Corresponding author: Rumi Azim
Academic editor: V. Faminsky
The 2008 global financial crisis (
The BRICS countries are significant members of the world economy with four of them among the ten largest economies. BRICS countries account for 41% of the world’s population and 23% of global GDP (
The role of trade in economic development has been a controversial issue, with the dominant view changing over time. In the fifties and sixties, when many developing countries became independent and their governments sought to accelerate growth in order to improve the living conditions of their people, the general opinion of development economists was that these countries should adopt a strategy of import-substituting industrialization (
Experience has shown that growth has stalled after an initial spurt and balance of payments problems have re-emerged.
Now the consensus has shifted to the assertion that protection worsened performance and that countries should adopt freer trade policies. Scitovsky, Little and Scott (1970) and
One of the methods of estimating the effect of trade was to regress the rate of growth on trade performance, in which different variables were used to measure trade performance.
Empirical analyses of the relationship between GDP and trade openness for the BRICS countries show a variety of results.
Given the variety of results, we undertake a re-examination of the relationship between exports, imports and GDP growth for the BRICS countries.
The 2008
Growth of per capita GDP in Europe and Central Asia (
Average annual growth of per capita GDP
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8.4 | 7.9 | 6.7 | 5.7 | 0.68 |
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6.5 | 0.8 | 3.4 | 1.6 | 0.25 |
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2.1 | 1.5 | 1.6 | -0.2* | |
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2.8 | 2.0 | -0.4 | 0.4 | 0.15 |
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4.7 | 4.5 | 4.5 | 5.2 | 1.1 |
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3.0 | 1.9 | 1.8 | -0.2* |
External balance (% of GDP)
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4.5 | 4.8 | 2.2 | 1.8 | -2.8 |
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4.9 | 3.1 | 2.0 | 2.9 | -2.0 |
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1.5 | -0.4 | -1.6 | -1.3 | -2.7 |
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3.1 | 1.6 | -1.1 | -5.8 | -8.9 |
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-2.5 | -5.7 | -5.4 | -3.9 | -1.4 |
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1.1 | 0.0 | -0.4 | -2.9 | -4.0 |
Exports of goods and services (
In brief, the
Economic performance of the BRICS countries mirrors that of developing countries. The rate of growth of per capita GDP in 2015–2019 was negative for Brazil and South Africa and almost zero for Russia, but declined only marginally in China and India (Table
Annual average growth of per capita GDP in BRICS (%)
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Brazil | 2.3 | 3.2 | 1.4 | -1.2 |
China | 10.2 | 9.4 | 7.6 | 6.2 |
India | 5.2 | 5.0 | 4.8 | 5.6 |
Russia | 7.2 | 4.2 | 2.1 | 0.9 |
South Africa | 3.0 | 1.9 | 0.9 | -0.6 |
The relatively good growth performance of China and India is deceptive as the analysis of annual growth rates shows a considerable decline in growth rates in these two countries (Figure
Annual growth rates of per capita GDP, 2001–2019.
External balance of BRICS (% of GDP)
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Brazil | 1.2 | -0.5 | -1.8 | 0 |
China | 4.4 | 5.2 | 2.4 | 1.8 |
India | -2.1 | -5.0 | -4.8 | -2.7 |
Russia | 11.9 | 8.2 | 6.6 | 7.2 |
South Africa | 1.0 | 0 | -1.1 | 0.3 |
The BRICS countries have, however, maintained high levels of investment (Appendix, Table
Despite the poor overall export performance (Appendix, Table
There is a strong correlation between rates of growth in the BRICS countries. The correlation for most countries is significant at the 99% level of significance, with the exception of India, whose growth does not correlate with growth in any of the other BRICS countries (Table
The share of intra-BRICS exports in their total exports increased from 4.3% in 2000 to 7.2% in 2008 and slightly more slowly to 10.0% in 2019 (Table
Correlation of growth rates in BRICS
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Brazil | 0.64 | -0.18. | 0.63 | 0 .65 |
China | 0.19 | 0.59 | 0.77 | |
India | -0.19 | -0.04 | ||
Russia | 0.88 |
