There are at least three possible approaches to the issue of global governance.
We will look more closely into the third one. Firstly, global governance
is related with the classic tension between order and anarchy, which in
its most extreme version refers to the alternation between peace and war
in the relations between nations, such as was put forward by Raymond Aron
in his classic book "Paix et Guerre entre les Nations" (Calmann-Lévy,
1962). This is a tension that has had, in the history of the yet non-globalized
world, epicenters of regional geographic scope. In these epicenters the
connectivity and, in particular, the physical proximity between sovereign
political units have intensified the tension originated from the perception
of opposed interests, which many times have led to conflict and even armed
confrontation between neighbors. Since the World War Two and, especially
due to the collapse of physical distances resulting from the technological
changes in communications and transport, the chain reactions caused by
regional conflicts have often turned them global. Thereof, in this first
approach, global governance is related with the existence of institutions
and rules that, due to their effectiveness and legitimacy, ensure the
prevalence of an international order that neutralizes the tendencies towards
the use of force between nations.
There are indeed other possible approaches to global governance. One
of these refers to unequal effects resulting from the organization of
production in transnational value chains (on this regard refer to the
first chapter of the book published by Cattaneo, Gereffi and Staritz,
mentioned as recommended reading of this newsletter). On the one hand,
the transnational productive networks contribute to accelerate the transmission
of the impact of the economic and financial crisis between countries,
even distant ones, such as was evinced in the years 2008 and 2009. This
was a crisis with visible effects still present in many countries, calling
for certain reserve in the diagnosis of its defeat. On the other hand,
precisely due to the connectivity and chain effects that they generate
between the different economic systems at a trans-national scale, the
proliferation of such productive networks increases the interest of the
countries in avoiding a worsening of the crisis through the policies applied
to defend themselves. This is almost the opposite of what happened during
the Great Depression of the 1930s. The ease of contagion generates a collective
interest in answers that preserve global governance in the face of any
trend towards a "run for your life" attitude. At the same time,
in certain way, it promotes favorable reflexes to the idea of an effective
global economic order.
Another possible approach -the one that we are going to focus on-, is
related with the capacity of the international system to articulate solutions
for those relevant issues of the global economic agenda that, due to their
scope, can only be tackled effectively by the group of all nations. This
means that it is not possible for these to be faced successfully solely
by one country or a limited group of countries. They are the result of
the globalization of the economy. Among others, we can mention the issues
related with climate-change, the trade and currency "wars",
the global regulation of the financial markets and the creation of conditions
that are favorable for the social and economic development of all nations.
It is precisely in view of this reality of the globalization of world
economy that marked systemic deficiencies may be observed.
In fact, the shifts in world power during the last decades (on this regard
refer to the stimulating book by Fareed Zakaria, "The Post-American
World, Norton, New York-London 2008), have gradually eroded the ability
of the existing international institutions to generate effective systemic
responses to the most relevant economic issues of the global agenda. These
are institutions that were created after the last World War. It is not
an easy task now to adapt them to the new geography of world power. And
those originated in the economic and financial domain as informal work
mechanisms between the most developed nations -such as the G7- have also
shown their inadequacies when the financial crisis of 2008 and its notorious
economic implications became evident. They led to resort to the G20 which,
however, has been unable to pass the efficiency and international legitimacy
Thus, it has become difficult to gather around a single international
negotiating table the sufficient critical mass of power that is required
for decisions to effectively impact reality. In the presence of every
relevant issue of the global economic agenda that demands effective, efficient
and legitimate decisions, the fundamental question remains: which countries
should be summoned and which countries understand that they should be
summoned? (On this regard, refer to the recent article by Mauricio Cárdenas,
Luis Carranza and Andrés Velasco -former Finance Ministers of Colombia,
Peru and Chile respectively - entitled "With no voice in the G20",
proposing the alternating participation of their countries in the G20,
and also on page 15 of El Cronista newspaper from Friday 31 December,
The scattering of world power in multiple relevant centers -nations and
organized regions- is complicating the task of redesigning the international
institutions of a new global economic architecture. The existing ones
were born at a time when it was clear who held the most power, which was
enough to be acknowledged as the maker of rules at world level. As many
times before, the answer emerged from war. This accounts, for example,
for agreements such as Bretton Woods. It also explains why it can be an
illusion to pretend to reproduce a similar scenario now, something like
the "other Bretton Woods" demanded in recent years by renowned
economists. The failed attempts, between l918 and 1939, to create international
institutions that made the world governable, remind us how difficult it
is to achieve viable agreements in a multi-polar and heterogeneous context
without a previous enforced definition of which country or countries can
effectively guarantee international order.
