By Stephen Thompson
August 23, 2011
The BRIC concept has always seemed contrived to me, and now that I visited all five BRIC countries, I can base my refutation on personal evidence. True, I only spent one day in India, but how much do these economists know about Brazil, Russia, India and China? The BRIC acronym calls to mind construction and growth and has taken on a life of its own; the BRIC countries, or the BRICS with South Africa tacked on, are now holding regular conferences and attempting to form joint policy as if they had something more in common than the happy coincidence of belonging to the same acronym.
The original motive for formulation of the BRIC concept by Jim O’Neill in a 2001 paper entitled Building Better Global Economic BRICs” was that they shared common characteristics: large populations, large land masses, and thus potential for rapid growth. Goldman Sachs weighed in, arguing that by 2050 the combined BRIC economies could eclipse the combined economies of the current richest countries of the world. (Currently they account for more than a quarter of the world’s land area and more than 40% of the world’s population)
But how much do China, India, Russia and Brazil really have in common? True, they both have large land areas, but there the similarities end. The main link between them is found in the huge commodity boom, and in this they are trading partners, with Brazil and Russia supplying the enormous appetites of China and to a lesser extent, India. As a result Brazil in particular suffers from wild fluctuations in its exchange rate, the curse of many resource rich nations. The commodity price boom has pushed the exchange rate up again, damaging national industries and generating a consumer boom of imported goods. Basking in unmerited popularity, the government has seen fit to put urgently-needed reform on hold until the next crisis. Brazil also differs from China in other ways: it is sparsely populated, rich in raw materials, has few natural hazards, good relations with its neighbours, and a political culture which leans towards excess liberty since the end of the dictatorship.
China on the other hand is overpopulated and has a shortage of land and of almost everything else, except people. It is frequently devastated by droughts, floods, typhoons and earthquakes and has fought wars with all its neighbours in recent decades. Its government is dictatorial and corrupt but also cunning, pragmatic and ambitious. After three decades of communist totalitarianism, it did the world’s most successful policy U-turn and now presides over a growing capitalist economy. One of China’s best policy decisions was to link the Yuan to the dollar at a low exchange rate.
As for Russia, how can it be classified as a developing country in the same category as India? Russia was the economic powerhouse which outdid Nazi Germany in the second year, building so many planes and aeroplanes that Churchill said the Russians “tore the guts out of the German Army”. In the 1950s the Soviet Union put the first man in space. Russia is more a de-industrialised nation than a developing one. It lost its industries during the hyper-deflation of the 1990s, when Boris Yelstin and other ex-communists asset-stripped the country. It is sparsely populated and its population is actually falling. Not long after Putin’s coup, Russia began to suffer from a commodity boom, cushioning the corrupt and despotic elite from real challenges to power, and allowing it to bask in popular approval. Putin and his mafia gang seem to have little ambition other than to continue to enjoy their privileges and it is hard to see Russia become anything other than another oil-igarchy.
Like China, India is poor in anything except people, and like China it suffers from traditional cultures which hinder development, only more so. But it has the massive advantage of being a democracy with freedom of information and free speech which will help it overtake China in the long run. It has not made the mistake of trying to artificially lower its population with over-zealous family planning and now has more young workers and consumers than China. Indians are known for their entrepreneurialism around the world.
If we were to smash the BRIC in two, we would have to put India and China in one half and Russia and Brazil on the other. The greatest resource of India and China are their people, and it is this which has sucked in foreign capital to make China the factory of the world. The Chinese government has played its hand well in this respect, extracting favourable conditions such as technology transfers from western companies desperate to get a piece of the billion-strong market. China has invested heavily in infrastructure, building whole metro systems in several cities in just a decade.
Brazil and Russia are on the opposite end of the scale. They have lots of land and small populations and suffer from the resource curse. Elites postpone political reform while the dollars flow in from commodities like oil, gas and minerals.
Alternatively, we could group India and Brazil together, as they are both failed democracies which prove that democracy on its own is not successful when it contends with a culture of corruption. Both have large under castes of former slaves who have not been incorporated into mainstream society. Russia and China both suffer from political traditions of despotism.
Either way, we seem stuck with the BRIC rubric for now. Other nations have been invited, and Indonesia, Mexico and Turkey all seem to qualify, but the economists can’t think up good new acronyms to include them.
NB. Goldman’s Sachs BRIC notion initially included Ukraine and Saudi Arabia, but the R.U.B.I.S.C acronym did not fly so well.
You can contact Stephen via email@example.com.
To read previous articles by Stephen click the links below:
Brazil: 10 Years After
Reinforcing Stereotypes of Brazilians
The Lula Football Curse and the Lula Olympic Nightmare
Are China and Brazil Ganging up on Google?
China-Brazil Relations: Amnesia or Ingratitude?
Running After My Boss
Brazil: Run for your life!
If God is a Brazilian…
Amazon Exhibition in Tokyo
Other Places to Speak Portuguese (Apart From Brazil): Macau
Brazilian Music in Translation
China is Quite Popular in Brazil These Days
Brazil: Physical Fitness and Personal Training in São Paulo Part 2
Brazil: Physical Fitness and Personal Training in São Paulo Part 1
Brazil: What’s in a Name?
Brazil: Go East, Young Man
Brazil: This Is The Life I’ve Always Wanted
Brazil: Stolen Computer
My First Business Failure in Brazil Part 2
My First Business Failure in Brazil Part 1
Getting your Brazilian Steak Fix in China
Brazil: Birth and Dying
Imaginary Voyages to Brazil
Brazil: Probably the Best Country in the World to Live In
Great Brazilian Inventions: The Kilo Restaurant
Brazil: Things you wanted to know… and will never know!
Brazil: Expensive, Trendy, and Extremely Beautiful
Brazil: Not Really British Enough
Package Holidays to Brazil are Back On Track
Brazil: Reverse Culture Shock
Brazil: The Legal System
Brazil: Saying Goodbye to a Bilingual Kid
How to get Brazilian Citizenship
Getting Work in Brazil
Acquiring and Running a Small Business in Brazil
Brazil: To Free Or Not To Free
Brazil: Trail Biking in Chapada Diamantinha
Brazil: So Near, but So Far Apart
How to Get Into University in Brazil
The Pleasure of Driving a Car in Brazil
Brazil: The Bairro of Flamengo in Ro de Janeiro
Brazil: The Information Technology Law
Managing a Brazilian bank account
Brazil’s Middle Class Ruled By Political Apathy