Many have observed that economically and culturally diverse countries such as Indonesia, Singapore, Malaysia, Colombia, Turkey and the Gulf Cooperation Council (GCC) countries are latching on to the global dynamics created by China, India and Brazil in business and trade. At the same time, the fact that business ventures in the South can no longer focus on profits alone while leaving the provision of public goods and development of local capacity to national governments has finally been acknowledged. If this is not addressed, it could threaten business sustainability.
This was the focus of the Growth Net, an international business conference held early this year in New Delhi. I attended the conference while working on the ‘Business From the Rising Powers in Africa’ strand of the Rising Powers in International Development programme led by Lizbeth Navas-Alemán. The conference, which centred on the new and emerging players of the global economy, brought together business leaders from emerging economies to discuss common aspirations, business opportunities and challenges.
Despite a clear diversity in trade practices, discussions were grounded in the reality of the participants’ countries, with perspectives that have evolved from common experiences rather than being borrowed from industrialised countries. A number of challenges were highlighted as some of the constant risks to investors in these countries, including:
- diversifying markets
- optimum use of available funds and resources
- lack of hard infrastructure
- Government accountability.
A Southern way of doing businessWhile the BRICS (Brazil, Russia, India, China and South Africa) were not the sole focus of the conference, the need for a new development bank was acknowledged by industry representatives who expressed general dissatisfaction with institutions such as the IMF and the World Bank.
Conference participants called for various South-South Cooperation (SSC) initiatives aimed at increasing regional trade agreements, keeping emerging markets open for more investments, enhancing domestic market capacity and addressing supply-side constraints. Many wished to establish their own network, recognising the challenge this implies for the established order of current global governance. A core component of these discussions was the stress on equitable patterns of growth in the host countries from the South, where business leaders are making informed decisions on new ventures, embracing all their societal and market complexities.
This interest in social equity from business leaders reflects the growing belief that there is a need to create a strong middle class on which a robust domestic market can depend. It is also linked to the growth of Multi-National Corporations (MNCs) and Small and Medium Enterprises (SMEs) in the emerging economies, which aspire to venture beyond the traditional domestic market. Understandably, they are now pushing for market access in countries which have been traditionally dominated by companies based in rich countries.
In this context, it makes sense for these business leaders to come together and press for better policies in general (whether in terms of trade, infrastructure or social protection) and to work towards bridging the social class gap in particular. The key to this lies in addressing and facilitating both the supply- and demand-side issues of access to basic services and commodities in the emerging economies. Similar ambitions have also led these industry representatives to agree on the need to take on more responsibility in public-private collaboration.
For example, it is vital for agribusiness to consider the issue of food security and for the pharmaceutical industry to address the issue of Intellectual Property Rights and patent issues. This is because the majority of the population in emerging economies is not otherwise able to afford access to medication (and often food) without heavy government subsidies, which in turn leads to fiscal deficit and impacts macro-economic stability.
Resource diplomacyClaude Smadja, formerly of the World Economic Forum, acknowledged the structural problem of money and power going hand in hand in the current global governance system. It is true that the era of focusing only on growth figures appears to be giving way to an increased focus on the quality of growth – addressing the issue of inclusivity, reducing the digital divide, developing a skilled workforce, and managing wealth to reduce inequality.
But it is also apparent that there is little love lost between India and China, the two largest BRICS economies, whose trade potential is still affected by strained diplomatic ties. The elephant in the room surely is the increased competition between them for markets in the African continent. The resulting resource diplomacy in Africa, which has been hotly debated by observers and scholars, certainly has the potential of reproducing the current dominant trade structure. Whether talk of social equity within the opportunity of increased trade within BRICS and emerging economies addresses this and creates a collaborative framework remains to be seen.
Akansha Yadav worked as a Research Assistant on the Rising Powers in International Development programme at the Institute of Development Studies. You can follow Rising Powers on Twitter @IDSRisingPowers