Economic Recovery of BRICs Post COVID-19
Not exclusively to BRICS (Brazil, Russia, India, China, and South Africa), the world economy suffered greatly in the years spanning the COVID pandemic. Even though the pandemic is a subject of the past, its consequences generate a ripple effect perceived until this day, especially in developing countries. #SDG8 #SDG8.1
This issue becomes evident when glancing over the BRICS’ GDP growth per annum alongside that of other economies. Ever since its emergence, the countries comprising the BRICS have shown sustainable growth in their GDP throughout the years. However, in 2019-2020, the BRICS experienced a substantial decrease in their GDP growth, with Brazil reaching a negative GDP growth.
One can expect a decrease in GDP growth given the circumstances of the pandemic. Nonetheless, most countries in the BRICS managed to hold their ground away from the zero mark in GDP growth, while others were not so fortunate. However, what could possibly explain this discrepancy? One of the indicators of healthy GDP growth lies in the amount of export to import ratio, and this was the lens through which the analysis was drawn. The difference between Brazil and China, both developing countries, lies in the ‘what’ is exported. The fact that China exports high-technology products and services, which is not the case in Brazil, is a major contributor to this discrepancy. #SDG 8.0 #SDG81 #SDG8.2
A means to mitigate this predicament is to increase the incentive for developing countries to produce and sell high-technology services or products by means of long-term credit availability and fiscal incentives. In more detail, the promotion of long-term credit is crucial to medium and small-sized exporters as they make up most exporters in developing countries, and to the elimination of long, bureaucratic, and inefficient regulations that deter the entry of new exporters. Lastly, provide fiscal incentives to nurture innovation.
Supporting evidence is found in the fact that countries that provide the greatest credit for the private sector also experience the higher export of technology, and consequently, greater GDP growth per annum.
It is recommended that developing countries establish special economic zones (SEZ) close to industrial or port areas. Like in China, SEZ should offer fiscal incentives, and motivation to innovate, and remain close to the port and the manufacturing regions to speed up the export process with minimal bureaucracy.