Intra-BRICS exports and the share of their world exports
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USD, billion | Share (%) | USD, billion | Share (%) | USD, billion | Share (%) | USD, billion | Share (%) | USD billion | Share (%) | USD billion | Share (%) | |
2001 | 3.7 | 6.4 | 7 | 2.6 | 2.3 | 5.3 | 6.9 | 6.9 | 1.1 | 4.4 | 21.1 | 4.3 |
2008 | 24.0 | 12.3 | 92.1 | 6,4 | 16.9 | 9.3 | 28.5 | 6.1 | 7.5 | 10.1 | 169.0 | 7.2 |
2014 | 50.4 | 22.8 | 158.5 | 6.8 | 28,5 | 9.0 | 44.4 | 8.9 | 13.5 | 14.7 | 295.4 | 8.5 |
2019 | 68.9 | 31.2 | 176.4 | 7.1 | 28.2 | 8.7 | 67.4 | 15.8 | 14.4 | 16.5 | 355.3 | 10.0 |
BRICS were expected to play an increasingly important role in the world economy as their share of both world GDP and trade was increasing. In the immediate aftermath of the crisis of 2008–2010, the share of each of the BRICS countries in world GDP increased leading some analysts to expectations that BRICS might lift the world economy out of the recession that accompanied the crisis (Table
Even though over the longer term, namely between 2001–2007 and 2015–2019, their share of world GDP increased by almost 60% (Table
Relative size of GDP in the BRICS countries (% of world GDP)
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Brazil | 3.1 | 3.3 | 3.3 | 2.9 |
China | 5.8 | 8.6 | 10.6 | 12.6 |
India | 2.0 | 2.4 | 2.7 | 3.3 |
Russia | 2.2 | 2.4 | 2.3 | 2.1 |
S. Africa | 0.6 | 0.6 | 0.6 | 0.5 |
Total | 13.6 | 17.1 | 19.5 | 21.4 |
The BRICS countries, however, fared better in trade. Their share of world trade has increased and the share of trade in their GDP has also increased. BRICS substantially increased their share of world exports of goods and services in the periods 2001–2007 and 2015–2019; China’s and India’s share of world exports almost doubled (Appendix, Table
The share of BRICS countries in world merchandise trade increased by almost 70%, more than their share of exports of goods and services (Appendix, Table
However, the share of exports of goods and services in GDP behaved differently for some of the BRICS countries than for the world in general. The share increased for the world, despite a dip in the period 2015–2019 (Appendix, Table
In the initial period of 2001–2007, the share of merchandise exports in GDP was higher for China, Russia, and South Africa than for the world (Appendix, Table
One of the objectives of BRICS is to foster South-South economic cooperation in addition to expanding economic cooperation among themselves.
Four of the BRICS countries send more of their exports to developing countries than the average for all G20 developing country members, and three of them send more of their exports to developing countries than the average for all developing countries (Appendix, Table
Here we analyze whether the BRICS economies have achieved the goals enunciated at various G20 summits. The Philadelphia summit of 2009 declared the goal to achieve strong, stable and balanced global growth (SSBGG). The Brisbane summit of 2014 declared that G20 countries would raise growth of GDP by 2%. We measured the economic volatility of the BRICS member countries by calculating the standard deviation of their annual growth of per capita GDP from 2001 to 2007 and separately from 2011 to 2019 to examine whether economies have become more stable. The picture here is mixed; the standard deviation increased for Brazil and Russia and decreased substantially for China, while remaining almost constant for India and South Africa (Appendix, Table
Annual data on macroeconomic variables are obtained from World Bank indicators for the sample period from 1992 to 2019. We investigate the relationship between growth of per capita GDP, the share of
Model 1:
Model 2: 𝑃𝐶𝐼𝑡−1 = 𝛽0 + 𝛽1𝐺𝐹𝐶𝐹𝑡−𝑚 + 𝛽1𝑋𝑡−𝑚 + 𝛽1𝑀𝑡−𝑚 + 𝜆2𝐸𝐶𝑇𝑡−1 + 𝜇𝑡 (2),
where PCI – log of per capita GDP,
All variables must be stationary to avoid the problem of spurious regression. The Augmented Dickey Fuller (ADF) reveals that all the variables are non-stationary at levels and stationary after taking the first difference (Tables
Since the variables are non-stationary at levels and stationary at the first differences, the variables can be co-integrated. The Johansen test of cointegration suggests the existence of cointegrating equations in both Model 1 and Model 2 for all BRICS countries (Appendix, Table
Therefore, we use the Vector Error Correction Model (VECM) to estimate the short-run and long-run relationship between the variables, as defined above in equations (1) and (2).
