BRICS WORKSHOP - 2006

Aalborg University, Aalborg, Denmark 12 – 15 February

BRICS - Countries as Regional Dynamos for Development

Angathevar BaskaranMiddlesex University, London, UK

Mammo Muchie Research Centre for Development and International Relations,

Aalborg University,Denmark

Main ThemesMain Themes

• Regional Pole in relation to the Wider Region or what we call Neighbourhood

• Using Systems of Innovation perspective to conceptualise the regional pole and its neighbourhood ‘pole and the hood’

• Whether this relation hinders or promotes development

Pole & Hood: A Conceptual Framework

Wider Region (WR)

Potential Economic

Transformative Input

World Economy

(WE)

Regional Economic Pole

(REP)

Building Competitve

Advantage

REP and WR

Systemic Interactions:

1. Level of Institutional 2. Level of Goals/ Ideas

/ Practices3. Expected Outcomes

Figure 1: Integration: Regional Economic Pole, Wider Region and the Global Economy

Source: Authors

Productive Exchange with WE

Through

Wider Region

Productive Exchange with WE

Directly without Developing

Strong Links with WR

• The opportunitiesMutual trade benefits/ competence building / learning through institutional linkages and so on

• The fearsPerceived or real threat to local industry/ market and fear of over dependence

• DangersFears of dependency by the neighbourhood could lead to missing opportunities to forge greater regional integration

On the other hand, if the regional pole ignores its neighbourhood and regional integration, this could harm it in the long run (globalising economy)

• Existing interactions / Weaknesses and strengths in these interactionsTrade/ Investments/ Institutional linkages/ infrastructure linkages/ Higher education/ technological learning

• Challenges and Prospects

Regional Pole and the Neighbourhood: Analytical Framework

South Africa: Problems of South Africa: Problems of Integrating with the rest of AfricaIntegrating with the rest of Africa

• Problems related to the bifurcation of South Africa’s own innovation system

• Problems related to the weak and often non-existent innovation system in many other African states

• General fragility of the S&T system

• Problems related to the funding system

• Path dependence problems

Second Economy

- Informal

- Agricultural/ Rural

- Urban / semi-urban trading

- Disparities in Education

First Economy- Similar characterristics as a developed economy

- Mineral and Financial based

- Tendency to link up with developed economies

such as EU, and the US

-- Developed financial, technological, and

production systems

Wider African Regional

Economy (WR) --

SADC,COMESA,&AU

Lopsided/ Uneven National

System of Innovation

- Shaped by History of Apathied

- Racialised economy and social

systems

World Economy

(WE)

Figure 2: South Africa -- First and Second Economy and their Links with the African Region and the World Economy

Source: Authors

Productive Exchange with

WE through WR

Little or No

Exchange with

WE and WR

Source: IMF Trade data

Destination of

South African Exports

2000 2004

Developing countries To Africa To Asia

29.1%13.1%

9.8%

30.8%12.8%

12.2%

Industrialized countries To EU To USA

44.4%28.6%

7.9%

56.5%31.8%

10.2%

Other (transition) 26.6% 12.7%

Source: IMF Trade data

Origin of

South African Imports

2000 2004

Developing countries From Africa From Asia

33.6%2.1%

14.1%

40.5%4.2%

18.5%

Industrialized countries From EU From USA

66.1%44.6%

11.9%

59.1%44.9%

8.5%

South African Trade Relations with Africa 1992-2003

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Year

R m

illi

on

s

exports

imports

South Africa's share of total exports of Sub-

Saharan Africa

0%

10%

20%

30%

40%

50%

60%

70%

80%

South Africa Rest SSA

1980 2002

South Africa's share of total exports of Sub-Saharan Africa

0%

20%

40%

60%

80%

100%

Total Exports Technlogyintensiveproducts

Medium-technology

Low-technology

Primaryproducts

Resourcebased

South Africa 1980 South Africa 2002

South African InvestmentSouth African Investment

• 94 of the 100 top corporations listed in the JHB Securities Exchange) involved in the rest of Africa

