Brazil, Russia, India, China, South Research Articles

Stock market volatility spillovers and portfolio hedging: BRICS and the financial crisis

The paper investigates the dynamic risk–return properties of the BRICS (Brazil, Russia, India, China, South Africa) capital markets and models potential time-varying correlations and volatility spillover effects with the US stock market. A VAR(1)–GARCH(1,1) framework contributes useful insight into US–BRICS market interactions and expands on a thin past empirical literature. A disaggregated approach pays attention to critical US–BRICS business sectors, namely the industrial and financial sectors. Significant return and volatility transmission dynamics are identified between the US and BRICS stock markets and business sectors. This is a critical input that can affect efficient global portfolio diversification and risk management strategies. Based on this empirical evidence, the study proceeds to assess effective portfolio hedge ratios and to construct optimal portfolio weights for diversified asset allocation to US–BRICS markets and business sectors.

India’s ‘Strategic Autonomy’ and the Club Model of Global Governance: Why the Indian BRICS Engagement Warrants a Less Ambiguous Foreign Policy Doctrine

India’s global policy strategy is on the verge of major changes. Non-alignment as a cornerstone of foreign policy has become outdated given the power shifts in a multipolar world, especially through the emergence of BRICS (Brazil, Russia, India, China, South Africa), which has put India in the position of being perceived as a potential new global player. Without formulating an explicit doctrine, India has applied a three-fold approach with obvious inconsistencies: traditional multilateralism in global forums, bilateralism in the region with selected strategic partners and increasing involvement in clubs (such as BRICS). The most recent power shifts, however, will warrant a more explicit formulation of principles to clearly position the country in a world with self-assertive nations such as China and Russia. India’s role in BRICS might be an indicator as well as a litmus test for a revised strategy.

Потенциал БРИКС и ШОС

The authors consider current status and prospects of Shanghai Cooperation Organization (SCO) and the group of BRICS (Brazil, Russia, India, China, South Africa). It is argued that both are formed by big quickly growing economies. This provides a good potential of economic cooperation. The authors single out the following factors. First of all, all member countries show positive dynamics of economic development. GDP in BRICS and SCO countries grew at the beginning of the XXI century significantly faster than in integration associations built by developed countries (EU, NAFTA). In general, the largest growing economies are on the raising wave of economic cycle and they invest a significant portion of national income into development. This secures them a benefit against developed countries. Secondly, the countries of SCO and BRICS possess vast human potential which is rapidly growing both quantitatively and qualitatively. Thirdly, they are rich in natural resources – in terms of both minerals and agro-climatic conditions. That is why these countries can economically complement each other. BRICS countries already practice economic partnership in a number of spheres – financial, agricultural, scientific and technological. As for investment partnership, the favorable prospects exist for carrying out multilateral mega-projects within BIRCS and SCO. Russia is especially interested in power engineering. Other prospective spheres include airspace, transportation infrastructure, environmental protection, education and vocational training. An important incentive to enhancing cooperation is common strive for transition from conservative resource-based type of development to the innovative economy. Acknowledgments. The article has been supported by the Program of Ural Division of RAS № 14 “Fundamental Problems of Regional Economies, 2015–2017”.

In this Issue

In this Issue

New tuberculosis technologies: challenges for retooling and scale-up [State of the art series. New tools. Number 4 in the series

The availability of new tools does not mean that they will be adopted, used correctly, scaled up or have public health impact. Experience to date with new diagnostics suggests that many national tuberculosis programmes (NTPs) in high-burden countries are reluctant to adopt and scale up new tools, even when these are backed by evidence and global policy recommendations. We suggest that there are several common barriers to effective national adoption and scale-up of new technologies: global policy recommendations that do not provide sufficient information for scale-up, complex decision-making processes and weak political commitment at the country level, limited engagement of and support to NTP managers, high cost of tools and poor fit with user needs, unregulated markets and inadequate business models, limited capacity for laboratory strengthening and implementation research, and insufficient advocacy and donor support. Overcoming these barriers will require enhanced country-level advocacy, resources, technical assistance and political commitment. Some of the BRICS (Brazil, Russia, India, China, South Africa) countries are emerging as early adopters of policies and technologies, and are increasing their investments in TB control. They may provide the first opportunities to fully assess the public health impact of new tools.

Major emerging powers in sustainable development diplomacy: Assessing their leadership potential

It is often argued that the growth of major emerging powers, such as China, India, Russia, and Brazil, will have a transformative effect on the world economy and politics, but the implications of their rise on sustainable development diplomacy have remained understudied. Do these new powers have the potential to exercise leadership and address the stalled performance on the sustainable development agenda? Drawing on theories of leadership in multiparty negotiations and the empirical study of two major emerging powers’ coalitions, BRICS (Brazil, Russia, India, China, South Africa) and BASIC (Brazil, South Africa, India, China), this article assesses their leadership potential in sustainable development diplomacy. It finds that emerging powers are already engaging in policy coordination in the sustainable development realm, have begun to use their influence to create incentives for other actors in the system and have been conducting skillful diplomacy to develop their coalitions and forge consensus in global policy-making. However, exerting actual global leadership would require building a stronger policy agenda. One area with particular potential for emerging powers to exert leadership is the clean energy arena of sustainable development diplomacy.