The problem is, then, at the level of power relations between nations.
It will not be an easy task to add up the necessary concentration of power
in order to adapt the institutions that make global economic governance
possible. Not only has the international system become globalized, it
tends to be more multi-centric as well. Several other factors also help
turn it heterogeneous in terms of values, memories, perceptions and visions.
This means that it is potentially more ungovernable.
From there the growing importance of mechanisms that enable to summon
a sufficient critical mass of power to make possible a process of creation
of new international rules, the revision of the existing international
institutions (such as the United Nations or the world financial institutions)
or to insure their proper functioning (such as in the case of the World
Trade Organization). Such mechanisms can be facilitated by the agreement
that may be achieved in those formal or informal ambits of regional scope,
such as the European Union, or trans-regional, such as the BRIC group.
In certain way they all represent diverse modalities of coalitions of
nations that, at the same time, reflect the different international subsystems.
These are coalitions of a variable geometry adapted to the main issues
of the regional, trans-regional, international or global agenda and that
lead to its formation. They can even be coalitions with superposed memberships.
A country may be member of different coalitions at the same time, depending
on its relative relevance in different international subsystems.
The joint work of the coalitions of nations towards common goals has
been frequent in the history of international relations. Often these have
their expression in informal groups with little institutionalization.
Other times they result in formal agreements that originate international
agencies or regional communities. Additionally, other of their objectives
can be to reflect the interests of a group of countries in international
trade negotiations, for example within the framework of the GATT or, currently,
the WTO, (on this regard see the book by Amrita Narlikar, "International
Trade and Developing Countries. Bargaining Coalitions in the GATT &
WTO", Routledge, 2003), or to have a greater impact in the definition
of new international institutions, or the transformation of the existing
ones. The latter is precisely the case of the BRIC group which will be
discussed further. The invitation extended to South Africa on December
23, 2010 by the government of China, on behalf of the whole members, to
join the group, plus the fact that the third Summit will take place next
April in Beijing, might grant this informal mechanism of nations a special
relevance in the process of redefining the institutions for global economic
Such inclusion may be perceived as a decision for the advantage of all
five countries and more political than economic in scope. The four current
partners would gain in representativeness, especially for the actions
aimed at promoting the reform of the international institutions that they
consider have been overcome by the new realities of world power and, in
particular, of the United Nations, including its Security Council. The
new partner, South Africa, would gain prominence and prestige, especially
in its own region, which could become more attractive for international
investments. However, it is still too early to predict if the expected
benefits will effectively materialize.
The decision to invite South Africa would have been encouraged by China.
However, when announced, it was clear that it was on behalf of all members.
At least two of them, Brazil and Russia, hastened to welcome South Africa
to the group. (On the invitation see http://www.southafrica.info/;
The invitation was desired by South Africa, although it was not expected
at the moment it happened. President Zuma had negotiated to enter the
BRIC when he visited Beijing last August. He had done likewise with his
colleagues in the three other countries. However, up until three days
before the actual invitation took place, the result of his negotiations
remained uncertain. The international press speculated which country would
be the next to be invited to this exclusive club. Even in Africa, Nigeria
considered it fulfilled the necessary requirements. Other countries that
were mentioned were South Korea, Turkey and Indonesia, to name a few.
After this addition, the original acronym will change to BRICS, or to
BRICSA to be more precise, at least at the level of multilateral economic
diplomacy. In its origins it had an economic purport. It gradually acquired
a symbolic scope. It reflected the great emerging economies that had the
capacity to influence the design of a new map of global economic competition.
