Can the BRICS dominate the world by their economical power?
In 2001, Jim O’Neil of the famous investment bank Goldman Sachs came up with the acronym BRIC in reference of Brazil, Russia, India and China. These are the four countries that he identified as having a common potential of influencing global markets in the near future. In a 2003 report titled “Dreaming with BRICs: The Path to 2050” published by Goldman Sachs, it was held that the economies of the four countries combined, which at the time constituted just 15% of the global economy, had the potential to become larger than those of the G7. It was thus argued that the order of the world’s major economies was bound to be different from the present one in not more than 40 years (O’Neill, 2001). If this prediction came to pass, there is no doubt that it would bear a significant influence on the investing behavior across the world. The BRICs relatively superior economic growth rates and their massive share of the world’s population (translating to huge masses of consumers) are the key reasons for the belief that the status of the G6 as world leader was increasingly threatened. The core principle by which the BRICs are known to be founded on is both their massive growth rate or investor opportunities and the sheer size of the economy and markets (Armijo, 2007).
The BRICs’ share of world output has moved from 7.5% to 15% in just a decade. China and India are the world’s most populous countries which when added populations of Brazil and Russia, the EU and the US combined are no match to the market size of the BRICs. This massive economic power of the BRICs coupled with the financial crisis that continues to trouble the west, has resulted in speculation of whether the global economic superiority is on the move from the US and Europe to Asia (Legro, 2007).
According to Goldman Sach’s projection, by the 2050 Russia will dominate petroleum raw materials while Brazil will command iron and soy. Similarly, China and India will dominate manufactured goods. It is on this basis that the BRIC economies have emerged as a formidable force in the global economy. With the increasing economic power of the BRICs, it is highly believed that commodity prices will change with the shift in the consumer base (O’Neill, 2001). As O’Neill, Goldman Sachs economists and other contributors have pointed out, the BRICs are not just rapidly developing but have a significant demonstrable potential. Of greater note though, the BRIC currencies are predicted to appreciate by about 300 percent. All these predictions are based on the hopes that there will be sustained adoption of policies which encourage steady growth considering the recent adoption of favorable capitalist policies (Wankel, 2009).
The rise in economic and political power of these four emerging countries especially in the near past has led to the debate of whether the BRICs have the potential to dominate the world as well as if their economic policy can indeed cause political concern for the rest of the world. It is an open secret that the BRICs have presented an unwelcome challenge to the existing world order in the definition of the US-dominated UN Security Council, the World Bank and the International Monetary Fund (IMF). The leadership of the four nations together with the new member, South Africa, are not known for iconoclastic radicalism. The BRICs have a grandiose vision which is “to create a new global architecture”. They harbor a desire to challenge Washington’s global dominance. It is known that plans are in the offing to put into place a permanent secretariat together with a development bank with the aim of bolstering the grouping’s political impact on the international arena.
However, critics have been quick to dismiss the potential of the BRICs to counter the present US-dominated global order notwithstanding the fact that the former notably constitute the rapidly growing economies in the world. It has long been argued that American hegemony has gone over its peak and a more multipolar international system is likely to dominate in the 21st century. From the point of view of neoclassical economics, the BRICs are considered weak and will have little influence in terms of heightened political science framework (Foot, 2006).
Critics have further pointed out that the whole concept of BRIC is largely flawed. The BRICs’ focus on institution-building is regarded as misplaced not because of their lack of functional organization rather the fundamental incompatibility of the nations forming the bloc. The BRIC nations have been touted as having nothing in common, something that renders them as less meaningful force on world scene. It is observed that the BRICs nations are in real strategic competition among themselves. This is especially true with Asian BRICs nations where Russia and India are perceived as potential obstacles to China’s position as regional leader (Legro, 2007). On the International stage, Russia, India and Brazil are striving to have a multipolar international system with them are the major actors.
