The Alliances Shaping the World (PART 1)

A few days ago, the BRICS alliance held its summit. And right now, the G7 leaders are also holding a meeting. So what are these alliances, and what effect do they have on the world economy.

Today, we’re talking about only a kind of alliance, the economic ones, including the G7, BRICS, and others. In part two, we’ll discuss the military ones. The ones that I will be covering in this article are only some of the important ones. So let’s get into them!

First is BRICS, standing for Brazil, Russia, India, China, and South Africa. BRICS, or rather BRIC, was founded in 2008. As for South Africa, it joined in 2010. The funny thing about the name is that there was only one “brick,” and South Africa made it several bricks. The countries in this alliance have developing nations, such as South Africa, and as for the better ones, I hope they could also do better. Some economists believe that China, which currently ranks as the world’s second-largest economy in GDP, will overtake the United States, No.1 in GDP, by 2027.

So what is this GDP? It stands for Gross Domestic Product and is a handy number for economists. The definition of GDP is the market value of all finished goods and services produced within a country in a year. Think of a country as a giant supermarket. The goods such as cars sold at this supermarket get added to GDP. However, not all things get added here. For example, is the metal the car manufacturer uses to make a car counted? Because the metal gets used to make another product, the value of the sold metal doesn’t count in GDP, but the finished product, or the car, is. Though if the metal gets sold to a consumer, like you, and you use it to hand-make an automobile from scratch, the metal sold would get counted as a finished good.

So what if the car from the factory gets exported to another country? Does it count for the other country’s GDP? Well, since it is a finished good exported from its manufacturing country, the value would get added for the country that made it, not the one who imported it. But what we’ve been talking about so far is the nominal GDP. If you’ve ever heard your grandparents talk about the old days, you should know that things were much cheaper. Due to constant inflation, prices keep rising, and it would seem that our economies are getting big very fast, while they aren’t. So to measure the correct stance of an economy over decades, we need to look at another number, real GDP. Accounting for inflation, it uses a fixed price from some date to see how much stuff got made over the years.

Anyway, let’s get back to the economic alliances now that we know about GDP. What is the G7? It stands for the Group of 7, an intergovernmental organization consisting of seven of the world’s largest and most advanced economies and wealthiest liberal democracies. The G7 countries are the United States, Canada, the United Kingdom, Germany, Italy, France, and Japan. The countries meet to discuss economic and monetary issues, though they occasionally tackle political topics. The Group of Seven used to be the Group of Eight, with Russia also a member. The organization expelled Russia after it annexed Crimea, Ukraine.

There is also a smaller alliance in Southeast Asia, the Association of Southeast Asian Nations, or ASEAN for short. Its original founding members were Indonesia, Malaysia, the Philippines, Singapore, and Thailand, who founded the organization in 1967. Since then, it has grown to ten member states. It focuses on boosting economic and trade growth, with all members signing a free trade agreement and an agreement against the development of nuclear weapons.

The three alliances we have discussed today are crucial in their region and even the world. As for how they compare, I think that should be a question up to you, dear reader, to answer. As for the military alliances, we will be talking about them in part two. So that’s the end of this production from the New News Newsminute. Thank you for reading, and tune in next time for more worldly updates.