Introduction
BRICS is a group of five countries with emerging economies that have united to develop a plan on cooperation regarding trade and investment (Aydin 207). The acronym stands for Brazil, Russia, India, China, and South Africa, which joined the group in 2010. Almost twenty years ago, some specialists predicted that the united economies of these nations would become the wealthiest power by 2050 (Aydin 207). Despite the political and economic instability of recent years, the BRICS countries show a varying increase in their trade and investment potential.
BRICS Nations and Their Economies
The most recent overview of the BRICS trade results claims that the region has around 23 percent of the world GDP (Shahbaz et al. 1). At the same time, its share in total trade and investment sector counts for 18 percent, while the export numbers have grown twice over the past ten years. The region is evaluated to have a large labor force that is occupied in agriculture, while service industries experience a lack of specialists. The BRICS countries are also characterized by the relatively low specialization in modern technology, which is often taken from the more developed states.
The national economies of BRICS countries are classified as developing or industrialized (Aydin 209). However, the resources of these countries make them competitive in the global trade market. For instance, the region’s population is estimated to be 3 billion people, which is 42 percent of the total world number. Moreover, Russia is considered the leading energy power, with the biggest natural gas reserves, large amounts of crude oil and coal, all of which is exported. While Russia has the greatest GDP per capita rate inside the group, resources are spread unevenly across the population, leaving many people in poverty.
The economies of the region seem to be rather different in each country. For example, China is more oriented on export, while India has a negative trade balance (Shahbaz et al. 3). Chinese positive results for the national economy are mostly explained by a large number of foreign companies that have their production sites there. The labor force in China is cheap, while workers have become more technologically skilled in recent years. The rise in competitiveness among Chinese technology producers such as Xiaomi and Huawei marks the future transition of this country to the post-industrial level.
BRICS and NAFTA
NAFTA is an acronym that stands for the North American Free Trade Agreement created more than twenty years ago (Rioux et al. 265). The USA, Canada, and Mexico are the members of NAFTA, the primary idea of which was to increase the economic competitiveness of the region. The plan was to relocate production to Mexico since this country had the cheapest labor force in the group, while the U.S. and Canada would specify on marketing, finance, and technology.
The difference between NAFTA and BRICS is that the latter does not have the same level of industrial consolidation. BRICS members do not share their industry sectors with each other, and their production strategy remains a domestic business. In this perspective, BRICS is more of a political union that has common goals regarding the world economy. At the same time, Trump’s administration in the USA shows intentions of decreasing the level of international trade partnerships, including the cooperation inside the NAFTA group. Besides, China currently seems a cheaper production site than Mexico, which leaves the latter fewer privileges as the NAFTA member in the recent decades.
Conclusion
BRICS is a term for a group of five countries that have agreed to act together to increase their trade and investment shares. However, the members of BRICS do not work together under a single strategy, and they have economic models and resources that differ greatly. This lack of real cooperation is the group’s biggest difference from NAFTA, which has a relatively clear structure regarding the division between production in Mexico and other functions in the USA and Canada.
Works Cited
Aydin, Levent. “Intra-BRICS Trade Opening and Its Implications for Carbon Emissions: A General Equilibrium Approach.” Journal of Economics and Development Studies, vol. 4, no. 2, 2016, pp. 207-218.
Rioux, Michele, et al. “Beyond NAFTA with Three Countries: The Impact of Global Value Chains on an Outdated Trade Agreement.” Open Journal of Political Science, vol. 5, no. 4, 2015, pp. 264-276.
Shahbaz, Muhammad, et al. “Globalisation, Economic Growth and Energy Consumption in the BRICS Region: The Importance of Asymmetries.” The Journal of International Trade & Economic Development, 2018. Web.