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BRICS Not Ready for Joint Development Bank

Tuesday, April 10, 2012

Ever since Goldman Sachs economist Jim O’Neill defined the BRIC group of countries in 2001, policymakers have been closely watching the rise of the presumed leaders of the 21st century. And it was widely expected that as Brazil, Russia, China, India and recently added South Africa exercised growing power in global politics, they would also play a larger role in efforts to promote global development by using their own success as a template for smaller and lesser developed states. At their recent summit in New Delhi, the BRICS heads of state signaled their intention to take up that responsibility. The most prominent idea to come out of the meeting was the joint proposal for a BRICS-led and administered development bank, directed toward creating a “South-South” model of aid distribution.

For aid-weary Western policymakers, a development institution led and funded entirely by emerging countries is at first glance an ideal scenario. It would certainly relieve much of the pressures that the historical development practitioners have come under in an era of economic austerity. However, while the publicity and handshaking in New Delhi marked the first step toward their new aid partnership, the BRICS must figure out what exactly they seek to accomplish with this proposed institution. Unless they can figure out a common definition of what constitutes development aid, and the best practices to administer it, the proposed bank is doomed to fail before the delivery of its first check. ...

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