EDB: BRICS may give new momentum to global economic integration
Moscow, 5 July 2017. Covering all the key regions of the developing world, BRICS may serve as a basis for a new comprehensive global integration platform. This statement has been made by Yaroslav Lissovolik, Chief Economist at Eurasian Development Bank (EDB), at the high-profile economic conference “Living without globalization?”. He also added that, in view of the recent developments in BRICS, China’s earlier initiative to establish BRICS+ is quite timely and will give new momentum to the process of global economic integration.
Yaroslav Lissovolik clarifies that, instead of expanding the core structure of BRICS member states, the BRICS+ initiative aims at establishing a new platform to enhance regional and bilateral alliances, representing different continents, with the objective to bring together regional integration blocs, in which the BRICS economies would play the leading role. Therefore, the main integration blocs that could join the BRICS+ platform include Mercosur, South African Customs Union (SACU), Eurasian Economic Union (EEU), South Asian Association for Regional Cooperation (SAARC), as well as ASEAN-China Free Trade Agreement (FTA).
The speaker has stressed the fact that there is already closer cooperation between regional blocs and development banks within the framework of BRICS+. For instance, Mercosur has signed a Memorandum of Understanding with the EEU and a Preferential Trade Agreement with the SACU. “As to cooperation between development banks of the BRICS member states in 2016, Eurasian Development Bank (EDB), the New Development Bank (NDB), Nord Hydro, and the International Investment Bank (IIB) reached an agreement on construction of small HPPs in the Republic of Karelia. The NDB will finance the construction of plants in Karelia for the total amount of US $100 million – the bank’s first ever investment in the Russian Federation. The New Development Bank of BRICS will provide to EDB and the IIB targeted financing of US $50 million each to open a Russian rouble credit facility for Nord Hydro. The maturity of the loan is 12 years, with EDB and the IIB covering the related project risks,” notes the expert. In April 2017, EDB and the NDB also signed a Memorandum of Understanding to establish а framework for cooperation.
Thus, according to the speaker, the mechanism offered by BRICS+ unlocks opportunities for deeper integration in the field of trade and investments, while establishing an underlying institutional framework for concerted efforts of regional development banks and enhancement of financial systems. The main principle of these developments should, however, be based on ensuring significant flexibility to promote the multilateral nature of trade and investment alliances, as well as prospects for establishing regional and bilateral alliances.
“In this respect, the integration mechanism offered by BRICS+ is closer in its nature to ASEAN and East Asia in general, where—unlike in the European Union with its mechanism based on unified standards aimed at establishing a single bloc—bilateral alliances and various integration mechanisms prevail. In contrast with the “core-periphery” pattern, which has dominated over the last decade, the BRICS+ model creates opportunities for open and diversified integration in the global economy,” stresses Yaroslav Lissovolik.
The high-profile economic conference “Living without globalization?” is held in Hamburg (Germany) on July 3–4. The conference is organised by the Reinventing Bretton Woods Committee and Hamburg Institute of International Economics. The discussions focus on issues related to the future of globalisation, as well as the role of the G20 in addressing major challenges resulting from global economic developments. The discussions also cover future changes in monetary policies, coordination of economic policies, and the future of economic integration.
The conference is held in the run-up to the G20 summit and aims at identifying the key trajectories of economic policies of the G20 countries and formulating main options for improving the global economic situation.
Additional Information:
Eurasian Development Bank (EDB) is an international financial institution founded by Russia and Kazakhstan in January 2006 with the mission to facilitate the development of market economies, sustainable economic growth, and the expansion of mutual trade and other economic ties in its member states. EDB’s charter capital totals US $7 billion. The member states of the Bank are the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Russian Federation, and the Republic of Tajikistan.
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