Short-run model looks like:
Model 1: ∆ 𝑃𝐶𝐼𝑡−1 = 𝛼0 + 𝛼1 ∆ 𝐺𝐹𝐶𝐹𝑡−𝑚 + 𝛼1 ∆ 𝐸𝐵𝑡−𝑚 + 𝜆1𝐸𝐶𝑇𝑡−1 + 𝜀𝑡 (3),
Model 2: ∆ 𝑃𝐶𝐼𝑡−1 = 𝛽0 + 𝛽1 ∆ 𝐺𝐹𝐶𝐹𝑡−𝑚 + 𝛽1 ∆ 𝑋𝑡−𝑚 + 𝛽1 ∆ 𝑀𝑡−𝑚 + 𝜆2𝐸𝐶𝑇𝑡−1 + 𝜇𝑡 (4).
The cointegrating equations (long-run model) when PCI is normalized to unity looks like:
Model 1: 𝐸𝐶𝑇𝑡−1 = 𝑃𝐶𝐼𝑡−1 − 𝜑1𝐺𝐹𝐶𝐹𝑡−1 − 𝜑2𝐸𝐵𝑡−1 + 𝜑0 (5),
Model 2: 𝐸𝐶𝑇𝑡−1 = 𝑃𝐶𝐼𝑡−1 − 𝛾1𝐺𝐹𝐶𝐹𝑡−1 − 𝛾2𝑋𝑡−1 − 𝛾3𝑀𝑡−1 + 𝛾0 (6),
where 𝛼0, 𝛽0, 𝜑0, 𝛾0 = constant or intercept term.
The VEC residual autocorrelation test confirms that there is no autocorrelation, i.e. the errors are not serially correlated (Table
The results of the short-run regression are presented in Appendix (Table
Now we summarize the short-run causality (Table
Summary of short-run causality
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Brazil | ||
China | ΔGFCF --> ΔPCI | + |
India | ΔM --> ΔPCI | + |
ΔM --> ΔX | + | |
Russia | ΔGFCF --> ΔX | + |
South Africa | ΔGFCF <--> ΔPCI | + |
ΔPCI --> ΔM | + | |
ΔGFCF --> ΔM | + |
Since the coefficient of the error correction term is negative and significant for Brazil, India and China (Models 1 and 2), this indicates that there is a convergence towards the long-run dynamics compared to short-run. Thus, long-run relationship exists between per capita GDP and other variables in these countries. However, there are no long-run relationships in Russia and South Africa.
Summary of long-run relationships
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Model 1 | |||
PCI --> |
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Model 2 | |||
X <--> PCI (+,+) | X --> PCI (+) | X <--> PCI (+) | |
M --> PCI (-) | M <--> PCI (-,-) | M --> PCI (-) | |
X <--> |
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M --> |
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M --> X (+) | X --> M (+) | M --> X (+) |
In the long run, Brazil, China and India show a classical relationship between
To summarize, we find that
The
In the VECM regression, we found that a long-run relationship existed between per capita GDP and other variables in Brazil, India and China. In Russia and South Africa, there is no long-run relationships. In the long run, the external balance has a negative effect on the growth of per capita GDP in Brazil, but the effect is insignificant for China and India.
