are members of G20. Since 2009, the BRICS nations have met annually at formal summits. China hosted the 9th BRICS summit in Xiamen on September 2017, while Brazil hosted the most recent 11th BRICS summit on 13-14 November 2019.
In 2015, the five BRICS countries represented over 3.1 billion people, or about 41% of the world population; four out of 5 members (excluding South Africa at #24) were within the top 10 of the worlds by population. As of 2018, these five nations had a combined nominal GDP of US$18.6 trillion, about 23.2% of the gross world product, a combined GDP (PPP) of around US$40.55 trillion (32% of World's GDP PPP), and an estimated US$4.46 trillion in combined foreign reserves. The BRICS have received both praise and criticism from numerous commentators. Bilateral relations among BRICS nations are conducted mainly on the basis of non-interference, equality, and mutual benefit.
OBJECTIVES OF BRICS
• Increasing trade co-operation by making an exclusive trade bloc. This came handy because after western sanctions, Russia integrated its economy with BRICS and saved its economy from utter collapse.
• Using currency other than US Dollar. Since Dollar may be a dominant currency and US can control the flow of dollar, BRICS helps within the countries operating with alternative currencies.
• Increasing regional co-operation. Trade is said to everything. India and China were the sole countries which didn't condemn Russia for what happened in Crimea. This happened because there's big money among the countries.
• The original objective was that developed countries used to dominate the trade with developing countries. So, there was a separate trade bloc made for developing countries for trade co-operation.
FUNCTIONS OF BRICS
With this study, researchers from Süd wind Institute (project lead) and Ecologic Institute inform the European Parliament about how the five emerging economies known collectively as the BRICS (Brazil, Russia, India, China and South Africa) are emerging as development assistance donors and potential partners within the developing world. The authors discuss how South-South cooperation is becoming more significant and what challenges it poses to the EU's ODA agenda. Finally, the study provides a series of recommendations for European policy makers.
The BRICS are the world's leading emerging economies. Especially within the last decade, they need been characterized by rapid economic growth and industrialization. Their role in world affairs is thus changing from that of developing countries who are recipients of aid to (again) significant donors of funds. This poses new challenges to the EU’s ODA agenda and has led the EU to re-focus its relationship with these potential partner countries. This study explores these challenges and provides recommendations to the EU on the way to address them.
Although the BRICS haven't reached the level of industrialization that characterizes traditional donors and are still plagued by persistent inequality and poverty, the BRICS have begun to disburse significant investment and foreign assistance funds to other developing countries. South Africa, for instance, has become the leading economy in Africa, and as such, is expected to lead peace and security efforts, promote regional economic integration and fund development projects. Similarly, Brazil and India are commencing to exert influence on their less developed neighbours and China is becoming a serious source of foreign direct investment within the developing world. These changes are giving rise to so called "South-South cooperation," which isn't only modifying the relationship between developing countries but also that between developing and industrialized countries.
Thus, the objective of this study is to tell the European Parliament about how the BRICS are emerging as development assistance donors and potential partners. The authors provide an overview of how development aid has evolved over the past decade, how financing from the BRICS impacts development cooperation, and the way development policies differ among the BRICS. The authors also discuss how these changes pose new challenges to the EU's ODA agenda. Finally, the study provides a series of recommendations for European policy makers. The authors' main conclusion is that eye-to-eye dialogue and trilateral cooperation are the best means of addressing BRICS as new stakeholders in 21st century development politics.
References:
- Https://www.toppr.com/ask/question/economic-development-is-characterized-by-which-of-the-following/
- Bajpai A .D .N., Caubey S.K. Et al, Leading Issues of Indian Economy, Atlantic Publishers and Distributers.
- Magazines / Journals Reports
- Ruddar Datta and K.P.M. Sundaram, Indian Economy, S. Chand and Co., New Delhi