Conceptualizing BRICS: OPEC as a Mirror

Brazil–Russia–India–China–South Africa (BRICS) is a popular yet poorly conceptualized group. This article builds a parallel between BRICS and OPEC in order to assess the former using a weak cognitivist version of the regime theory. The five countries created an international regime whose members cooperate in view of acquiring, collectively and individually, increased influence in international financial and economic institutions. As they do not concern this domain, the diverging interests of the five members do not hamper the rather limited socialization process at work and the implicit development of the regime. However, they will most likely prevent BRICS from reaching generalized political cooperation. Consequently, the group can be expected to increase its influence significantly in comparison to the present level but not to become one of the world's leading actors.

Determinants of foreign direct investment in BRICS economies: Analysis of economic, institutional and political factor

This paper explores the role of economic, institutional and political factors in attracting foreign direct investment (FDI) in BRICS (Brazil, Russia, India, China & South Africa) economy and the comparative weightage of these factors in attracting FDI. The study uses panel data for a period of ten years (2000-2009) in order to examine the significant determinants of FDI in BRICS from a holistic approach. Analysis has been done using panel unit-root test, and multiple regressions. This study takes into account Market Size, Trade openness, natural resources as economic determinants and Macroeconomic Stability (Inflation Rate), Political stability/No violence, Government Effectiveness, Regulatory Quality, Control of corruption, Voice and accountability, Rule of Law as potential institutional and political determinants of FDI. These factors are based on their relative importance from previous empirical literature. Findings indicate that economics factors are more significant than institutional and political Factors in BRICS economies. The results indicate that market size measured by real GDP is a significant determinates of FDI which implies that most of the investment in BRICS is motivated by market-seeking purpose. Analysis of empirical data also indicates that trade openness, natural resource availability, rule of law and voice and accountability are statistically significant. Coefficients of market size, trade openness are positive which implies that these variables have positive effect on total inward FDI. Natural resource availability has negative effect on total inward FDI, this particular result indicate that FDI is not motivated by resource-seeking purpose in BRICS economies.

BRICS at the Gate: Modern International Monetary System in Conditions of Balanced Uncertainty

The history of the modern international monetary system has been one of balanced uncertainty, with a fundamental trade-off – and tension – persisting between it anchoring mechanism and the mechanism for adjusting imbalances within. Ever since the system’s moorings drifted from its anchoring to gold and the assured automaticity of convertibility, the adjustment mechanism to regulate intra-systemic imbalances – floating exchange rates, capital controls, coordinated international intervention, or a combination thereof – has had to be progressively scaled upwards to account for the contingent nature of the tie to gold. Attempts to weave this balance have typically tended to break down over time as structural shifts associated with modern capitalism have overwhelmed the founding design of each monetary order. Looking ahead, a 21st century international monetary order that is entirely de-anchored from gold and rests merely on the full faith and credit of its fiat money trustees will necessitate that its mechanisms of international coordination and adjustment to restore balance be ratcheted-upwards equivalently. The emergence of the BRICS (Brazil, Russia, India, China, South Africa) phenomenon, and the powerful re-rise of China as a global strategic peer competitor to the United States, is likely to heap a layer of complication to this task of international financial coordination. To overcome the fundamental structural tensions that exist within the system – semi-liberalized financial and exchange rate regimes in a universe of fully-liberalized and quicksilver capital flows; basic long-term irreconcilability of the United States’ international debtor status with its principal reserve currency-issuer status; viability of a dollar-dominated monetary system in a progressively China, Asia and BRICS-dominated global economic and trading order, we propose that flexibility and capacity be endowed within the system’s regulatory mechanisms to accommodate – and accelerate – the economic and financial liberalization trajectories, and rise, of its BRICS and emerging markets constituents.

South African trade hegemony: Is the South Africa–EU Trade, Development and Cooperation Agreement heading for a BRICS wall?

South African dominance of trade in Africa as well as its position as a regional hegemon was entrenched by the Trade, Development and Cooperation Agreement (TDCA) with the European Union in 1999. South Africa's full-blown integration into the BRICS (Brazil, Russia, India, China, South Africa) formation since 2011 has brought new dynamics, however, as South Africa now has a marked BRICS orientation. Although the European Union (EU) as a bloc is still South Africa's largest trading partner, China has become South Africa's largest single-country trading partner. The question arises as to whether this new found loyalty makes sense in terms of South Africa's regional position and its trade prospects. Against the background of more intra-industry trade with the EU and the new and growing inter-industry trade with the other BRICS economies, South Africa's trade share of African trade has been in relative decline. This study uses an international political economy framework to analyse South African trade hegemony based on the TDCA and the possible effects of a shift towards BRICS. The conclusion is that, although the shift towards BRICS can politically be justified, economically it should not be at the expense of the benefits of the more advantageous relationship with the EU.