Banking on the BRICS

The five-member BRICS countries account for roughly 18 per cent of the world's GDP [AFP]

The proposal of a development bank between the five BRICS nations – Brazil, Russia, India, China, and South Africa was the main topic of discussion at last week's 4^th Annual Brics Summit in New Delhi.  The South-South development bank would pool resources for things such as lending and infrastructure improvements as well as facilitate trade. The leaders also discussed the possibility of extending credit to member countries in local currency, side stepping the dollar as the main unit of trade between the BRICS. Talk of setting up a BRICS bank has generated a flood of news stories trying to predict the future implications. 

Here are a few examples of recent news headlines:

• BRICS summit to explore creation of bank
  Al Jazeera | http://aje.me/HdlUWX
• BRICS Can Lead Whole Global South in Quest for Financial Justice CRIENGLISH.com | http://bit.ly/HFBCtO
• Why a Brics-built bank to rival the IMF is doomed to fail 
  The Telegraph | http://tgr.ph/HblZK
• Emerging Markets Look to Drop BRICS on U.S. Dollar  
  International Business Times | http://bit.ly/HRmW8L
• The west must wake up to the growing power of the Brics The Guardian | http://bit.ly/HiAUQy                         
• World Bank Open to Partnering Brics Bank
  Wall Street Journal | http://on.wsj.com/HL2dYKv                               

You can see how these news sources are covering the same story in different ways. The order of the articles I read above also shows the progression of coverage:

1. Exploration of development bank. 
2. BRICS will free the Global South from financial dependency. 
3. The BRICS bank attempt to rival the World Bank and the IMF will fail.  
4. Uh oh, the U.S. dollar will be affected.
5. Hey, you - the West, watch out for the strengthening of the BRICS.
6. Solution to #5: Global North can "partner" with the BRICS bank. 

Why does this all matter? MONEY, POWER, CONTROL and last, but not least: the numbers. According to the Al Jazeera article:  The five members now account for roughly 18 per cent of the world's GDP, 15 per cent of global trade and hold 40 per cent of global currency reserves. They account for the 40 per cent of the world population.

Many argue the BRIC concept, conceived in 2001 by Jim O'Neill of Goldman Sachs is just that - a concept. Many articles touch on the fact that these countries do not have much in common besides being locating in the Global South and their desire to rid ties to Western institutions.  However, with the BRICS's combined global economic power and 40 percent of the world population, this "concept" is getting a little more disconcerting to the West. The news went from, "The BRIC bank is DOOMED to failure" to "The World Bank wants to partner with BRIC bank" within a week. Talking about changing tides.  Who is going to call the shots now?

Before global power relations really change, the BRICS need to get on the same page to ensure more international bargaining power. Another point of contention in the media is - Who is going to gain what from this development bank? Aren't some of the BRICS countries at a greater advantage to reap the benefits? China? An opinion column in The Bangkok Post highlights the emerging asymmetrical relations within the bloc:

"Lending and trading in renminbi is likely to boost China's international standing and clout. But its undervalued currency and hidden export subsidies have been systematically undermining manufacturing in other Brics nations, especially India and Brazil."  This excerpt points out the false notion that South-South transfer is always equitable. Undermining manufacturing in member countries?  

We will have to wait and see how the BRICS development bank progresses. Regardless, the rest of the world should realize global power is shifting. (The World Bank does and that's why it suddenly wanted to "partner" aka maintain some control.) In previous posts Jeannie has covered Iranian influences in Latin America and this latest BRICS Summit highlighted the continued relations: BRICS refuses to side with US in showdown with Iran – 

The Economic TImes http://bit.ly/HcQ287.  

The long and short of it is - the Global South is uniting. What does this mean for development and education? Where will the models of education/development come from if the Global North isn't calling all the shots?  

Praça do Relógio University of São Paulo
Photograph: Reuters/USP

USP aparece no 'top 100' das melhores universidades do mundo
USP ranks in the 'top 100' university in the world
O Globo
March 15, 2012
Citation: http://tinyurl.com/USPBrasil

The University of São Paulo (USP) ranks among the top 100 higher education institutions in the world according to rankings released March 15, 2012 by the Times Higher Education (THE) based on academic reputation. The result shows an improvement of USP in the rankings. Last year, no Brazilian institution appeared in the top 100 list, which takes into account the reputation of the university among researchers from academia. Harvard University, USA, received the highest score in the rankings released on Thursday. The survey asked academic experts to highlight what they believed to be the strongest universities for teaching and research in their own fields. Harvard scored 100 points. The United States has 44 institutions in the list of top 100. The UK has ten universities in the list. The presence of institutions in Japan, Singapore, Hong Kong, China, South Korea and Taiwan in the "top 100" shows the improvement of higher education in Asia. In addition to USP, new to the list are Hebrew University of Jerusalem, Israel, and Middle East Technical University, Turkey.