Membership to this group began to symbolize prestige. Some considered
that a new brand-name had been coined, one that was attractive for investors
avid of opportunities aside from those offered by the OECD. In any case,
it also gave fame to Goldman Sachs, the financial institution that invented
It was Jim O'Neill, then Chief of Global Economic Research at Goldman
Sachs, who launched the idea of the BRIC in 2001 (see Global Economics
Paper N° 66, November 2001, on http://www2.goldmansachs.com/
here). At that time, the 9-11 attacks had shocked the world. The sense
of the original concept was merely economic. It tried to identify nations
whose markets, due to their size and growth potential, could become a
driving force in the global economy of the future. Their population represents
40% of the world's inhabitants, with a strong growth of urban population
and a middle class income. Their economies could surpass in size those
of the G7 by the beginning of 2030. Furthermore, as per Goldman Sachs,
the leading role in the global economy of the four member countries would
lead to the reorganization of the international forums of economic decision-making
and even to the incorporation of new members to the G7 (the club of the
most developed nations).
The idea struck, markets bought it and the acronym became a trademark
with media impact. Thrilled by its initial success, O'Neill later updated
and even expanded on the idea. He was the mastermind behind one of the
following publications by Goldman Sachs where he held that, actually,
it would be necessary to add more countries to the original group of four.
(See Global Economics Paper N° 153, March 2007, on http://www2.goldmansachs.com/
aquí). The idea of the N11 was thus proposed. According to
it, due to their probable performance in terms of their contribution to
global economic growth, other economies needed to be taken into account
in order to fully grasp the future international global scenario. These
were Bangladesh, Egypt, Indonesia, Iran, South Korea, Mexico, Nigeria,
Pakistan, Philippines, Turkey and Vietnam. South Africa and Argentina
were not included.
Since then, the issue of the number and the name of the countries to
be considered as the relevant global economic players has been the subject
of much debate. This reflects a more essential problem: which and how
many countries would be able to represent the interests of those other
countries not invited to the global decision-making process. A recent
study by BBVA Research (on http://www.bbvaresearch.com/
aquí; and also on: http://www.bbvaresearch.com/
aquí) considers that the original Goldman Sachs idea has been
surpassed. It differentiates between two different types of countries
that deserve to be considered due to their potential for economic growth.
On the one hand, it identifies what are called the "eagles"
(emerging economies that lead global growth and that in the next ten years
will top the average of the G7 economies: China, India, Brazil, Indonesia,
South Korea, Russia, Mexico, Egypt, Taiwan and Turkey). On the other hand,
it identifies those countries that are in the "waiting list"
or the "nest" and which have conditions to soar like the "eagles"
(Thailand, Poland, Nigeria, South Africa, Colombia, Argentina, Malaysia,
Vietnam, Bangladesh, Peru and Philippines). It also adds, maybe rightfully
so, that unlike the BRICs, the concept of "eagles" is a dynamic
one since the list will require periodical revision and updating, taking
into account the continuous evolution of global economy and of the respective
In fact, many countries have questioned the economic relevance given
to the BRICs, (for example see the article by David Rothkopf in "Foreign
Even though between the years 2000 and 2008 the four members of the group
represented approximately 50% of the world's economic growth, and that
percentage is estimated to grow to 61% by 2014, a significant portion
of that contribution is originated by China and India. At the same time,
China represents 50% of the GDP of the countries of the group. Also under
question is the density of common interests existing between them, without
overlooking, additionally, the potential for conflict that can be seen
at the bilateral relations among some of the members. All this generates
the impression of being in the presence of a phenomenon that, in the measure
that it is considered as a whole, can have an illusory media component.
Nevertheless, the idea of the BRICs has transcended the economic plane
and its initial layout. In fact, it has turned into the name of an informal
forum of nations that aspire to influence the definitions required to
guarantee global governance. It has acquired, thus, a clear geopolitical
sense and has been incorporated to the growing constellation of international
coalitions of variable geometry that characterize the current global scenario,
among which the G20 stands out.
