01 April 2013

The Future of the BRICS: Hype or Hope?

A meeting of the major middle-income countries in South Africa garnered plenty of attention, but produced little in terms of actual policies.

Brazil, Russia, India, China and South Africa (BRICS) account for over 40% of the world’s population, 1/4 of the world’s GDP and are responsible for 55% of the global economic growth since 2009. The BRICS have raced onward in the face of the financial downturn and are poised to take a larger share of the global economy in the coming years.
What will this mean for development, for the global push to reduce poverty, inequity and the so-called north-south imbalance of power. Some experts think not much, because the BRICS are more a concept than a cohesive force.

The recently published United Nations 2013 Human Development Report says that the BRICS are on track to overtaking the economies of the longstanding Western powers.

“By 2020, according to projections developed for this Report, the combined economic output of three leading developing countries alone—Brazil, China and India—will surpass the aggregate production of Canada, France, Germany, Italy, the United Kingdom and the United States,” says the report.

While the group has garnered much hype for their growing economies, increased investments in the African continent and dramatic gains against poverty, the relationships between the countries are not terribly cohesive.

Goldman Sachs economist Jim O’Neill predicted a decade of massive economic growth by Brazil, Russia, India and China in a paper he published in November 2001. He argued that the changing landscape and the growing economies of the four countries gave reason to re-think the Group of Seven (G7) that is comprised of the major global powers.

The grouping recommended by O’Neill and the moniker BRIC stuck as the countries pursued a different avenue of cooperation outside of the G7. Its first formal BRIC meeting was held in Russia in 2009 and South Africa was granted membership in 2010.

“The grouping doesn’t make much sense, and any expectation that these countries will form a new geopolitical bloc is outside of O’Neill’s original intent,” argues economist Daniel Altman.

“Their political systems, population dynamics, and paths to economic growth are all different. Brazil and Russia both depend to a great degree on natural resources, and India and China must both use manufacturing to employ hundreds of millions of people.”