The University of São Paulo made news last October in The Economist for being the only Latin American university listed in the Times Higher Education (THE) world’s top 200 universities ranking.  In this general university ranking USP ranked 178th in 2011-2012, up from the previous 232nd ranking. THE’s most recent publication based on university reputation cited in the O Globo article is based on the largest international survey of academic opinion. Whether it is based on reputation or their international university performance indicators, the USP is climbing up the ranks, but alone. The Economist article puts it bluntly: “Research output [in Latin America] is unimpressive, teaching techniques are old-fashioned and students drop out in droves. These failings matter.” I contend that economic growth has stimulated a greater demand for higher education in the region and it is about time to start assessing them. Private institutions have emerged to meet this demand, but unfortunately, quality assurance is not on the top of their to-do lists. Public universities are not necessary any better; however, USP’s growing recognition could guide the way for others in region. My post on "New Model for Research Partnerships for Latin America" also serves as inspiration for increasing academic excellence in Latin America and cutting ties of intellectual dependency.

The fact that we are depending on an institution based in London to "rank" universities throughout the world is problematic in and of itself.  The Global South depending on the Global North to assess the quality of their own educational institutions is only perpetuating the intellectual dependency models. These institutions - public, private, non-profit should start their own assessments based on their own criteria and emphasize quality. Even in the U.S. the fixation on rankings is overwhelming look at U.S. News & World Report. Higher education worldwide needs to focus more on quality and perhaps everyone can climb the ranks together.  

The "Golden Opportunity" for the South - Foxconn

Employees work on the assembly line at the Foxconn plant in Shenzhen, China.
Photograph: Bloomberg via Getty Images

China's wage hikes could benefit Americas
The Miami Herald

By Andres Oppenheimer

March 3, 2012
Citation: http://bit.ly/wagehikes

Good news for Latin America: wages in China, Vietnam and other Asian countries are rising faster than expected, leading growing numbers of multinational firms to move their manufacturing plants to Mexico and other countries closer to the U.S. market.

Read more...

According to economists, Chinese salaries are destined to increase for decades to come with the growing appreciation of Chinese currency, higher educations standards, and a declining workforce.  Most multinational companies will keep plants in China to serve the domestic market as well as neighboring countries in Asia, but will move their export-oriented plants to other parts of the world. The author contends: “Either way, Asia’s rising wages present a fabulous opportunity for Latin America.” He argues in order to lure foreign manufacturing plants and to export increasingly sophisticated goods and services to China, Mexico and Central America will have to reduce their violence rates, and all Latin American countries will have to dramatically improve their education systems, which currently lag far behind those of their Asian competitors. He concludes that Latin American countries that take advantage of this golden opportunity will do great in coming decade and they will have Asia’s rising wages to thank.

In order to persuade China to move plants to Latin America, these countries will have to make adjustments to their educational initiatives to develop a workforce capable of providing these “sophisticated” goods and services. I would argue it is too soon to know what these educational adjustments will look like, but not everyone thinks China’s economic involvement in Latin America is a positive according to an article by Univision: “China in Latin America: Should we be worried?” The article points out China’s investment in Latin America has increased 400% during the past decade which creates a new reliance on Chinese commodity demand and China’s state-run companies, and now additional goods and services. This “golden opportunity” sounds more like a dependency model and its affect on education will run deep. Will Mandarin be the second language of the next generation in Brazil? Will vocational studies focus more on technology? Will China take over in the exploitation of Latin American? The Univision article argues this isn’t a “win-win” situation because Chinese companies do not have to follow the same rules as those from the U.S., Europe, or even Latin America leading to general corruption and increases the likelihood of bribery, smuggling, and poor environmental practices. I conclude Latin American should access this opportunity wisely before overhauling educational practices to cater specifically to the Chinese economic demands.  

The Progress of Education in Latin America

Photograph: Manu Dias/AGECOM Bahia

Moving Latin American Education Forward

Latin Business Chronicle

February 15, 2012

By Gabriel Sanchez Zinny
Citation: http://tinyurl.com/7jahvuo

In the last few decades, Latin America has fared poorly in various international educationtesting assessments. The most well-known, the Program for International Student Assessment, administered by the OECD most recently in 2009, only included nine countries in the region, but the results were not encouraging, as these nine participants finished somewhere between 44th and 63rd place, out of 65 countries tested. Chile placed at the top of the region, with Uruguay close behind, but both countries still ranked well below average. However, there are encouraging signs of education reform in Latin America, and they provide a foundation for improving education throughout the region—a daunting but feasible and necessary task.

