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The Emerging New World: The BRICS, South Africa and New Models of Development

Dr. Martyn Davies |

In 2011 South Africa became a member of the new emerging economic power grouping known as the BRICS, along with Brazil, Russia, India and China. What began as a loose grouping of emerging and populous economies is rapidly morphing into a more coherent power grouping that reflects the shifting balance of power in the global economy – away from the traditional world to the new. South Africa must now figure out how to leverage relations with BRICS compatriots in order to align the commercial interest of the BRICS with Africa.

A priority of South Africa’s Department of Trade and Industry (DTI) is to push regional integration in and beyond the Southern African Development Community (SADC) – a region of 15 member states with a combined population of over 250 million people. On paper, the SADC is bigger than Brazil, Russia and Indonesia, but poor government-to-government coordination and inadequate infrastructure does not allow the exploitation of opportunities presented by trade liberalism in the region. South Africa’s renewed drive to push for enhanced regional integration is arguably a consequence of it joining the BRICS – a pressure to increase its market depth through integrating the SADC economy. South Arica is now describing itself as the gateway to the region.

But, when one strips out the political rhetoric, it is ironic that South Africa’s strategic political partners in the BRICS grouping are also its greatest commercial competitors. This is especially the case with China (manufacturing) and India (services) – the management of South Africa’s commercial relations with both powers will be a delicate balancing act in the coming years. And while South Africa has benefited from China’s (insatiable) demand for resources over the past decade, South Africa and Brazil have experiences de-industrialization through trade.

Joseph Stiglitz visited South Africa in May 2012 and endorsed the government’s new model supporting a state-driven “demand side” rather than “supply side” approach to growth. I would argue that South Africa’s new emerging model of a state-first approach to growth is both a response to the recessionary state of its traditional (western) investment and still largest trade partner, the European Union, whilst also an attempt to emulate the BRICS high GDP growth performance, which is at least perceived to be state-determined.

The BRICS may have common strategic macro interests but how the South African government manages its relations with BRICS business interests in Africa will be critical to economic growth in the coming years.

Topics: Economic Outlook

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