General Concepts

Emerging Countries Searching for their Rightful Place at the Global Level

بسم الله الرحمن الرحيم

The term ’emerging countries’ was first used about a decade back by the financial institutions and the implications was limited to the emerging financial markets and the investment opportunities of such countries which were in a comfortable position to attract investments.

This concept later evolved further and two more factors were incorporated into it:

1. Presence of real economic potential of the emerging countries, and
2. Rapid industrialization.

In such emerging markets which were faced with corruption, the political leadership played an important role to create a viable and sound economic climate in order to benefit from the investment capital funds.

From the perspective of the West the ‘quality transformation’ of such emerging countries which can truly be described as genuinely independent economies deriving their strength from the democratic set-up, was in fact enjoyed by just three countries and no more i.e. China, Brazil and India and it is these countries that who are emerging on the economic front as a whole. Some economists have lately included Russia to this list although Russian industry is not emerging simply because it already has the industry. But the economists argue that since Russia was focusing to stabilize itself in the aftermath of the Soviet Union’s collapse and hence it had neglected its industrial and production sectors. It was only when it was politically stabilized that it began to concentrate on the industrial and production sector just like any other emerging country and it is for this reason that Russia is counted among emerging countries known by the name (B.R.I.C). This view is rather justified, and thus we officially have four emerging countries.

The distinguishing feature of these countries that have developed their industry from the level of ‘developing’ countries to the level of ‘developed’ countries and thus the term ‘emerging’ is more apt for them as it distinguishes them from the lower levels of the ‘developing’ and from the big wealthy industrial or ‘developed’ countries.

Sometimes certain other countries are also counted among emerging nations, but if one looks at the details, it does not reflect the reality. For instance, Turkey and Mexico are included the list of emerging nations, but a keen observer of the reality in Turkey and Mexico do not meet the standards set for ‘emerging’ countries. The reason is that though these two countries possess considerable demographics and they do have some industry, such industry and economy is essentially dependent on the western countries and thus any industrial advancement in these countries first and foremost affects and benefits America and European more these two countries themselves.

Even South Africa is sometimes talked about as an emerging country because its economy is far more developed as compared to the rest of the African continent. However, the industrial opportunity available in South Africa is rather weak and dependent on the western countries.

Thus if one observes meticulously, the actually emerging countries are four, and they are the group of B.R.I.C which stands for Brazil, Russia, India and China. These alone fully meet the criteria of the concept of ‘emerging’ countries.

As for the rest of twenty countries like Indonesia, South Korea, Argentina and Saudi Arabia, they are still ‘developing’ countries that do not possess the features of ‘rapidly’ developing domestic industry or economic development and thus they been placed under the group of 20 as being the largest of the world’s developing countries. This is either to exploit their financial resources in supporting international financial institutions, as in the case of Saudi Arabia, or to be proxy witness to the global agreements in order to give such agreements some sort of international legitimacy.

These four emerging countries of B.R.I.C have been able to register their vocal presence in economic conferences and for a. Statistics bear witness to their strength and their utility in the global economy, the Bank of International Settlements, an affiliate of the International Monetary Fund (IMF) as published a study that says: “The market valve of the stock markets in the emerging economies in the past decade was less than 2 trillion dollars as in 1995, while that has now surpassed 5 trillion dollars in the current year and represents 12% of the global stock value which is some 40 trillion dollars at present.”

America and Europe decided to involve the emerging countries to have some role and this was reflected in the conferences-the summit of group of 20 in London and Sao Paolo where the finance ministers and heads of the central banks of the group of 20 participated in the proceedings of the conferences.

The B.R.I.C countries called for economic reforms in the world especially in the IMF and the World Bank which were partly met and the IMF provided billions of dollars to the emerging markets and China provided a huge package of 586 billion dollars for rehabilitation and revitalisation plan for global economy and stock markets.

In the joint communiqué at their last summit held in June this year in Russian city of Yekaterinburg in the Ural Mountains the four BRIC leaders demanded reforms in the international monetary system and the United Nations itself, it said: “We feel that there is a need for a stable world monetary system which has greater representation and predictable direction for the future.” The statement urged a “stable world trade system which curbs protectionism and pursues a comprehensive and balanced outcome of the Doha round of world trade.” The leaders also demanded that India and Brazil be assigned greater voice and role in the international community, it said: “We reaffirm the importance that we attach to placing India and Brazil on a scientific footing and support their cause to play a greater role at the UN.” [Al-Jazeera net: 24.06.09].

The global economic conflict between America and Europe has opened up an opportunity for the emerging countries to play a new role since both America and Europe want these nations to agree to strengthen global economy. Thus Europe demanded that America bring binding legislation to monitor international financial agencies and re structure the global financial system, whereas the United States carved out plans that are designed to save only the financial incentive. As a result of this conflict, both the US and Europe fear that the emerging nations may resort to adopting protectionist policies that protect their domestic trade and consequently political leaderships hostile to the West may emerge as happened in the 1930’s when the Nazis and Fascists emerged as result of the failure of the London Conference in 1933.

Therefore, the US and Europe agreed to encourage the participation of the emerging nations in the international financial institutions and benefit from this participation. They increased the IMF allocation by $500 billion and transferred another 250 billion dollars to support global trade.

David Miliband, the British Foreign Secretary said: “The reality that countries like China, India, Russia and Brazil are the four partners in the dialogue for future global economy in itself indicates that the western leaders do not believe that they by themselves can solve the world economic crisis.” He added: “I believe that we aware of the dangers of protectionism since the 1930’s and that protectionism can lead to collapse and that it is important not to allow the world to suffocate this time.”

The Brazilian President Lola D Silva said: “The concept tht the group of seven elite and advanced nations of the world are by themselves not in a position to work alone and the time has come to reach a consensus between governments on building a new financial structure for the world and that the global financial crisis requires a global solution.”

Indeed these four emerging nations have become the focus of the big countries and these countries have formed plans to benefit from them, sometimes through the traditional means of control, as Britain did in India; or within the American continent, like the US and Brazil; or through political engagements as the US and Europe have done with China and Russia.

For instance, China helped America in its financial crisis and bought US treasury bonds to the tune of 767.90 billion US dollars up to Marc, 2009, while Russia bought bonds worth 138.40 billion US dollars. [Novo city: 16.06.2009]. Also China contributed hundreds of billions of US dollars to support the Shanghai Co-operation Organisation countries (former Soviet republics), this point to China’s enormous economic and global might.

The four B.R.I.C countries represent about 40% of world’s population and 15% of world gross production. Thus China advanced in its gross domestic production and goods export from being ranked 10th in the late 1990’s to being ranked 2nd at present.

Thus, what is known as BRIC has become a considerable economic force to reckon with, so much so that is next only to the group of seven advanced economies. It has its influence over the economic market for the last few years and it also come to occupy considerable weightage within the group of 20 despite the fact that the US regards the G-7 greatly over everything else. The US Deputy Secretary for international affairs David H. McCormick said after the G-7 summit that: “I haven’t heard anyone rejecting the G-7, but I heard about the greater importance of the G-20.”

Thus the growing prominence of the emerging nations is of global importance because it represents unprecedented erosion of the rules of international play which have been imposed upon the developing countries which place restrictions and impediments in their growth and advancement since the Second World War.

The role of the emerging countries was demonstrated clearly at the G-8 summit which ended today 9th July, 2009 in Italy where the emerging countries played a conspicuous role during the proceedings of the summit.

16th Rajab, 1430 A.H
9th July, 2009.