Article clipped; see link above for full version

Despite the low grades that Latin America has received on international education testing assessments, there has been a surge in funding for education throughout the region. In the past several years, Latin America nations have, individually, spent about $200 billion per year on education and as a region has received more than $5 billion from multi-lateral organizations. Their approach to education has also recently changed. Once focused on school attendance and retainment of students, ministries of education are now concentrating on investing in the quality of schools. Primarily they are beginning to follow the models of their fellow global nations like Singapore, Finland, and South Korea. Studies in these countries have shown that teachers are the essential school based factor that influences achievement rates of students.

As a result of the large amount of funds required to propel these ventures, Latin America have seen a new set of investors join the education scene. Business companies and other organization have stepped up in order to address these educational woes, providing support when public sectors do not have the resources or capital. Organizations like Argentina's EducAr 2050, Mexicanos Primeo, and Brazil's Todos Pela Educacao, are promoting the value of stronger curricula and effective teachers by integrating improved management skills and introducing technology into the classroom. It is the hope of these regional programs and initiatives to not only provide better support to the education system, but to also improve the learning conditions and quality of education for future generations.

When I initially read this article I was skeptical of Latin America's tactics to solve their problems with the quality of education in their respective countries. Immediately their intentions were good, to invest large sums of money in their education system. However their quick reactions only fulfilled their short term goals. When Latin American countries' focus shifted from short term to long term, they refined their approach and found global models that produced the results that they desired. Even then I was wary of their choice to have outside education systems be the model of achievement for their own. The last time I read an article about Latin America modeling other more "developed" nations' education systems, it ended in protesting on the streets in Chile (see my post Hidden Strife within Chile's Education System). However I was pleasantly surprised that, unlike the case of Chile, less government involvement and more private initiative seem to not only support the financial aspects of education reform, but also the personal side of education.

For me this article touched upon many of the same issues and concerns seen in Jaime's post The Case for Local Business Support for Education in Nicaragua. These companies took an interest in promoting education reform not just because it would improve the achievement of students, but that improving the quality of education now could lead to many other long lasting results. The benefits that society could reap from these investments could transcend present time and support the success of future generations. While this article focused more on national organizations rather than local ones, I feel that the concepts are very much similar. This sense of nationalism and pride propelled these organizations to take a calculated risk and invest in the future of their country's education system in hopes that the results generated would indeed produce an overall benefit to society and not just improve one set of achievement statistics.

The Global South Unites Through Lending

China lends more than $75bn to Latin America
Financial Times
February 15, 2012
By John Paul Rathbone
Citation: http://on.ft.com/yKyIpQ

Chinese state banks have lent more than $75bn to Latin America since 2005, and in 2010 gave more than the World Bank, Inter-American Development Bank and US Ex-Im Bank combined, according to a report which highlights China’s growing financial heft in the region.

“On the positive side, it is clear that China is a new and growing source of finance in Latin America,” notes the independent academic report, New Banks in Town: Chinese finance in Latin America.

“That said, and contrary to much commentary on the subject, by and large Latin American nations have to pay a higher premium for loans from China.”

China has overtaken the US to become Brazil and Chile’s largest trade partner. Many US policymakers fear that Beijing is using cheap rate loans to “buy” influence among left-leaning Latin American governments that are hostile to western interests, and that Beijing uses financing to secure long term commodity supplies.

Read more...


Latin America has borrowed more than $75bn from China since 2005. Since then China has transformed into Brazil and Chile’s leading trading partner, beating out the United States. Through financing China has been able to secure long term supplies of commodities. Many U.S. policy makers are voicing concern that the attractive loan rates are a tool to “buy” influence among left-leaning governments in Latin America. Chinese loans to Latin America now account for more than half of Beijing’s international lending. China’s growing presence has not gone unnoticed in the region.

This situation supports Jeannie’s previous post about global interconnectedness: “Venezuelan and Iranian Involvement in Nicaragua: Benevolence or Strategy?” Latin America is now financially tied to China and the implications of such ties are not yet clear.  This article also illustrates the notion within World Systems Theory that international power relations are constantly changing. Even though the money from China is not coming in the form of aid or “assistance”, it still has potential to create a certain level of dependency, especially considering the fact China focus is on commodities in Latin American markets, which critics say, will increase “dependency” exploitation. The article even points out that left-wing development economists denounced this type of dependency four decades ago.  That is not to say the past cannot repeat itself.  Left-leaning governments tired of Western ways may overlook such factors and continue relations with the Chinese in their quest for modernization and development. 