Exports of goods and services by developing country regions (% of GDP)
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34.6 | 32.3 | 29.5 | 24.8 | 0.72 |
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33.9 | 30.8 | 30.3 | 31.4 | 0.92 |
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20.7 | 19.5 | 19.8 | 20.8 | 1.01 |
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35.3 | 33.9 | 31.2 | 27.8 | 0.79 |
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17.2 | 21.0 | 22.8 | 18.1 | 1.05 |
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30.2 | 31.3 | 30.0 | 24.1 | 0.80 |
Gross fixed capital formation (% of GDP)
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34.3 | 38.7 | 40.5 | 39.1 | 1.14 |
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21.3 | 23.4 | 23.5 | 23.2 | 1.09 |
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18.5 | 20.4 | 20.5 | 18.0 | 0.97 |
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23.5 | 26.9 | 24.9 | 22.9 | 0.98 |
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29.2 | 31.4 | 30.0 | 27.0 | 0.92 |
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21.1 | 22.1 | 21.0 | 21.0 | 1.0 |
Gross fixed capital formation of BRICS (% of GDP)
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17.5 | 19.7 | 26.3 | 15.7 |
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37.5 | 42.3 | 37.5 | 42.2 |
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31.4 | 34 | 31.5 | 28.6 |
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18.7 | 22.0 | 21.0 | 21.2 |
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17.1 | 21.4 | 21.9 | 18.9 |
Exports of goods and services by BRICS (% of GDP)
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14.5 | 11.8 | 11.6 | 13.3 |
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29.5 | 28.2 | 25.0 | 19.6 |
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17.3 | 22.5 | 24.4 | 19.2 |
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34.4 | 29.5 | 27.0 | 28.0 |
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28.6 | 30.7 | 30.7 | 30.0 |
Exports of
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2.9 | 1.4 | 0.5 | 0.4 |
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27.5 | 28.8 | 26.8 | 26.8 |
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1.4 | 2.1 | 1.7 | 1.2 |
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0.2 | 0.2 | 0.4 | 0.6 |
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1.5 | 1.2 | 1.2 | 1.2 |
Exports of
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2.5 | 2.1 | 2.2 | 5.5 |
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2.7 | 5.3 | 8.1 | 12.0 |
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45.9 | 48.6 | 46.8 | 46.2 |
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3.9 | 5.4 | 5.9 | 7.8 |
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2.6 | 2.0 | 3.4 | 4.0 |
Exports of goods and services (% of world exports of goods and services)
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1.0 | 1.2 | 1.2 | 1.1 |
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5.4 | 8.1 | 9.7 | 10.6 |
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1.1 | 1.7 | 2.0 | 2.1 |
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1.8 | 2.4 | 2.5 | 1.8 |
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0.5 | 0.5 | 0.5 | 0.4 |
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9.8 | 13.9 | 15.9 | 16.1 |
Merchandise exports (% of world merchandise exports)
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1.0 | 1.2 | 1.3 | 1.2 |
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6.4 | 9.5 | 11.3 | 13.0 |
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0.9 | 1.3 | 1.6 | 1.6 |
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2.0 | 2.6 | 2.8 | 2.0 |
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0.5 | 0.5 | 0.5 | 0.5 |
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10.9 | 15.2 | 17.5 | 18.4 |
Service exports (% of world service exports)
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0.7 | 0.9 | 1.1 | 0.8 |
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0.7 | 2.0 | 2.9 | 2.5 |
