Are BRIC Countries The Future Of The World? - Facts & Infographic
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Brazil, Russia, India, and China – The BRIC countries or the BRIC economies as they are now called have earned the reputation of being ‘The Big Four’. In 2001, Jim O’Neill, chief economist of Goldman Sachs, first proposed the acronym BRIC and argued that these four countries were the fastest growing economies of the world and the ones with the most potential as well. Over the past decade economists have endorsed this view.
In 2011 when Standard & Poor, the world’s leading credit rating agency downgraded the US long term economy to AA+ with a negative outlook, it seemed that the world was shocked. A number of reasons even political intrigues were suggested. But by early 2012, the trend seemed to have swept the world. The Eurozone was perhaps the worst affected. In October 2011, Spain tumbled to an ‘AA-‘. With the British and French ‘AAA-‘ ratings having been put under scrutiny and threats of a blanket downgrade on the Eurozone countries looming large, the traditionally strong economies are facing testing times. The Greek economy rescue plan has been fraught with dissent as the Greek economy itself was declared ‘Selective Default’. The surprise that has marked the trend of a global recession is the development of the BRICs. The Blue Book Annual Report 2011 said “In the coming 15 years the BRIC countries will retain the trend of stable and relatively quick economic growth. They will hold an even higher place in the world economy.” Leading economists acknowledge this shift in focus with predictions that the BRICs make the most lucrative investment option in the current economic scenario.
Why do economists think the BRIC economies hold the key?
In 2003, Jim O’Neill in his ‘Dreaming with BRICs: The Path to 2050’ predicted that the BRIC countries were well on their way to global economic dominance - China and India as the leading suppliers of services and goods and Brazil and Russia as the leading supplier of raw materials the world over. O’Neill postulated that the economic bloc formed by these nations would outdo all the G8 countries. In their follow-ups Goldman Sachs economists predicted that the China and India would capture the first and third slots among the economies of the world in the next three decades.
To corroborate O’Neill’s thesis the Annual Report (Blue Book) on BRIC's Social-Economic Development (2011) predicted that by 2015 the GDP of the US economy shall be surpassed by that of the BRIC economies. Also the trend of quick but stable growth as evinced by the BRICs will result in their joint GDP accounting for about 22% of the global figures. The potential inflow of foreign funds and investments in these countries is very high and attractive, the report said.
How is this likely to influence international politics?
Together the BRIC countries account for about 25% of the world’s area and about 40% of the global population. To consolidate their economic might and potential it is likely that the BRICs may organize themselves into an economic union similar to the European Union. A close association such as this is certain to have political implications.
In 2009 the leaders of the BRIC countries met at the first BRIC Summit held in Yekaterinburg in Russia. Among the BRIC countries, China and Russia are permanent members of the United Nations Security Council. The political aspirations of India and Brazil to gain permanent memberships of the UN Security Council were discussed. “We reiterate the importance we attach to the status of India and Brazil in international affairs, and understand and support their aspirations to play a greater role in the United Nations.”
In the BRIC Summit of Brasilia in 2010, a number of international issues including the developments at the Iran nuclear front were discussed. The countries expressed a resolute commitment to the furtherance of BRIC. The 2011 BRIC Summit was held in Sanya in China. A number of political issues formed part of the agenda. International law and the Libyan crisis were discussed in detail. Going by the agenda of these summits and the closer ties the BRICs have started to enjoy it seems extremely likely that the combined economic strength shall translate into political clout for the nations.
But will the BRICs make it?
A number of apprehensions mar the predictions of a BRIC dominance. The approach of China towards economic development is still a question to be reconciled with. Despite being the leading countries of the world in terms of population, both China and India lack a sound public welfare structure. Healthcare, education and primary needs are yet to be available freely across these countries.
Adding to these woes is the issue of Russia’s shrinking workforce. Economists have concerns about the sturdiness of the Russian economy and some have even decidedly pointed that Russia does not justify its presence in the bloc.
As far as political grouping goes, a history of dissent still haunts the countries. While relations have dramatically improved between China and India and China and Russia, it still remains to be seen if the countries can manage to form a cohesive political alliance and influence international affairs.
A Final Word
The International Monetary Fund Report, New Growth for Low-Income Countries: The Role of BRIC’s (2011) says “The emergence of BRICs—Brazil, Russia, India, and China—has changed the landscape of low-income countries’ (LICs) engagement with the rest of the world. The rapid growth of the BRIC economies has helped create the global commodity booms of the past decade and contributed to a significant improvement in the terms of trade for LICs. (Wang, 2007)”
Does this mean the BRICs hold the key to the future of the world? Will the Big Four form a strong political cohesion to leverage their economic might? Is the growth of the BRICs a spurt or is the growth trend here to last? Will these countries take on the traditional heavyweights? And most importantly, are these economies capable of balancing economic development with significant public welfare as is required to keep going? It remains to be seen.