Impact of the Transatlantic Trade and Investment Partnership (TTIP) on the Economies of Brazil, Russia, India, China and South Africa (BRICS)

Abstract

This paper aims to quantify the potential effects of the Transatlantic Trade and Investment Partnership (TTIP) being negotiated between the EU and the U.S. on the economies of Brazil, Russia, India, China and South Africa (BRICS). The BRICS is distinguished by its large, fast-growing economies and significant influence on regional and global affairs. The method used for this study is the GTAP-FDI model that explicitly takes into account foreign direct investment (FDI) and foreign commercial presence differentiated by the country of location and ownership. The main findings of the study are as follows. Only Russia of BRICS is expected to gain from the TTIP a slight additional increase in the real GDP. Brazil, India, China and South Africa are to be negatively affected, albeit negligible, by the TTIP in terms of economic growth. Korea and the rest of the world (ROW) are to be positively affected by the TTIP in terms of economic growth. On the other hand, Japan is to be negatively affected by the TTIP. This implies that the TTIP will be a trade-creating free trade agreement to Korea, Russia and the ROW, while it will be a trade-diverting FTA to Brazil, India, China, South Africa and Japan.

Keywords: BRICS, FDI, Foreign Commercial Presence, GTAP-FDI Model, Transatlantic Trade and Investment Partnership (TTIP)

JEL Classification: C68, F13, F14, F15