GIBS Review 

We trust that you will find the latest issue of GIBS Review an informative and enjoyable read. As always we welcome your feedback on any of the content or the format of the GIBS Review and encourage you to email us with any comments or suggestions you may have at gibsreview@gibs.co.za. Kind regards, Professor Nick Binedell Director: Gordon Institute of Business Science

WHAT'S ON IN JANUARY 2012 25 | 27 | 31   UP NEXT IN FEBRUARY 2012 6 | 13 | 14 | 27

ANNIVERSARY OF A DECADE OF BRIC BUILDING

Ten years ago, Goldman Sachs' Jim O'Neill made the bold prediction that the Bric nations – Brazil, Russia, India and China – would overtake the West's six biggest economies within four decades. Since then there's been the addition of newcomer South Africa and while these nations together form a powerful bloc, they face their own specific challenges amid the global financial turmoil.

CNN reports that during this period of turbulence Brics’ growth has come with challenges – most notably inflation and in India’s case downside currency pressures as well. O’Neill believes the future holds a constant juggling act between managing inflation and sustaining growth with so many pressures coming from the West.

In an interview with CNN, O’Neill says, “The key for these guys [Brics economies] is to grow their domestic consumer market to stop reliance on the West.”

The Financial Express is far more sceptical, arguing that it is time to bid farewell to a “clever acronym [that] once offered an easy account of the redistribution of global power” but now “obscures more than it illuminates”. For one thing, the Brics are divided by politics: authoritarian regimes sit alongside democratic ones, and China and Russia are uncomfortable bedfellows, while China and India have a history of being at loggerheads.

“The important message is that the dynamics of the new world order are driven as much by rivalries between rising powers as by how they get along with the West,” writes The Financial Express. But there is a thread that draws together the Brics. “They are all pretty much hostile to the idea of intervention in the domestic affairs of sovereign states. So, as it happens, are most of the other rising powers.”
CNN Video: Global Exchange: Impact on emerging markets
The Financial Express: A story of Brics without mortar
BBC News: Brics nations mark 10th birthday
BBC News: In graphics – Why do the the Brics matter?

The rise of the Bric nations is synonymous with the acronym coined by Goldman Sachs’ Jim O’Neill, writes the Financial Times. Of course, without the label the Bric economies would have grown anyway, but undoubtedly the label was a marketing success, spawning the creation of Bric-only investment funds.

O’Neill, now chairman of Goldman’s asset management arm, is struggling to find new labels for the so-called emerging markets – a tag he does not like since it underestimates these countries’ economic role, the Financial Times writes in a review of Goldman’s new book, The Growth Map. His latest label is “growth markets”, which covers not just the Bric quartet but also other emerging markets, but does not have the same ring as the Brics and lacks precision.

The Financial Times finds striking O’Neill’s optimism on Russia, with his prediction that, even with an ageing population, the country’s gross domestic product could overtake that of France, the UK and ultimately Germany by 2030.
Financial Times: The Growth Map

NATIONAL PLANNING COMMISSION

The National Development Plan (NDP), unveiled by National Planning Minister Trevor Manuel, has deservedly generated great interest. It is the result of an exhaustive consultation process drawing on expertise across the political spectrum and seeks to address nine national issues that the commission has identified as the country's top priorities. They are:

• Widespread unemployment;
• Ailing infrastructure;
• Low standards of education;
• Exclusion of the poor from mainstream development;
• A resource-dependent economy;
• A failing public health system with a large disease burden;
• Inept public service provision;
• Widespread corruption; and
• Societal divisions.

The National Planning Commission’s Cyril Ramaphosa traced the roots of the NDP back to the social compact, “forged through compromise with the promise of mutual benefit” that gave SA its constitution, in a column published in City Press. Speaking at GIBS, Manuel made clear that the NPC may be advisory in design – the cabinet will now consider its proposals – but government risks ignoring the findings and recommendations at its peril.

Writing in Business Day, John Kane Berman, head of the SA Institute of Race Relations, cites as a drawback that the NDP “is in some respects utopian”. There is no reason given in the NDP why its job targets in agriculture and elsewhere are any more feasible than those cited in previous planning documents and many people are “rightly sceptical of the notion of national economic planning”.

