18 December 2013
Taylor & Francis Online journal for
The International Affairs Forum
If we look at the biggest player in this bloc, China, the fragility of the coalition becomes obvious. Already the world’s second largest economy, this heady nation’s ambitions are far beyond that of the emerging bloc. It is vying for the number one global position and sees the US as its core competition. However, having no genuine allies other than some rogue nations like North Korea, Sudan, Iran, Pakistan, etc., it is happy to play the tune and officially be a part of the group. For instance, as the bloc discusses possibility of a $100 billion currency stabilizing fund, China wants a bigger say since it might be a large contributor to it. Likewise on every other matter, China really needs to have things its way. Being the largest member of the BRICS bloc, with a whopping GDP of $8 trillion, it sees no reason to be otherwise. So the biggest growth driver of the BRICS is somewhat of an outsider looking in.
But even if the BRICS could evolve into some sort of a pan emerging world bloc, where does it stand today and what are the chinks in its armor. There are essentially three legs on which a nation stands – its economy, political system, and human rights status; let us assess the BRICS along these lines.
So far the BRICS story is their economic success story and so, what really is the crux of it? To an extent the rise of emerging economies is nothing more than a turn to good old market reforms. China and Russia were the communist nations and India, aligned with the USSR bloc, also largely socialist. Post fall of communism in the late 1970s all these economies started liberalizing. In the 1980s and 1990s, a changeover to market centric economies turned their fortunes around. China particularly has carved out a lion’s share for itself by capitalizing on low-cost exports which it can produce in its mile-long factories with bonded labor that it has perfect control over. Although becoming the factory of the world does come with a price tag and all its cities are highly polluted. But China has struck the right balance in its mixed economy model, with the state taking the lead in two areas where the private sector usually lags behind – infrastructure and agriculture. With a first world infrastructure and a pro industry Capitalist Communist party in control, there is no stopping China.
India, on the other hand, has a relatively more transparent business environment and the most well-regulated markets anywhere in the developing world but poor infrastructure and public opposition to land for industries tend to drag it down. To attain its potential, India must get past these two barriers. Russia has overcome the chaos of the Perestroika era and banking on its natural oil and gas resource, it is doing well. However, its business environment is considered among the least favorable or transparent. Brazil again has infrastructure problems but continues to grow. Market-led growth is also true of several other economies like Vietnam, Turkey, etc. The only recent nation to stumble has been Venezuela which again tried a Chavez style brand of socialism which did not work. But most nations have learnt to veer away from this path.
Overall, high inflation rates are a big concern for all these economies which affect the common man the most but saving rates tend to be high. Lack of proper infrastructure and public services seems to be a cause of concern from the point of business as well as people’s day-to-day lives.
In terms of political systems, most of the world has come to understand that a switch over to democracy does not necessarily work in the developing world. It often leads to power in the hands of fundamentalist and factional forces and even destabilizes countries. For a long time it was also believed that democracy is an essential pre-requisite to free markets but that hypothesis has been disproved amply. Regardless of what model they follow, political stability and continuity seem more critical for progress. For instance, in political terms, China and India are the polar opposites but both stable in their own ways which seems to work in their favor. In China, the ruling CPC is a force to reckon with and what it says goes – so decision-making and execution is fast. India is the most long-standing and stable of democracies in the emerging world. While grappling with many problems, it has among the best politicians in the developing world that are committed to the nation’s progress and unity. Both the nations score high on political stability. Russia on the other hand is largely a one man show and what after Putin remains a question mark. Brazil’s democracy seems to have stabilized with power changing hands peacefully for several terms now. So long as it does not go back to the era of army coups, it will perhaps continue to do well. Outside the BRICS too several countries that are politically stable like Vietnam are growing. On the other hand, the Middle East which has undergone some sort of upheaval, dubbed as a “spring,” has led to economic ruin for many and it is not clear what they have gained politically either. Political stability coupled with market reforms seems to be the new mantra for the developing world.