• Food retailer (Shoprite Checkers) has more than 70 shops in 14 African states

• MTN mobile provider is in Nigeria, Rwanda, Uganda, Cameroon and Swaziland

South African InvestmentSouth African Investment

• SABMiller, second-largest beer brewer in the world is market leader in 13 states

• South African Transport runs Cameroon’s rail road

• South Africa manages power plants in Mali and Zambia

• SA controls banks and supermarkets in Tanzania, Mozambique and Kenya

Companies involved in different Companies involved in different sectors include:sectors include:

• Mining: Anglo Gold-Ashanti, De Beers

• Energy/utility: Sasol, Eskom enterprises, Umgeni Water

• Telecommunications: MTN, Vodacom

• Transport: Transnet, Unitrans

Companies involved in different Companies involved in different sectors include:sectors include:

• Construction-Murray and Rob Retail and wholesale (market seeking)-Shoprite, Massmart Group

• Financial Services: Stanbic, IDC

• Tourism: Southern Sun, Protea

• Manufacturing: SABMiller, Barlow, World, Nampakerts /Group5/Grinaker LTA

Sectors in which South African Sectors in which South African companies operate:companies operate:

• Transport

• Construction

• Financial services

• Tourism

• Mining and energy

• Telecommunication

• Retail

• Hydropower: Mega-project e.g. Inga dam project in DRC

India as a Regional Pole and South Asia as Neighbourhood?

• The opportunities

• The fears

• Dangers

• Existing interactions/ Weaknesses and strengths in interactions

• Challenges/ Prospects

South Asia Region (WR)

-- SAARCPotential Economic

Transformation Input

World Economy

(WE)

INDIA:

Regional Economic Pole

(REP)Building Competitve

Advantage

Figure 3: India (Regional Economic Pole) -- Productive Exchange with South Asia Region and the World Economy

Source: Authors

Productive Exchange with WE

Through

Wider Region

Productive Exchange with WE

Directly without Developing

Strong Links with WR

Table1: India: Exports and Imports to Countries in South Asian Region 2004-05 (in Rs. billion)

Country Exports Imports

Bangladesh 72.2 2.7

Bhutan 3.8 3.2

Maldives 1.9 0.03

Nepal 33.4 15.6

Pakistan 22.9 4.2

Sri Lanka 60.9 16.4

Source:<http://www.dgciskol.nic/pdfs/Emsft_2b.pdf>;and <http://www.dgciskol.nic/pdfs/Imsft_2a.pdf>

• India’s Total Imports in 2004-05: Rs 4905.3b

• Total Imports from SAARC countries: Rs. 41.96b

• This amounts to just 0.86 % of the Total Imports

Table 2: India: Exports to and Imports from Bangladesh – 2001-2005 (in US$ m)

Year Exports Imports Trade Balance in Favour of India

2000-01 873.0 73.9 799.1

2001-02 1002.2 59.1 943.1

2002-03 1176.0 62.1 1113.9

2003-04 1740.8 77.6 1663.2

2004-05 1586.2 54.9 1531.3

Source: Ministry of Foreign Affairs, Government of India.

• Major items of Exports from India: food grains, cotton yarn, fabrics, machinery, instruments, glass/glassware, ceramics and coal.

• Major items of Imports by India: raw jute, inorganic chemicals, leather, jamdani saris, etc.

Indian Investment in Bangladesh:

• 28 Indian joint ventures with equity participation equivalent to US$ 16.6m (by the end of 2000)

• 7 wholly owned subsidiaries with total equity of US$ 0.61m

• Areas covered include textile spinning, building industry, chemicals, software data processing, and automobile

• Tata Group has signed an agreement to invest US$2b to set up a 1000MW power station, a steel mill, and a fertilizer unit.

Links in Education:

• Over 50,000 students from Bangladesh pursue higher studies in India. India provides various scholarship schemes such as Indian Technical and economic Co-operation (ITEC) and Technical Co-operation Scheme (TCS) of the Colombo Plan.