“But the new plan might just be the turning point in the steady degradation of the state, for it recognises that ‘a capable state is an essential precondition for SA’s development’…Such a state ‘has to be painstakingly built, brick by brick, institution by institution’,” writes Kane-Berman.
NPC: The full NDP
City Press: A plan steeped in value
Business Day: National Development Plan might undermine the revolution
GIBS Video: Series of six videos of Trevor Manuel on the NDP at GIBS

DURBAN COP17 CONFERENCE: GOOD COP, BAD COP

While the 17th Conference of the Parties (COP17) in Durban is likely to be assessed as producing more hot air than actual moves to address climate change, new research findings are “sounding alarm bells” for urgent action to halt global warming, the UN’s top official on climate change, Christiana Figueres, said.

“The World Meteorological Organisation (WMO) has put out a report that the atmosphere has reached record levels of greenhouse gases and the Intergovernmental Panel on Climate Change (IPCC) has just adopted … its report on extreme weather events, concluding that hot days are becoming hotter and will occur more often,” Figueres said in an Agence-France Presse report.

The world already has the technological and other abilities needed to economically avert damaging climate change, according to a UN Environment Programme (UNEP) report. UNEP lists accelerated adoption of renewable energy sources, energy efficiency improvements, fuel switching, increased public transport, more fuel-efficient vehicles, agriculture and waste management as important to the cause. Other gains could be made from changes to aviation and shipping, together responsible for around 5% of greenhouse gas emissions.
AFP: Salvaging Kyoto a “tall order”: UN climate chief
IPCC Report: Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation
UN Environment Programme: Bridging the emissions gap

AFRICA SHOULD LOOK TO BRAZIL FOR LESSONS

Investment philosophy had to embrace the social policies that made fellow Brics member Brazil a success, writes former trade unionist and ANC cabinet minister Jay Naidoo in The Maverick. And the greatest challenge in Africa is to feed its people and address the overwhelming poverty and inequality.

“Africa has gone from a net food exporter in the 1960s to being heavily dependent on food aid … Youth unemployment and the despair of hunger are time bombs waiting to explode,” writes Naidoo.

“With 80% of arable land uncultivated and nearly two-thirds of African countries net importers of food, this is a huge opportunity for the right type of partnership between Brazil and Africa to bring mutual benefits such as transfer of skills, technology and the building of the capacity of African small-scale farmers.”

Meanwhile, Reuters reports that Brazil is launching a top-level drive to expand its economic ties with Africa, a sign of how crises in the rich world are pushing faster-growing emerging economies to trade and invest among themselves. The new initiative, ordered by President Dilma Rousseff after her three-country trip to Africa last month, comes as nervousness grows in Brazil over the impact in the coming months of Europe's debt crisis and lurch toward recession.
The Maverick: Africa at the crossroads: Let's talk Brazil
Reuters: As rich world sputters, Brazil looks to Africa

2011’s BEST BUSINESS BOOKS REFLECT A SYSTEM IN CRISIS

Books reflect their times. This year Booze & Company’s annual review of the best business books of the year – chosen by a panel of leading business school academics and financial journalists – reflects the grim economic times that the developed world’s major economies again find themselves in.

Although they cover a wide variety of topics and fields, just about all of the books featured “are rife with dissatisfaction”, writes strategy+business. “Many of their authors have tracked down root causes of the destruction of economic value and prescribed radical solutions for them.”
strategy+business: Best business books 2011

IN DEPTH ...

Strategic South Africa
From the days of its strategic importance as a vital link on the East-West trade route for the Dutch East India Company to the current day faith being shown in South Africa by the emerging BRIC economies (Brazil, Russia, India and China) as a strategic gateway into Africa, the words of Vladimir Lenin have never held so true as they do today: “Whoever controls the tip of Africa controls the world.” Recognising the tactical importance of South Africa and how to harness this role is central to the academic focus of the Gordon Institute of Business Science. Read more ...

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