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2.3 | 3.4 | 3.4 | 3.6 |
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1.0 | 1.3 | 1.4 | 1.1 |
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0.6 | 0.6 | 0.4 | 0.3 |
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5.3 | 8.1 | 9.2 | 8.3 |
Exports of BRICS to developing countries (% of total exports)
2001-2007 | 2008-2010 | 2011-2014 | 2015-2019 | |
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48.2 | 60.2 | 63.7 | 66.2 |
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45.0 | 50.2 | 55.7 | 55.6 |
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54.6 | 64.5 | 66.5 | 62.5 |
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36.8 | 39.6 | 46.8 | 46.6 |
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36.4 | 49.1 | 64.5 | 62.7 |
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44.2 | 52.7 | 59.4 | 58.7 |
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42.0 | 49.8 | 55.2 | 54.2 |
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49.5 | 57.3 | 62.5 | 61.1 |
Average annual growth of per capita GDP
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2001-2007 | 2011-2019 | |
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2.0 | 2.5 |
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2.1 | 1.0 |
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1.8 | 1.4 |
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1.4 | 2.2 |
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1.2 | 0.9 |
Exports of goods and services of the BRICS countries (% of GDP)
Standard deviation | |||
2001-2007 | 2011-2019 | ||
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1.4 | 1.2 | |
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6.3 | 3 | |
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3.4 | 2.8 | |
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2.1 | 1.6 | |
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2.4 | 0.6 |
External balance on goods and services of the BRICS Countries (% of GDP)
Standard deviation | ||
2001-2007 | 2011-2019 | |
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2.0 | 1.2 |
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2.8 | 0.8 |
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1.3 | 1.8 |
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1.7 | 1.6 |
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2.4 | 1.3 |
Gross fixed capital formation of the BRICS countries (% of GDP)
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2001-2007 | 2011-2019 | |
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0.6 | 2.7 |
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2.3 | 1.1 |
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2.8 | 2.3 |
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1.1 | 0.5 |
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2.0 | 0.9 |
BRICS merchandise exports (% of GDP)
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21.8 | 19.2 | 19.2 | 20.2 |
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54.0 | 49.3 | 44.5 | 33.4 |
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25.6 | 36.3 | 41.4 | 29.3 |
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48.0 | 43.0 | 39.3 | 39.1 |
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47.6 | 53.2 | 58.8 | 56.5 |
Test of stationarity at levels
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-1.43 | -1.17 | 0.02 | -0.52 | -0.97 |
(0.56) | (0.68) | (0.96) | (0.88) | (0.76) | |
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-1.57 | -0.82 | -0.66 | -0.51 | -0.82 |
(0.49) | (0.81) | (0.85) | (0.88) | (0.81) | |
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0.30 | 0.21 | -0.82 | -1.01 | -2.47 |
(0.26) | (0.1) | (0.81) | (0.74) | (0.12) | |
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-0.69 | -1.97 | -1.95 | -2.48 | -1.65 |
(0.84) | (0.30) | (0.30) | (0.12) | (0.45) | |
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-1.74 | -2.15 | -1.37 | -0.64 | (-2.00) |
(0.41) | (0.22) | (0.59) | (0.86) | (0.28) |
Test of stationarity after taking first difference
