There is a consensus in the literature that India–Brazil–South Africa (IBSA) Forum is not about trade. The main argument is that the three economies do not have enough complementarities to foster trade and that their cooperation in trade issues is undermined by competition for developed countries’ markets access. This report shows that this argument does not hold. Not only there are potential gains from trade among India, Brazil and South Africa, but also their exports are not sufficient similar to affirm that they are essentially rivals concerning market access. Moreover, it discusses the potential political gains that an increased trade among IBSA members can bring about. More trade can increase cooperation in multilateral negotiations and helps to sustain the coalition of developing countries.
The author would like to thank Janina Onuki and Felipe Loureiro for their helpful suggestions and Fapesp for the generous funding. This paper was written when the author was a visiting research fellow at GIGA-Hamburg.
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Mercosur’s trade system (Nomenclatura Comum do Mercosur).
The Grubel–Lloyd index is calculated for each sector using import data (M) and export data (X): GL = 1–[|XM|/(X + M)]. When trade in this sector is predominantly intra-industry, trade volume (X + M) is high, but the trade balance (X– M) is small, since there are imports and exports within the same sector. Thus, GL tends to one. When trade in this sector is predominantly inter-industry, the trade balance and trade volume tend to be equal. In this case, GL tends to zero. In order for us to obtain an aggregate index for the countries, we calculated the sectorial indices for each of the four-digit sectors and used a weighted average of the trade weight of each sector in international trade, as suggested by Mikic and Gilbert (2009).
This index is calculated by adding (among all sectors) the minimum percentage value of each sector in the total exports of each country involved (in our case, always in pairs), as suggested by Mikic and Gilbert (2009).
Survey “Brazil, Americas and the World”. IRI/USP. Available online at http://www.lasamericasyelmundo.cide.edu
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