The United States is no longer ranked number one in regard to trade with countries like Brazil and Chile, but that is not their only concern.  Some believe China’s growing presence in the region is driven by an ideological desire to boost South-South ties according to the article. Besides the economic benefits tied to commodities and the influential power of money, it appears China’s strategy may consist of spreading and supporting ideologies of the Global South.  Venezuela and Iran are now supporting Nicaragua and isn’t Iran friends with China? The Global South seems to be uniting in the United State’s backyard. What will that mean for future the future of development and education in Latin America?

A Venezuela Without Chavez?

What Comes After Chavez?

By: Wikistrat

CNN World

February 10, 2012

Citation: http://tinyurl.com/7yx97qo

This Sunday, the historically disorganized Venezuelan opposition movement is holding its first-ever presidential primary to decide upon a single candidate to challenge long-time strongman Hugo Chavez. With regional governor Henrique Capriles expected to prevail, the aging Chavez faces a younger version of himself: namely, a dynamic rising star promising to transform the political landscape. This time, however, the figure is moving it away from the heavy-handed populism initiated by Chavez after he swept into office in 1998.

(Article clipped, see link for full version)

This article attempts to hypothesize what may happen in Venezuela if Chavez is challenged by the opposition movement in it's first presidential primary. The prevailing opponent, Capriles, is a younger version of Chavez, and may pose quite the challenge to the aging and ailing president. Chavez instituted populism in Venezuela, marked by the persecution of political opponents, nepotism in parliament, an emerging oil industry, and close relationships with fellow Chavista leaders in Bolivia, Ecuador, Nicaragua and Cuba. The authors highlight five potential post-Chavez situations in Venezuela. First, the opposition's campaign could create anti-Chavez fallout; or Chavez could be elevated to martyr status like Che in Cuba, allowing for his brother to assume the presidency and continue the Chavez rule of Venezuela. However, given Latin American history, a military junta could assume power behind the scenes, using a figurehead ruler to appease the people; alternatively, Venezuela could be the new Colombia, full of drug violence. The last scenario has the next Venezuela leader as the new "Lula;" Brazil won't allow its neighbor to fall to evils of globalization, and instead could use its regional leadership to lead it into a functioning democracy.

To begin, I found this analysis interesting because what happens in Venezuela could indicate a shift in power in Latin America. For example, if Chavez is on the out, a power vacuum could emerge, either shifting Venezuela to a nepotistic "all in the family" government like Cuba, or to a potentially more violent state, like Mexico, propelled by drug violence. I think the comparisons that this article makes between Venezuela and situations in other Latin American countries are really interesting. The fact that Chavez and his government are facing real opposition for the first time in a long time is highly significant. However, Latin American history does indicate that this situation may not turn out well. What would happen to security and stability in Latin America if Venezuela went the way of Mexico? How would that situation impact its relations with other countries in the region? Or, could a military junta government or a case of Chavez nepotism lead the way to another long and brutal Latin America civil war, marked by violence and "disappearances"? As the current situation in Honduras indicates, when it comes to politics in Latin America, everything hangs on a very thin thread. I think though that the last situation, involving Brazil and its regional power, is the most interesting given the current situations in globalization and development. In International Human Rights Law, we talk about the power of regional organizations over more Western influences (think of the Arab league in Syria before the situation escalated to its current predicament). Brazil, due to rapid development and globalization has become a relatively potent 'democratic' force in Latin America. I'd like to think that perhaps this will count for something if the future of Venezuela's politics seems uncertain.

Brazil - U.S. International Education Initiatives

Education Cooperation Partnership Between the United States and the State of Pernambuco, Brazil



Map by Raphael Lorenzeto de Abreu

U.S. Department of State Press Release

Fact Sheet

Office of the Spokesperson

Washington, DC

February 3, 2012    
Citation: http://www.state.gov/r/pa/prs/ps/2012/02/183132.htm
_______________________________________

Presidents Obama and Rousseff share a commitment to promoting an innovative U.S.-Brazil education partnership to meet the needs of a 21st-century workforce. Last year, both Presidents set complementary goals for international education. President Obama announced the "100,000 Strong for the Americas" goal to see the number of students from Latin America and the Caribbean studying in the United States increase to 100,000 and 100,000 students from the United States studying throughout the region by the end of the decade. Likewise, President Rousseff’s “Science without Borders” initiative to support as many as 100,000 students for international study over the next four years, with at least half coming to the United States, is a visionary approach to building and expanding Brazil’s role as a global leader. The two countries will reinforce their commitments to international education with the signing of a Memorandum of Understanding (MOU) on educational cooperation between U.S. Ambassador to Brazil Thomas Shannon and Pernambuco State Secretary of Education Anderson Gomes, witnessed by Under Secretary of State for Political Affairs Wendy Sherman, on February 3, 2012. The following programs, including the MOU, demonstrate the broad educational partnership between the United States and Brazil.