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-3.4 | -2.83 | -5.04 | -3.39 | -3.44 |
(0.01) | (0.04) | (0.00) | (0.01) | (0.00) | |
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-3.44 | -6.98 | -5.22 | -3.5 | -3.33 |
(0.00) | (0.00) | (0.00) | (0.00) | (0.01) | |
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-2.67 | -6.84 | -5.00 | -3.41 | -4.13 |
(0.04) | (0.00) | (0.00) | (0.01) | (0.00) | |
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-4.13 | -4.36 | -4.76 | -4.45 | -5.26 |
(0.00) | (0.00) | (0.00) | (0.00) | (0.00) | |
M | -5.47 | -6.84 | -3.05 | -4.09 | -4.98 |
(0.00) | (0.00) | (0.03) | (0.00) | (0.00) |
Johansen’s cointegration test
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None | 30.2151 | 29.68 | 95.8336 | 47.21 | ||
At most 1 | 0.50661 | 11.8471* | 15.41 | 0.89658 | 39.1092 | 29.68 |
At most 2 | 0.3234 | 1.6897 | 3.76 | 0.66706 | 11.6144* | 15.41 |
At most 3 | 0.06292 | 0.34834 | 0.9087 | 3.76 | ||
At most 4 | 0.0357 | |||||
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None | 42.7901 | 29.68 | 69.3598 | 47.21 | ||
At most 1 | 0.67842 | 14.4272* | 15.41 | 0.71994 | 36.2679 | 29.68 |
At most 2 | 0.37961 | 2.492 | 3.76 | 0.55671 | 15.1161* | 15.41 |
At most 3 | 0.09487 | 0.39443 | 2.0748 | 3.76 | ||
At most 4 | 0.0767 | |||||
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None | 38.6391 | 29.68 | 72.6165 | 47.21 | ||
At most 1 | 0.62125 | 14.3668* | 1.54E+01 | 0.82342 | 29.2671* | 29.68 |
At most 2 | 0.436 | 0.0491 | 3.76 | 0.54811 | 9.409 | 15.41 |
At most 3 | 0.00196 | 0.29925 | 0.5188 | 3.76 | ||
At most 4 | 0.02054 | |||||
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None | 31.1447 | 29.68 | 65.0525 | 47.21 | ||
At most 1 | 0.46239 | 15.0087* | 15.41 | 0.71 | 34.106 | 29.68 |
At most 2 | 0.39902 | 1.7697 | 3.76 | 0.5828 | 12.2514* | 15.41 |
At most 3 | 0.0658 | 0.28543 | 3.8495 | 3.76 | ||
At most 4 | 0.14271 | |||||
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None | 43.8743 | 29.68 | 78.3307 | 53.12 | ||
At most 1 | 0.69644 | 14.0696* | 15.41 | 0.70035 | 48.2025 | 34.91 |
At most 2 | 0.38939 | 1.7372 | 3.76 | 0.61935 | 24.0558 | 19.96 |
At most 3 | 0.06713 | 0.4529 | 8.9778* | 9.42 | ||
At most 4 | 0.3017 |
Optimal lag selection
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0 | -1.3 | -1.79 | -1.43 | -2.78 | -1.53 | -5.25 | -0.66 | -4.43 | -3.93 | -5.99 |
1 | -5.24* | -8.44 | -9.47 | -11.43* | -8.81 | -11.46 | -5.55* | -9.61 | -8.14 | -11.44 |
2 | -5.02 | -8.45* | -9.76* | -10.99 | -8.81* | -11.52* | -5.21 | -10.08* | -8.27* | -11.96* |
Vector error correction model (short-run dynamics)
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1.36** | 0.60 | 1.80 | 5.73*** |
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(0.62) | (0.39) | (1.42) | (2.08) | |
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0.24 | -0.28 | 0.47* | 0.65*** | 0.18 | 0.18 | -0.49 | 2.38 | -0.06 | -2.70* |
(0.47) | (0.94) | (0.26) | (0.17) | (0.49) | (0.40) | (0.78) | (1.62) | (0.83) | (1.41) | |
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-0.58 | 0.05 | -0.79 | -0.18 | -1.27 | -1.07 | -1.86** | |||
(0.74) | (0.23) | (0.50) | (0.39) | (1.27) | (0.85) | (0.89) | ||||
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-0.29 | -0.06 | -0.04 | -0.17 | -0.51 | 0.17 | -0.75 | -0.18 | 1.97 | |
(0.42) | (0.82) | (0.37) |
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(0.32) | (0.34) | (0.65) | (1.17) | (0.57) | (1.26) | |
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0.30 | 0.18 | 0.12 | -0.40 | 0.92 | 1.35* | ||||
(0.64) | (0.27) | (0.33) | (0.39) | (1.05) | (0.71) |
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0.57 | -0.05 | 0.15 | 0.49 | ||||||
(0.40) | (0.16) | (0.40) | (0.66) | |||||||
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-0.05 | 0.41 | -0.68 | |||||||
(0.15) | (0.35) | (0.65) | ||||||||
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0.11 | 0.24 | -0.73* | -1.05 | -0.75 | |||||
(0.59) | (0.16) | (0.43) | (1.08) | (0.61) | ||||||
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-0.13 | -0.85** | 0.32 | 0.37 | ||||||
(0.54) | (0.41) | (0.60) | (0.60) | |||||||