Table 3: India – Bhutan Trade (2001-2003)

Trade (in Rs. billion) 2001 2002 2003

Exports to India 4.70 4.92 5.46

Imports from India 6.98 6.05 9.20

Exports to Other Countries 0.28 0.34 0.19

Imports from Other Countries 2.04 19.7 12.2

Source: Ministry of Foreign Affairs, Government of India.

Table 4: India: Exports to and Imports from Maldives between 1999 and 2003

Year Exports (in Rs. m) Imports (in Rs. m)

1999 1760 8.0

2000 1684 11.0

2001 1886 13.1

2002 1930 5.5

2003 2107 15.4

Source: Ministry of Foreign Affairs, Government of India.

Table 5: India: Exports to and Imports from Nepal – 2002-2004 (in US$ m)

Year Exports Imports Trade Balance in Favour of India

2002-03 971 362 609

2003-04 1100 425 675

Source: Ministry of Foreign Affairs, Government of India.

Table 6: India: Exports to and Imports from Pakistan between 2001 and 2005

Year Exports(in US$ m)

% of Pakistan’s Global Trade

Imports(in US$ m)

% of Pakistan’s Global Trade

2001-02 186.5 1.8 49.2 0.53

2002-03 166.05 1.35 70.7 0.63

2003-04 382.4 2.45 93.7 0.76

2004-05 (Feb) 297.20 2.4 149.36 1.69

Source: Ministry of Foreign Affairs, Government of India.

Table 7: India: Exports to and Imports from Sri Lanka between 1999 and 2004(in US$ m)

Year Exports Imports Total

1999 512 49 561

2000 (Post FTA) 600 58 658

2001 602 72 674

2002 835 171 1006

2003 1093 245 1338

2004 1350 382 1732

Source: Ministry of Foreign Affairs, Government of India.

INDIA – SRI LANKA

“Sri Lanka is probably India’s only neighbour that views increasing economic interdependence with India more as an opportunity than as a threat.”

India accounts for about 15% of total Sri Lankan imports and it is also the fifth largest destination for Sri Lankan exports accounting for about 4% of Sri Lanka’s total exports.

• Sri Lanka is relatively small market for India. It accounts for about 2% of total Indian exports and less than 1% of its imports.

SRI LANKA

• Major items of Exports from India: Transport equipment, cotton yarn, fabrics, primary and semi finished iron and steel, sugar, man made yarn, machinery and instruments, drugs, pharmaceuticals, fine chemicals, wheat, glass and glassware, ceramics, cement, paper and wood products.

• Major items of Imports by India: Non-ferrous metals (Copper), spices, electronic goods, electrical machinery, scrap metal, paper pulp and chemicals.

Indian Investment in Sri Lanka:

• India is the fourth largest investor in Sri Lanka with US$400m in FDI (after Singapore, UK, and Australia)

• India was the biggest investor in 2002 and 2003.

• Indian Oil Corporation is a major player in the petroleum sector through its subsidiary Lanka IOC.

• NTPC and BHEL are collaborating in setting up a 300MW power plant.

Links in Education/ Human Resource Development:

• India provides training facilities in various professional courses under Indian Technical and economic Co-operation (ITEC) (70 places) and Technical Co-operation Scheme (TCS) of Colombo Plan (50 places), and BIMSTEC (30 places).

• Major courses under these schemes are financial management, auditing and accounting, rural development, parliamentary studies, rural banking, insurance, plantation management, teacher training, textile, engineering and railway.

SummarySummary

• All BRICS countries are poles with their own neighbourhoods

• Initiative for a research project on this aspect of BRICS as poles with their respective hoods focusing on the interaction of the research and innovation system

• More cases and comprehensive data needed

• Comparative frame, conceptualisation and communication using the IS to explain detailed empirical variations in the dynamics of pole-hood interactions

• Map the particular trajectories, path dependencies and emergent properties

• A book proposal is prepared to assist the development of the project and to move the Globelics initiative forward!!

• Thank you!!!