The BRICS’ weakest point is their track record on human rights. The BRICS bloc continues to be backward on most soft parameters. Crimes against women are rampant (except for China) and corruption high in all of them. Illegal detention, custodial tortures, and “might is right” sort of law enforcement are characteristic of the entire BRICS world. The key criticism of the emerging world is that its economic progress is not matched by progress on other soft social parameters.
In the West the economic growth story was matched by or actually preceded by cultural, social, and political renaissance which laid the foundation of a modern progressive society. Having just recently emerged out of economic impoverishment, the developing world is still celebrating its new found wealth and is yet to start paying attention to these important issues.
The BRICS’ summit still seems like a showcasing event rather than an active coalition or introspective exercise. To assume leadership, the bloc could not be focusing on economy alone and should start addressing its problems of overpopulation, fresh water shortage, sanitation, women’s status, and human rights. The foundation of all sustainable growth is a just and progressive society. The BRICS are yet to lay bricks in that foundation. Most of them are aware of all these problems but are at a loss as to how to solve them. But unless they start discussing and applying themselves to it, their progress will remain lopsided. So, the world is not quite flat, at least not on this most critical count.
With a resurgence of the western economies, doubts are being cast on the BRICS’ potential but that is not true. There are huge labor and material cost differences in the world and in an era of free trade, leveling out is inevitable. So long as the BRICS remain politically stable and keep following market reforms, there is no turning back. Maybe they will not take over the world but surely power is going to be more evenly distributed. On all issues today, the developing world has a say and even the recent Forbes most influential people’s list has a fair mix of leaders from round the globe with Putin actually at the top, ahead of the US president. All this is emblematic of the changing global power structure, with the world becoming truly round which perhaps sounds more harmonious than a flat world anyway!
Taylor & Francis Online journal for
The International Affairs Forum
The twenty-first
century has begun with much euphoria around the world becoming “flat”
and the rise of developing world economies. In the shifting global power
balance, how is the BRICS bloc (comprising Brazil, Russia, India,
China, and now also South Africa) going to fare?
First
and foremost, as most experts realize today, BRICS is not really a
bloc. These are some oddball nations put together in one clubbing,
initially by a whizz kid at Goldman Sachs. The countries seem to have
little in common other than concurrent economic resurgence. While India
and Russia have been traditional allies, China characteristically has
been at loggerheads with both. Brazil is a total outsider that has more
interdependence on the Americas than any nation in Asia. South Africa is
just a small add on and several other countries have expressed an
interest in joining it too. To their credit the BRICS countries are
excited about their very own bloc and also making efforts to come
together and hold summits, etc., but it is not really a coalition bound
together by common interests like the EU.
If we look at the biggest player in this bloc, China, the fragility of the coalition becomes obvious. Already the world’s second largest economy, this heady nation’s ambitions are far beyond that of the emerging bloc. It is vying for the number one global position and sees the US as its core competition. However, having no genuine allies other than some rogue nations like North Korea, Sudan, Iran, Pakistan, etc., it is happy to play the tune and officially be a part of the group. For instance, as the bloc discusses possibility of a $100 billion currency stabilizing fund, China wants a bigger say since it might be a large contributor to it. Likewise on every other matter, China really needs to have things its way. Being the largest member of the BRICS bloc, with a whopping GDP of $8 trillion, it sees no reason to be otherwise. So the biggest growth driver of the BRICS is somewhat of an outsider looking in.
But even if the BRICS could evolve into some sort of a pan emerging world bloc, where does it stand today and what are the chinks in its armor. There are essentially three legs on which a nation stands – its economy, political system, and human rights status; let us assess the BRICS along these lines.
So far the BRICS story is their economic success story and so, what really is the crux of it? To an extent the rise of emerging economies is nothing more than a turn to good old market reforms. China and Russia were the communist nations and India, aligned with the USSR bloc, also largely socialist. Post fall of communism in the late 1970s all these economies started liberalizing. In the 1980s and 1990s, a changeover to market centric economies turned their fortunes around. China particularly has carved out a lion’s share for itself by capitalizing on low-cost exports which it can produce in its mile-long factories with bonded labor that it has perfect control over. Although becoming the factory of the world does come with a price tag and all its cities are highly polluted. But China has struck the right balance in its mixed economy model, with the state taking the lead in two areas where the private sector usually lags behind – infrastructure and agriculture. With a first world infrastructure and a pro industry Capitalist Communist party in control, there is no stopping China.