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0.13 | 0.05 | -1.19 | 0.31 | ||||||
(0.70) | (0.18) |
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(1.15) | (0.79) | ||||||
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-0.02 | 0.55 | -0.17 | -1.50** | ||||||
(0.72) |
|
(0.56) | (0.90) | (0.72) | ||||||
|
0.00 | 0.04 | -0.04 | -0.05 | 0.09* | -0.01 | 0.01 | 0.00 | 0.00 | -0.00 |
(0.03) | (0.05) | (0.03) | (0.03) | (0.04) | (0.04) | (0.04) | (0.06) | (0.03) | (0.03) | |
|
26 | 25 | 25 | 26 | 25 | 25 | 26 | 25 | 25 | 25 |
VEC residual serial correlation LaGrange-multiplier test
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Brazil | ||||||
1 | 11.2128 | 9 | 0.2614 | 12.6268 | 16 | 0.69982 |
2 | 6.6794 | 9 | 0.67046 | 12.0504 | 16 | 0.7405 |
China | ||||||
1 | 12.8385 | 9 | 0.17005 | 20.6861 | 16 | 0.19089 |
2 | 10.5126 | 9 | 0.3106 | 11.6104 | 16 | 0.77033 |
India | ||||||
1 | 4.8409 | 9 | 0.84795 | 10.0495 | 16 | 0.86403 |
2 | 10.7523 | 9 | 0.29307 | 17.8176 | 16 | 0.33469 |
Russia | ||||||
1 | 12.2891 | 9 | 0.1975 | 10.6633 | 16 | 0.82978 |
2 | 17.1744 | 9 | 0.04605 | 18.1212 | 16 | 0.31685 |
South Africa | ||||||
1 | 4.977 | 9 | 0.83631 | 11.5649 | 16 | 0.77335 |
2 | 4.909 | 9 | 0.84216 | 18.6308 | 16 | 0.28827 |
Jarque-Bera test of normality
Table |
||||||
---|---|---|---|---|---|---|
Model 1 | Model 2 | |||||
Equation | chi2 | df |
|
chi2 | df |
|
|
|
|||||
|
|
|
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|
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|
|
||||||
ΔPCI | 0.26 | 2 | 0.88 | 10.63 | 2 | 0.11 |
ΔGFCF | 1.64 | 2 | 0.44 | 0.13 | 2 | 0.94 |
ΔEB | 5.18 | 2 | 0.08 | |||
ΔX | 25.47 | 2 | 0.00 | |||
ΔM | 1.09 | 2 | 0.58 | |||
ALL | 7.08 | 6 | 0.31 | 37.32 | 8 | 0.00 |
|
||||||
ΔPCI | 1.21 | 2 | 0.55 | 1.50 | 2 | 0.47 |
ΔGFCF | 2.92 | 2 | 0.23 | 0.50 | 2 | 0.78 |
ΔEB | 0.40 | 2 | 0.82 | |||
ΔX | 1.34 | 2 | 0.51 | |||
ΔM | 1.08 | 2 | 0.58 | |||
ALL | 4.53 | 6 | 0.61 | 4.42 | 8 | 0.82 |
|
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ΔPCI | 0.08 | 2 | 0.96 | 2.13 | 2 | 0.35 |
ΔGFCF | 5.27 | 2 | 0.07 | 0.89 | 2 | 0.64 |
ΔEB | 0.39 | 2 | 0.83 | |||
ΔX | 0.02 | 2 | 0.99 | |||
ΔM | 1.56 | 2 | 0.46 | |||
ALL | 5.73 | 6 | 0.45 | 4.60 | 8 | 0.80 |
|
||||||
ΔPCI | 2.23 | 2 | 0.33 | 1.84 | 2 | 0.40 |
ΔGFCF | 0.04 | 2 | 0.98 | 2.31 | 2 | 0.31 |
ΔEB | 0.50 | 2 | 0.78 | |||
ΔX | 11.09 | 2 | 0.00 | |||
ΔM | 1.36 | 2 | 0.51 | |||
ALL | 2.78 | 6 | 0.84 | 16.59 | 8 | 0.03 |
|
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ΔPCI | 2.83 | 2 | 0.24 | 3.59 | 2 | 0.17 |
ΔGFCF | 1.31 | 2 | 0.52 | 0.86 | 2 | 0.65 |
ΔEB | 1.23 | 2 | 0.54 | |||
ΔX | 0.20 | 2 | 0.91 | |||
ΔM | 0.25 | 2 | 0.88 | |||
ALL | 5.37 | 6 | 0.50 | 4.89 | 8 | 0.77 |
VEC Granger causality/ Wald test (Model 1)
Table |
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---|---|---|---|---|
Country | Dependent variable | Source of causality | ||
Short run (Wald chi sq statistic) | ||||
ΔPCI | ΔGFCF | ΔEB | ||
|
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||
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|
|
|
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|
ΔPCI | _ | 0.47 | 2.06 |
(0.49) | (0.15) | |||
ΔGFCF | 0.13 | _ | ||
-0.71 |
|
|||
ΔEB | 0.07 | 0.02 | _ | |
(0.78) | (0.87) | |||
|
ΔPCI | _ | 0.01 | 0.1 |
(0.91) | (0.75) | |||
ΔGFCF | 1.72 | _ | 0.25 | |
(0.18) | (0.61) | |||
ΔEB | 1.11 | _ | ||
(0.29) |
|
|||
|
ΔPCI | _ | 0.29 | 0.14 |
(0.59) | (0.70) | |||
ΔGFCF | 1.63 | _ | 0.17 | |
(0.20) | (0.68) | |||
ΔEB | 1.99 | 0.03 | _ | |
(0.15) | (0.86) | |||
|
ΔPCI | _ | 0.07 | 0.97 |
(0.79) | (0.32) | |||
ΔGFCF | 0.57 | _ | 0.89 | |
(0.44) | (0.34) | |||
ΔEB | 0.95 | 0.64 | _ | |
(0.32) | (0.42) | |||
|
ΔPCI | _ | 3.79 | 1.39 |
(0.15) | (0.49) | |||
ΔGFCF | 4.43 | _ | 1.26 | |
(0.10) | (0.53) | |||
ΔEB | 1.61 | 3.82 | _ | |
(0.44) | (0.14) |
VEC Granger causality/ Wald Test (Model 2)
Table |
|||||
---|---|---|---|---|---|
Country | Dependent variable | Source of causality | |||
Short run (Wald chi sq statistic) | |||||
ΔPCI | ΔGFCF | ΔX | ΔM | ||
|
|
|
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|
|||||
|