Memorandum of Understanding on Educational Cooperation: The MOU covers a broad range of areas in education that the United States and Pernambuco support, including: “To enhance training (vocational and technical) and access to the labor market by using the English language as a tool for access to information and communication, enabling new forms of social interaction and cultural immersion; To promote the academic, cultural and technological exchange of students, teachers and other education professionals; To develop youth leadership; To exchange leadership management experiences in schools; To develop the teaching of the English language in the educational system of Pernambuco; and to promote social inclusion and diversity in education.”

“Win the World” program: On November 3, 2011, Pernambuco Governor Eduardo Campos unveiled an ambitious educational program for state high schools called “Win the World.” This program has three pillars: providing English language instruction to 24,000 public high school students; sending 1,000 outstanding English students overseas for six-month exchanges to the United States, the United Kingdom, New Zealand, and Canada; and providing enhanced teacher training to approximately 450 English teachers statewide through the Department of State’s English Language Fellows Program. The U.S. Mission in Brazil, through its Public Affairs Offices and Regional English Language Office, has collaborated on and supports all three pillars.

Pernambuco English Language Fellows Program: The State of Pernambuco, in partnership with the U.S. Mission in Brazil, will host six Senior English Language Fellows to Pernambuco for the 2012 academic year to conduct teacher training courses that reach 450 public school teachers. The State of Pernambuco will provide approximately $250,000 in direct funding for the project as well as in-kind support totaling about $150,000. The U.S. government will fully fund one of the six fellows and will pay for international transportation as well as course materials, with a total investment of approximately $150,000.

English Access Microscholarship Program: Fifty students from Santos Dumont Public High School in Recife have received full scholarships for two years of English language instruction at the binational center Associação Brasil-América. Access students gain an appreciation for U.S. culture and democratic values through cultural enhancement activities and participate in leadership and volunteer activities outside the classroom. The program will continue this year, incorporating students from other schools.

The U.S. and Brazil solidified their joint commitment to expanding bilateral international educational initiatives on February 3, 2012 by signing a Memorandum of Understanding (MOU) on educational cooperation between U.S. Ambassador to Brazil Thomas Shannon and Pernambuco State Secretary of Education Anderson Gomes.  This comes one year after Presidents Obama and Rousseff set complementary objectives for global education, which included the "100,000 Strong for the Americas" goal of seeing 100,000 students from Latin America study in the U.S. and 100,000 students from the U.S. study throughout the region.  President Rousseff has a supplementary initiative, “Science without Borders,” to support Brazilian students for international study over the next four years with at least half slated to study in the United States.  The press release concludes by listing the specific programs to take place within the state of Pernambuco all of which include an emphasis on English language education. 

In many ways these international education initiatives are mutually beneficial for Brazil and the United States; however, after reading through the specific educational programs to be instituted in Pernambuco, Brazil, I question the equity of the partnership. Who is benefiting the most from this educational collaboration? For example, the English Access Microscholarship Program gives select high school students scholarships for two years worth of English language instruction.  While learning English does have benefits in our increasing interconnected, globalized world, my concern lies in the secondary part of the English Access Microscholarship Program. According to the press release, through the curriculum students will “gain an appreciation for U.S. culture and democratic values through cultural enhancement activities and participate in leadership and volunteer activities outside the classroom.”  Exporting the model of U.S. democracy and fostering “appreciation” does seem to be more advantageous for one country in particular. Another key part of the educational collaboration is the teacher trainings for English teachers, which World System theorists might argue influences global homogenization of educational policy and practice.  World System theorists might also ask if this program is mediating and ultimately advancing the neoliberal agenda through encouraging an appreciation of U.S. culture and democratic values?

One final commentary to critique how President Rousseff’s “Science without Borders” initiative is quoted in the press release as “a visionary approach to building and expanding Brazil’s role as a global leader.” This quote highlights an assumption that for development to occur “knowledge” must be sought externally specifically, in the North.