Emerging Economies like those of India, Eastern Europe, and China are increasingly growing and becoming significant world economies in the aftermath of the global financial crisis. A few decades ago, these countries contributed a mere 5% to the world’s GDP but today this figure has grown to 25% today. These emerging economies, which also include countries such as Vietnam, Nigeria, Malaysia, Indonesia, Saudi Arabia, and South Africa, are growing faster than the G7 countries which over the last 5 years slowed down due to the global financial crisis. Whilst the potential of all the above named countries is great and promising, the BRICS (Brazil, Russia, India, China, and South Africa), are the most dominant forces today in terms of economic power. China, together with the other BRIC countries, has made massive investments in governance, infrastructure, social programs, domestic institutions, as well as, in production. Accordingly, they have had a great impact on international trade.
Economic strength is defined by the industrial as well as, production capabilities of a nation. These are areas in which emerging economies have identified and invested into; thus providing them with the much needed impetus upon which to drive their economies into the first world. To bring things into a clear perspective, emerging economies contributed 27% growth in international trade in the 2000 to 2007 period. However, it is China that largely contributed to that growth. Going forward, experts predict that these economies will be larger than the G7 economies hence resulting in the creation of greater wealth and shifts in agenda and power.
The role of these countries in international trade has rapidly and significantly changed. While previously they were market places for goods from the developed countries, today they are industrialized large scale producers of manufactured goods and exporters of the same to some of the developed countries and the developing countries. Their financial and technical assistance to each other and to other developing countries has been made possible through economic cooperation amongst each other; and mainly through the south-south-cooperation with developing countries (Low Income Countries).
As these countries go about forming economic associations with each other, in addition to pacts with other developing countries, they are also striving to have more influence politically, around the globe. Their efforts, thus, are a threat to the traditional western powers like the EU. China, for instance, is growing its presence in several African Countries, supporting infrastructure development in countries like Kenya, Uganda, Tanzania, South Sudan, and so forth. Development financing, and foreign direct investment and trade that China engages with its partners in Africa has meant that countries like Kenya which previously looked to the western countries for its agricultural exports and internal trade has switched to the east – to China, Thailand, Malaysia, and so forth.
The rise of emerging economies into global trade has resulted into the alteration of the traditional economic dominance by western donors. China and other emerging economies have formed an economic and political bloc known as the BRICS which is aimed at political and economic cooperation through trade pacts. These efforts are purposed to strengthen international trade through the South-South-Cooperation – shared experiences, solidarity, and self-reliance amongst the emerging economies. In the next 50 years, China will be the world’s leading economy, and will command greater political as well as, economic strength or influence across the globe.
- Cheng, H. F., Gutierrez, M., Mahajan, A., Shachmurove, Y., & Shahrokhi, M. (2007). A future global economy to be built by BRICs. Global Finance Journal, 143-156.
- Hawksworth, J. (2013). The World in 2050. Retrieved January 12, 2014, from The 2050 Reports: http://www.pwc.com/
- Morazan, P., Knoke, I., Knoblauch, D., & Schafer, T. (2012). THE ROLE OF BRICS IN THE DEVELOPING WORLD. European Parliament Directorate-General for External Policies of the Union.