|
|
|
||
|
ΔPCI | _ | 0.28 | 0.07 | 0.04 |
(0.87) | (0.96) | (0.98) | |||
ΔGFCF | 0.1 | _ | 0.21 | 0.32 | |
(0.95) | (0.89) | (0.85) | |||
ΔX | 0.41 | 1.11 | _ | 4.47 | |
(0.81) | (0.57) | (0.10) | |||
ΔM | 0.63 | 0.68 | 0.78 | _ | |
(0.72) | (0.71) | (0.67) | |||
|
ΔPCI | _ | 2.17 | 0.06 | |
|
(0.14) | (0.80) | |||
ΔGFCF | 1.33 | _ | 0.18 | 0.02 | |
(0.24) | (0.67) | (0.89) | |||
ΔX | 1.82 | 1.72 | _ | 0 | |
(0.17) | (0.19) | (0.99) | |||
ΔM | 0.11 | 0.05 | 0.07 | _ | |
(0.73) | (0.82) | (0.79) | |||
|
ΔPCI | _ | 2.33 | 2.89 | |
(0.12) | (0.08) |
|
|||
ΔGFCF | 0.61 | _ | 0.01 | 0.74 | |
(0.43) | (0.92) | (0.39) | |||
ΔX | 0.01 | 0.1 | _ | ||
(0.93) | (0.75) |
|
|||
ΔM | 0.18 | 0.01 | 0.14 | _ | |
(0.67) | (0.90) | (0.70) | |||
|
ΔPCI | _ | 1.01 | 1.19 | 1.08 |
(1.60) | (0.55) | (0.58) | |||
ΔGFCF | 2.06 | _ | 1.06 | 1.54 | |
(0.35) | (0.58) | (0.46) | |||
ΔX | 0.68 | 6.74** | _ | 3.39 | |
(0.71) | (0.03) | (0.18) | |||
ΔM | 2.4 | 0.79 | 2.74 | _ | |
0.3 | 0.67 | 0.25 | |||
|
ΔPCI | _ | 1.71 | 4.48 | |
|
(0.42) | (0.10) | |||
ΔGFCF | _ | 1.45 | 3.8 | ||
|
(0.48) | (0.14) | |||
ΔX | 2.02 | 0.56 | _ | 3.38 | |
(0.36) | (0.75) | (0.18) | |||
ΔM | 1.9 | _ | |||
|
|
(0.38) |
The cointegrating equations – long-run model (Model 1)
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_ | - |
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_ | |||
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-0.49 | 0.34 | _ | |
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_ | 0.048 | |
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- |
_ | ||
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_ | 0.17 |
The cointegrating equations – long-run model (Model 2)
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_ | - |
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_ |
1 The term BRIC was originally used in a report by Jim O’Neill of Goldman Sachs “Building better economic BRICs.” Beginning with meetings in 2006 among the foreign ministers of the 4 BRIC countries on the sidelines of the UN General Assembly, it was formally established in 2009. South Africa officially became a member in December 2010.
2 After adjusting various shortcomings of his analysis,
3 These countries could not adjust their policies to counter the effects of the
4 We do not find any substantial shifts in the share of major sectors, such as agriculture or manufacturing, in GDP.
5 Apart from infrastructure, investments are sought to be directed towards housing as this is expected to lead to higher employment. However, investments in construction rather than machinery and equipment can slow down production and growth (Agarwal et al., 2015).
6 See
7 Deterioration of the
8 The budget of President Obama in the US stressed the importance of shovel-ready projects that could be implemented quickly.
9 For instance, see
10 This is in contrast to the result of
11 For a discussion whether China was moving away from its investment and export dependent growth model, see
12 Partly for this purpose, the BRICS countries established the New Development Bank, open to membership of all countries, to provide development loans to developing countries. They also established the Contingent Reserve Arrangement to provide loans to countries with balance of payments deficits.
13 For further details, see Agarwal, (2013), South-South Economic Cooperation: Emerging Trends and Challenges, Background Research Paper submitted to the High-Level Panel on the post-2015 Development Agenda, May 2013, UN, New York.
14 Our data shows that growth of per capita GDP increased by less than 2%. Since growth of GDP would increase by less than the growth of per capita GDP unless the growth of population increased, which did not happen, we can infer that the Brisbane target was not met.
15 In Russia, the lack of a long-run relationship can be due to the high and rising dependence of the Russian economy on oil prices and negative oil price shocks (
16 Apart from the five BRICS countries, other developing countries of the G20 are Argentina, Indonesia, Mexico and Turkey.
17 This is the average for all developing countries.