The Costs of Collaboration & International Integration:
The Winners, Losers and hopefuls of BRICS
he world is in motion. Over the last few decades, growth levelled off in developed countries as it exploded in developing ones. The potential and influence on the world of these developing nations has dramatically changed. Five of the most populous, resource rich nations in the world banded together, a flagship for developing countries, known as BRICS. They include: Brazil, Russia, India, China and South Africa. Together, these countries make-up over half of the world’s population and almost a quarter of the world’s economy.Sadly, interdependence has increased influence but not yet mastered avoiding mutually shared downturns. In the last few years, stagnating growth in several of these nations threatens to leave individual and interconnected countries’ potential unfulfilled. Next week, BRICS leaders will meet in Goa, India, to discuss how to reinvigorate global growth, sustainability, and security.
Brazil, with over 200 million people and a nominative GDP of $1.5 trillion, is a towering regional power. Its tremendous influence over neighboring countries, primarily through trade and finance, makes it foundationally important to economic stability and development in South America. As an export driven country, Brazil’s products are consumed throughout the world. It is the world’s largest coffee exporter. From 2000 to 2012, a global boom in exports resulted in an average growth rate of 5% for Brazil. Now, Brazil suffers to survive its worst recession since the Great Depression of the 1930s, due to a drop in commodity prices and other factors. Adding to this struggle, political scandal and governmental corruption costs the country over $40 billion (by some estimates) annually. Just this summer, President Dilma Rousseff was impeached and removed from office on corruption charges. Meanwhile, inflation continues to increase (upwards of 7%) while unemployment spikes. Despite these economic woes, Brazil hosted the 2014 World Cup and the 2016 Summer Olympics. It spent billions of dollars building the necessary infrastructure while neglecting widespread poverty. That infrastructure did nothing for economic growth.
Russia is the world’s largest nation in square mileage and it has tremendous wealth in resources like natural gas, oil, metals and minerals. The World Bank estimates Russia’s natural resources are worth $75 trillion. However, national economic health that is dependent on natural resources and commodities rises and falls with commodity prices and global markets. When oil and natural gas prices plummeted in late 2014, the Russian economy fell drastically. Adding to its economic downturn, the Ruble (Russia’s currency) has suffered incredible inflation (upwards of 8%) that includes more than a 100% drop in worth against the US dollar since then.
India is the second most populous nation worldwide. Since its independence from the UK, in 1947, it has grown into the world’s seventh largest economy. One of the few BRICS that has continued to grow despite a fall in commodity prices, India is considered the “Bright Star” of the world’s economy. India’s economic resilience is fortified by a GDP that is founded in service industries — meaning India’s consumer population spends money within the country. Its labor force of nearly 500 million people is the second largest globally, providing and tremendous human capital. And, India has diversified its economy to (in ways that Brazil and Russia haven’t), by investing in telecommunications, manufacturing, and agriculture. Put into perspective: from March 2010 to March 2011, Indian telecom operators added nearly 230 million individuals to cell phone plans — or 70% of the entire US population.
China is the world’s most populous country and the second largest economy world over by nominal GDP. However, if calculating GDP by purchasing power parity (which considers the price of goods and services in local currencies and how human capital operates within that system), China is the largest economy in the world — by a significant margin. Since 1990, China’s economy nearly quintupled as hundreds of millions have been lifted out of subsistence farming into a factory-based middle-class lives in cities. Despite tremendous growth, China’s massive population remains largely poor and struggles to adjust to rapid industrialization and urbanization. The environmental impact of accelerated industrialization in China has created enormous problems contradistinct from the economic boons of unprecedented growth. Pollution, deforestation, and water quality are all concerns for China as the world’s largest carbon emitter.
South Africa faces many of the same problems that the other BRICS face, including environmental disasters and inequality. But (like the rest of the BRICS) its GDP has tripled since 1996 and it makes up almost a quarter of Africa’s GDP. While economic health increases for the country, its people struggle to thrive. Unemployment remains extremely high at almost 25%. Crime and inequality have negatively affected future investment and growth. As the smallest member of the BRICS in both population and GDP, South Africa is very dependent on mining and exports of natural resources like diamonds, gold and platinum. These low-paying, intense jobs and the country’s economy depend on commodity prices in the international marketplace.
Despite the fact that BRICS represent so much of the world’s economy, population and natural resources, they remain relatively marginalized by the dominating world order, Western Europe and the United States. Organizations like the International Monetary Fund and the World Bank ignore significant input from BRICS. This has caused countries like Russia and China to push for new international lending organizations, like the New Development Bank, that have the capacity to lend tens of billions of dollars to developing nations independent of Western interference. This investment in developing nations often produces both fiscal and cultural benefits in short term market control and long term returns for the lending nations.
The role of these nations will evolve over the next few decades. To secure positive evolution, their economies need to change from the export-based nations that are rapidly growing to sustainable economies based on renewable resources and lower growth. Achieving this sustainability is more difficult than it sounds. Sustainability requires investing in renewable energy sources, technology and service industries that create a balanced GDP while simultaneously decreasing carbon emissions. As the 21st century progresses, the world will be watching to see if and how BRICS grows into world leaders capable of developing strong domestic and international interests.