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The global economy is going through an interesting phase. There are many countries facing challenges of stagnation and decline while growth opportunities are staring at many other countries. We shall dwell in this article not analysing historical data about these two countries but how the events of past in these countries and around them could usher in an era of substantial growth. There are two key limitations facing modern global economy in terms of how to deal with current challenges. One is more than adequate emphasis on past events. This possibly inhibits our ability to give enough emphasis on looking forward. Second is we are saddled with old paradigms while trying to deal with current challenges. We possibly need to view possibilities in future with new paradigms that could emerge and change the way economics and trade have been viewed in the past.
In 2050, India will be the third-largest economy on Earth, followed immediately by Brazil (Oliver Stuenkel, Indian Foreign Affairs Journal July Sept 2010). In consequence of their growing economic dominance, ties between Brazil and India will inevitably reach previously unimagined intensity and scope much before 2050. India and Brazil together could also play a very useful role of fuelling growth in respective regions. There are several similarities and areas of differences that could help create synergies in their regions. Both these countries have enjoyed good economic and political relationship, all these years. Both the countries have been stronghold of democracy while other countries in the region have gone through some not so successful political experiments. Both countries are secular, multi- cultural, multi-ethnic, large democracies as well as trillion-dollar economies.
These two countries account for over 20% of global population contributing over 8.5% of global GDP (Amit Prasad & Daulata Chakraborty). If right strategies for skill development are designed and implemented, these two countries could become
epicentre of generating globally efficient and technically skilled manpower to the world. Trade between India and Brazil is expected to reach around 15 billion USD (Huma Sidiqqui, Indian Express 23rd Mar 2013) and therefore possibilities of growth is tremendous. India and Brazil are similar in terms of stability of governance as well as demographics. This set them in a unique position to collaborate on several areas and be torch-bearers in leading advocacy for inclusive growth.
Studies have established that Brazil has been successful in reducing poverty, inequality and hunger by developing profitable small farms and increasing cash supply to poor families through innovative payment schemes. India can take a cue from Brazil’s experience in raising agricultural output and tackling the menace of poverty and inequality. The Indian Council for Agricultural Research (ICAR) has started to engage with its Brazilian counterpart Embrapa, probably the most advanced research institute on agricultural productivity in the world. In the context of food security, Brazil could thus be of key importance to India. Some prominent economists have said that one of the reasons of stable high growth rates in Gujarat was driven by supporting agriculture based village economy. There are huge opportunities in this area for India to move ahead. Given the heavy dependence on monsoon, low yield and low profitability in farming in India – it is a huge area of opportunity. Agriculture as well as agri-based industries have a tremendous promise for future. The new government is also talking of using technology to share soil quality, fertiliser usage, crop and yield information network could benefit farmers across the country.
Brazil on the other hand is a net exporter of several minerals and raw materials. It could view tapping into indian expertise in metal processing. This will help Brazil generate higher revenue and earn foreign exchange. India could contribute immensely to enhance technical skill base in Brazil.
There has been two-way investment between India and Brazil but there is still huge scope of mutual cooperation and growth. While the Brazilian companies have invested in automobiles, IT, mining, energy, biofuels, footwear sectors in India, the Indian companies have invested in such sectors as IT, Pharmaceutical, Energy, agribusiness, mining, engineering/auto sectors. Possibly it is time to build and strengthen related value-chains in these industries to make them globally competitive. Possibility of setting up a BRICS development bank could provide impetus in this direction by channelising and funding large scale projects that will enhance mutual trade in these two countries.
Infrastructure and energy are other two key areas identified by the new government in India. Both the countries could collaborate and help build competitive value chain around these two industries. Renewable sources of energy are one area that places both the countries in a unique position, given their geographical size and location. Vast areas of land with abundant sunlight most of the year is one common enabling factor for renewable sources of energy. Large coastline is another enabling factor for this area. Both have large parts in the country that could do well with high quality transport, commercial and residential infrastructure.
Both energy and infrastructure development have large potential to generate employment. This will propel many other sectors of economy. Large employment generation is one of the key drivers of economy both the countries can hardly do without.
India and Brazil should find ways of engaging young people in charting the course of inclusive growth. Given the large tracts of poverty in both countries the governments also need to collaborate on affirmative actions to engage the educated and literate youth in the mainstream of growth. We see tremendous potential in the pool of enthusiastic and ambitious youth that could fuel growth from grass-root level up. Need is to channelise trade related education and skills training, so that the youth is engaged in meaningful activities. This will generate employment on one hand and give more money in the hands of larger number of people for boosting domestic trade. On the other hand this will improve mobility of these trained manpower and facilitate cross-trade skills, multi-skilling and thus improving last mile delivery chain. Economic activities engagement have become elitist today due to lack of affirmative actions. The difference between haves and have-nots have been increasing because of this elitist approach. Quality of education and skill enhancement could be a great leveller in this game. Public-private partnership to being effective changes in affirmative action will ensure that the opportunities become ‘open’ in the real sense of the term and therefore more pervasive.
One of the options the two countries have to explore is to set up professional business forums that could bring professionals and professional services on one platform, so that interested businesses from each of the BRICS countries could find one window solutions support from local experts. This kind of professional platform will encourage and foster stronger business to business relationships. This support structure will enable businesses from outside to understand and prepare themselves for success in a new environment. Collaboration in business is a strong area that needs attention from all these countries.
Authors:
Dr BBL Madhukar, Secretary General – BRICS Chamber of Commerce and Industry, New Delhi, India; e-Mail: secretarygeneral@bricscci.com
Naveen Coomar, Hony Advisor – BRICS Chamber of Commerce and Industry, New Delhi, India; e-Mail: naveen@naveenconsulting.in