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The Sao Paulo stock exchange
The Sao Paulo stock exchange
Gayle Tzemach Lemmon

In a recent interview, Goldman Sachs’ Jim O’Neill, whose pen gave birth to the concept of the BRICs —the constellation of emerging economic powers Brazil, Russia, India, and China (and now including South Africa) — said the countries’ combined growth had “exceeded all expectations.” Noted O’Neill, “in slightly over a decade the group’s GDP has grown from approximately $3 billion to $13 billion. The BRIC countries have the potential to avert a global recession and to grow faster than the rest of the world and to pull all of us along with them as a (growth) engine.”

As each of the BRIC economies has grown their combined economic strength has made an impact on Foreign Direct Investment (FDI) flows — both inward and outward. Indeed, they have helped to alter the map of global investment.

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(photo: Chesilu)

A recent report from the UN Conference on Trade and Development (UNCTAD) vividly illustrates this shift. “Since 2010,” it says, “developing and transition economies have absorbed more than half of global FDI inflows, and in 2012, FDI flows to developing economies exceeded those to developed countries for the first time ever—with US$130 billion more.”

The numbers tell the story of a collection of emerging nations that have evolved into a growth engine even while the global economy has sputtered, as I discussed in a post last week. In the past decade “FDI inflows to BRICS more than tripled to an estimated US$263 billion in 2012.” Even financial crisis and recession did not hit the BRICS as hard: flows fell by 30 percent in 2009 compared to 40 percent for the developed world. And the recovery also arrived in faster order: the BRICS’ share of global FDI reached 20 percent in 2012, “up from 6 percent in 2000.”

Serious heft

As the foreign dollars have piled up the investment dollars have poured out and the BRICS have become global investors of significant financial heft. Outbound foreign investment from the BRICS grew from “$7 billion in 2000 to $126 billion in 2012, rising from 1 percent of world flows to 9 percent.” Most notable among the investment stories is the growth of BRICS investment in Africa—and not simply in primary goods such as minerals or petroleum, but in the services and manufacturing sectors. In 2012 BRICS foreign investment accounted for a quarter of Africa’s inflows. According to UNCTAD, “the rise of FDI in manufacturing, which has positive consequences for job creation and industrial growth, is becoming an important facet of South–South economic cooperation.”

All of the BRICS minus Brazil now count “among the top investing countries in Africa on FDI stock and flows.” And even while the numbers are smaller, Brazil has had an impact on investment in Africa. The Brazilian Development Bank has helped to fuel the growth of the ethanol industry in countries including Angola and Mozambique. And other Brazilian banks have helped to fund housing developments.

As the BRICS continue to invest in Africa their funds raise important questions for policymakers and investors alike. Among them, as UNCTAD asks, is “what policies by BRICS could favor investment in Africa in sectors that can make a particular contribution to productive capacity building and employment generation?” And how can BRICS investors best link to local firms through supply chains and local procurement? These questions and more are sure to confront both business and the public sector as the BRICS become ever more central to global investment flows.

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Coronavirus

Chinese Students' "Absurd" Protest Against COVID Lockdowns: Public Crawling

While street demonstrations have spread in China to protest the strict Zero-COVID regulations, some Chinese university students have taken up public acts of crawling to show what extended harsh lockdowns are doing to their mental state.

​Screenshot of a video showing Chinese students crawling on a soccer pitch

Screenshot of a video showing Chinese students crawling

Shuyue Chen

Since last Friday, the world has watched a wave of street protests have taken place across China as frustration against extended lockdowns reached a boiling point. But even before protesters took to the streets, Chinese university students had begun a public demonstration that challenges and shames the state's zero-COVID rules in a different way: public displays of crawling, as a kind of absurdist expression of their repressed anger under three years of strict pandemic control.

Xin’s heart was beating fast as her knees reached the ground. It was her first time joining the strange scene at the university sports field, so she put on her hat and face mask to cover her identity.

Kneeling down, with her forearms supporting her body from the ground, Xin started crawling with three other girls as a group, within a larger demonstration of other small groups. As they crawled on, she felt the sense of fear and embarrassment start to disappear. It was replaced by a liberating sense of joy, which had been absent in her life as a university student in lockdown for so long.

Yes, crawling in public has become a popular activity among Chinese university students recently. There have been posters and videos of "volunteer crawling" across universities in China. At first, it was for the sake of "fun." Xin, like many who participated, thought it was a "cult-like ritual" in the beginning, but she changed her mind. "You don't care about anything when crawling, not thinking about the reason why, what the consequences are. You just enjoy it."

The reality out there for Chinese university students has been grim. For Xin, her university started daily COVID-19 testing in November, and deliveries, including food, are banned. Apart from the school gate, all exits have been padlock sealed.

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