Category: Business and Finance

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The BRICS Are Back, With a Bank

Image: Presidential Press and Information Office/Wikimedia

This article was originally published by the East Asia Forum on 2 August 2014.

The BRICS countries met for their sixth annual summit in Brazil this month, setting out to establish a counterweight to Western-dominated global financial institutions.

The summit’s key achievement was the establishment of the long-awaited BRICS New Development Bank. The bank will press for a bigger say in the global financial order — which is centred on the IMF and the World Bank. While China won the race for the bank’s headquarters, set to be located in Shanghai, India secured the presidency. The bank is a sign of the growing influence of the BRICS which together account for 18 per cent of world trade, 40 per cent of the global population and a combined GDP of US$24 trillion.

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Amid Security Concerns, Poaching Moves Up International Agenda

Elephant ivory seized from poachers. Photo: Enough Project/flickr.

This article was originally published by the IPI Global Observatory on 30 January 2014.

Tied to rising ivory prices, elephant poaching and ivory trafficking has tripled over the last fifteen years, with the rate of increase jumping dramatically from 2009. Profits from illegal wildlife trafficking are now worth an estimated US$8-10 billion annually, making this the fifth most profitable form of transnational organized crime after drugs, people, oil, and counterfeiting. The sale of endangered species—from tigers to rhino horns to turtles—is big money, and elephant tusks are by far one of the most lucrative subsectors of this illicit trade.

There have been increased national anti-poaching efforts—in South Africa and Kenya, for example—but the poachers’ methods are evolving and becoming more brutal and distasteful to the general public. They now include cyanide poisoning of watering holes to reduce the risk of being detected by gunfire, resulting in the indiscriminate killing of entire herds.

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Is North Korea Opening for Business?

Photo: Whitecat SG/flickr.

SEOUL – North Korea’s system is failing. The country is facing severe energy constraints, and its economy has been stagnating since 1990, with annual per capita income, estimated at $1,800, amounting to slightly more than 5% of South Korea’s. Meanwhile, a food shortage has left 24 million North Koreans suffering from starvation, and more than 25 of every 1,000 infants die each year, compared to four in South Korea. In order to survive, the world’s most centralized and closed economy will have to open up.

A more dynamic and prosperous North Korea – together with peace and stability on the Korean Peninsula – would serve the interests not only of North Korea itself, but also of neighboring countries and the broader international community. After all, North Korea’s sudden collapse or a military conflict on the peninsula would undermine regional security, while burdening neighboring countries with millions of refugees and hundreds of billions of dollars in reconstruction costs.

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The BRICs Party is Over

Market watching. Image by Rafael Matsunaga / Flickr.

After a decade of infatuation, investors have suddenly turned their backs on emerging markets. In the BRIC countries – Brazil, Russia, India and China – growth rates have quickly fallen and current-account balances have deteriorated.[1] The surprise is not that the romance is over but that it could have lasted for so long.

From 2000 to 2008 the world went through one of the greatest commodity and credit booms of all times. Goldman Sachs preached that the BRICs were unstoppable (e.g. Wilson and Purushothaman 2003).

However, Genesis warns that after seven years of plenty, “seven years of famine will come and the famine will ravage the land”. Genesis appears to have described the combined commodity and credit cycle, from which the Brazil, Russia, India and China have benefited more than their due.

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Multinationals: Power and Responsibility

With power comes responsibility. Photo: RaghuP/flickr

Operating outside the legal jurisdiction of their home state, some multinationals violate human rights or damage the environment in ways that are illegal in their own countries: selling elsewhere what can’t be sold at home.

Swiss agribusiness firm Syngenta’s code of conduct commits it to acting in accordance with “the highest standards of ethics and integrity.” Yet it also sells the highly toxic herbicide Paraquat – forbidden in Switzerland for more than two decades – to developing countries. The consequences are grave: Plantation workers are suffering from skin diseases, poisoning or blindness, and are at greater risk of developing skin cancer or Parkinson’s disease.

Sadly, Syngenta is just one of many examples. The progression of globalization has led to an immense expansion of multinational corporations around the world. As our alternative map of South America highlighted, corporations these days are often bigger economic entities than states themselves. Multi- and trans-national corporations are on the winning side of globalization – but doesn’t power also bring responsibilities along with it? What about the environment and rights of unskilled workers in developing countries?

Business ethicists have tried to address these issues with the concept of corporate social responsibility (CSR). CSR stresses corporate self-regulation and is a voluntary commitment on the part of companies to contribute to sustainable economic, environmental and social development. Such codes of conduct have added to an increased awareness about the responsibilities of firms in doing business – and helped broaden consumer understanding about the implications of their purchase choice.

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