India, on the other hand, has a relatively more transparent business environment and the most well-regulated markets anywhere in the developing world but poor infrastructure and public opposition to land for industries tend to drag it down. To attain its potential, India must get past these two barriers. Russia has overcome the chaos of the Perestroika era and banking on its natural oil and gas resource, it is doing well. However, its business environment is considered among the least favorable or transparent. Brazil again has infrastructure problems but continues to grow. Market-led growth is also true of several other economies like Vietnam, Turkey, etc. The only recent nation to stumble has been Venezuela which again tried a Chavez style brand of socialism which did not work. But most nations have learnt to veer away from this path.
Overall, high inflation rates are a big concern for all these economies which affect the common man the most but saving rates tend to be high. Lack of proper infrastructure and public services seems to be a cause of concern from the point of business as well as people’s day-to-day lives.
In terms of political systems, most of the world has come to understand that a switch over to democracy does not necessarily work in the developing world. It often leads to power in the hands of fundamentalist and factional forces and even destabilizes countries. For a long time it was also believed that democracy is an essential pre-requisite to free markets but that hypothesis has been disproved amply. Regardless of what model they follow, political stability and continuity seem more critical for progress. For instance, in political terms, China and India are the polar opposites but both stable in their own ways which seems to work in their favor. In China, the ruling CPC is a force to reckon with and what it says goes – so decision-making and execution is fast. India is the most long-standing and stable of democracies in the emerging world. While grappling with many problems, it has among the best politicians in the developing world that are committed to the nation’s progress and unity. Both the nations score high on political stability. Russia on the other hand is largely a one man show and what after Putin remains a question mark. Brazil’s democracy seems to have stabilized with power changing hands peacefully for several terms now. So long as it does not go back to the era of army coups, it will perhaps continue to do well. Outside the BRICS too several countries that are politically stable like Vietnam are growing. On the other hand, the Middle East which has undergone some sort of upheaval, dubbed as a “spring,” has led to economic ruin for many and it is not clear what they have gained politically either. Political stability coupled with market reforms seems to be the new mantra for the developing world.
The BRICS’ weakest point is their track record on human rights. The BRICS bloc continues to be backward on most soft parameters. Crimes against women are rampant (except for China) and corruption high in all of them. Illegal detention, custodial tortures, and “might is right” sort of law enforcement are characteristic of the entire BRICS world. The key criticism of the emerging world is that its economic progress is not matched by progress on other soft social parameters.
In the West the economic growth story was matched by or actually preceded by cultural, social, and political renaissance which laid the foundation of a modern progressive society. Having just recently emerged out of economic impoverishment, the developing world is still celebrating its new found wealth and is yet to start paying attention to these important issues.
The BRICS’ summit still seems like a showcasing event rather than an active coalition or introspective exercise. To assume leadership, the bloc could not be focusing on economy alone and should start addressing its problems of overpopulation, fresh water shortage, sanitation, women’s status, and human rights. The foundation of all sustainable growth is a just and progressive society. The BRICS are yet to lay bricks in that foundation. Most of them are aware of all these problems but are at a loss as to how to solve them. But unless they start discussing and applying themselves to it, their progress will remain lopsided. So, the world is not quite flat, at least not on this most critical count.
With a resurgence of the western economies, doubts are being cast on the BRICS’ potential but that is not true. There are huge labor and material cost differences in the world and in an era of free trade, leveling out is inevitable. So long as the BRICS remain politically stable and keep following market reforms, there is no turning back. Maybe they will not take over the world but surely power is going to be more evenly distributed. On all issues today, the developing world has a say and even the recent Forbes most influential people’s list has a fair mix of leaders from round the globe with Putin actually at the top, ahead of the US president. All this is emblematic of the changing global power structure, with the world becoming truly round which perhaps sounds more harmonious than a flat world anyway!