The new economic dimension of the BRICs was made clear two years ago
when the member countries started to meet at the highest political level.
The first Summit took place in Yekaterinburg, Russia, in April, 2009.
It had been preceded yearly since 2006 by the meetings of the Foreign
Affairs Ministers on occasion of each of the UN General Assemblies in
New York. The second Summit was held in Brasilia, on April 15 of last
year. The third will be precisely in Beijing next April (for more information
go to http://www.itamaraty.gov.br/).
After the first Summit the Chancellor of Brazil at that time, Celso Amorim,
pointed out in the newspaper Folha de Sao Paulo that the four countries
had decided to expand the agenda for joint action: "seeking to strengthen
politically as a block to help balance and democratize the international
order of the beginning of this Century". He also pointed at the necessary
reform of the United Nations: "to postpone indefinitely the reform,
including that of the Security Council, will aggravate the risk of the
erosion of its authority".
The importance for this group of the necessary institutional transformations
required to guarantee global governance in all the relevant areas of the
international agenda of the beginning of this Century becomes evident
in the Declaration resulting from the Brasilia Summit. It reaffirmed the
support to a multi-polar world order that is fair and democratic, based
on international law, equality, mutual respect, cooperation, coordinated
action and the collective decisions of all countries. In particular, it
expressed a firm commitment to a multi-lateral diplomacy, with the UN
performing a central role in the management of global challenges and threats.
On this regard, it stressed the need for a broad reform of the United
Nations Organization to make it more effective, efficient and representative.
It also pointed out the importance they assign to the position of India
and Brazil in international affairs and supported their aspirations to
perform a more relevant role in the UN.
Maybe it is in the light of such Declaration that the whole political
implication of the addition of South Africa to the group of four countries
makes full sense. On this regard, it is also relevant that this year the
countries of the new BRICS will all be members of the Security Council,
together with Germany. The declaration published by Itamaraty after the
invitation made to Jacob Zuma to participate in the upcoming Beijing Summit,
highlights this fact. It also reminds us that Brazil, India and South
Africa are already part of another informal group called IBAS (on this
topic refer to the information on http://www.itamaraty.gov.br/).
Originally conceived as an informal geopolitical space aimed at influencing
the reformulation of the formal mechanisms of international governance,
the original BRIC is enhanced by the fact that South Africa provides and
African dimension which was previously lacking. South Africa is the largest
economy of the region. At the same time Africa as a whole is acquiring
a clear global economic relevance.
However, South Africa's economic dimension is small compared to that
of the BRICs, in terms of population, GDP and share in world trade. If
we consider its addition to the informal inter-regional group only on
the basis of economic criteria, those who believe that South Africa is
far from being the ideal candidate might be right. Its GDP for example
is just a fourth of Russia's. Even the father of the original idea, Jim
O'Neill, pointed it out in his declarations after the invitation to Jacob
Zuma was made public (for his declarations go to http://blogs.ft.com/).
However, to a certain degree, it is considered that it reflects the growing
Chinese interest in increasing its presence in Africa in terms of trade,
investments and cooperation for development (on this regard see http://news.xinhuanet.com/).
Additionally, South Africa has an undeniable projection in Africa, whose
population will reach 1.5 billion in 2030. Its membership in the BRICS
group is perceived as something that will promote its leading role in
African development. At the same time, China already has a special economic
presence in South Africa. In fact, it is China's main African partner
both in trade and direct investments.
If the new BRICS aspires to have a meaningful participation in global
economic governance and in the reform of international institutions such
as the UN -which would seem the immediate goal for this year-, it faces
strong challenges ahead. It has strong challenges ahead. Among others,
being able to uphold that the members speak on behalf of their respective
regions. The legitimacy of such representation is crucial for its effectiveness.
And it is a still greater challenge for the two countries that aspire
to represent the interests of complex regions, with strong differences
of all kinds and with a lower degree of institutionalization than that
achieved in the European geographic space. This is the case of Brazil
in South America and of South Africa in Africa.