On the other hand, China desires for a bipolar world where it will function as the real counterbalance to American power (Tsai, 2006). To this end, China is in opposition of India’s bid for permanent membership in a diversified UN security council. Similarly, it is worth noting that the respective framework of the four economies is worlds apart. This is because of the fact that Russia specializes in commodities, Brazil in agriculture, China in manufacturing and India majors in services (Hurrell & Amrita, 2006). Merging these diverse specializations for the general economic good of everyone would prove an uphill climb. The apparent conflict of interest is what threatens the aim of the BRICs nations to challenge the current economic and political order. Another hindrance to global superiority is captured in the sense that the BRICs lack a common model of economic management that it desires to propagate. There exist wide and developing contrasts between the member countries such the favor of a social democratic market economy buttressed by much fiscal orthodoxy in the case of Brazil, and the growing politicized approach in Russia (MacFarlane, 2006). China is single-minded on productivity and economic growth which India may not harmonize with its democratic, civil and legal culture. The BRICs have also failed to agree on the important aspect of exchange rates (Hurrell & Amrita, 2006).
The BRICs nations economic policies as agreed to by their leadership is such that it favors responsible macroeconomic and financial policies and in so doing avoiding creation of excessive global liquidity. In addition, the BRICs support structural reforms targeted at lifting growth and thus create more jobs its people. In the same light, the bloc desires to establish a “south-south” development find which would grow to challenge the World Bank and the Asian Development Bank.
The ambition of the BRICs nations to bring about change the world to be in tune with their perception stirs up questions of fundamental weight along with geopolitical influence. It is evident that Russia and China have little or less tenuous attachment to democratic principles like free speech, free elections as well as free media (Legro, 2007). Similarly, India has been accused of forbidding open debate in the country. Russia, China and India are in the same region and are all nuclear powers. While Brazil has no nuclear powers, it is on another continent, does little trade with India and almost none with Russia. Meanwhile, the border between China and India is still in dispute after previous wars over the territory (Goldman, 2009).
In the same vein, the BRICs nation’s rise to economic and political superiority in the world is lacking the full backing of the less powerful non-aligned states (Gallagher, 2008). The latter have been suspicious of the emergence of the BRICs, wondering whether it is yet but another selfish global elite just like the existing western powers. The BRICs is perceived as yet another grouping that is opposing unipolarity. Similarly, it is apparent to many other nations that the BRICs are in no position to challenge the lead that the US currently claims in politico-economic, military as well as strategic spheres. To this effect, many developing countries will continue to lend their allegiance to the western powers, particularly the United States. While it must be admitted that the US-led unipolar movement in the world is no more, the successors of that world order will not be the BRICs nations in the foreseeable future. The most likely change will be in form of dispersed power among a number of countries – US, China, Russia, India, Japan and the European Union (Gallagher, 2008).
In light of the economic and political policies of the BRICKs, there are questions as to whether these countries (in the event that they consolidate their position as world leader) will still appreciate the present liberal framework of global governance or whether they can be more revisionist in nature so as to modify the global governance structures. The apparent mutual history of suspicion and mistrust among the BRICs countries is what greatly hinders the possibility of strategic cooperation. Analyzing this aspect through a realist framework, it is obvious that every major power strives to be as powerful as possible in respect to their potential competition (Hausmann et al, 2006). This translates that the powerful nations in the Asian region will support the establishment of regional hegemony on one hand, but work to ensure that no other state grabs greater power which would alter the existing power equation (Foot, 2006). This is what eats the BRICs countries in their efforts to grow together and emerge as a formidable economic as well as political grouping to challenge the G7. While the bloc will have smooth cooperation and reach consensus on lighter issues such as climate change and poverty, other factors such as history together with the territorial issues are bound to serve as impediments to the BRICs prosperity. The BRIC groupings creates a window that promotes the significance of each other but falls short of being a cohesive grouping in terms of major economic, political, and security issues (Beeson, 2009).
If indeed the BRICs desire to emerge and position them as a strategic bloc, it must first reanalyze the bilateral design of the grouping itself. Going by the theory of economic liberalism, for instance, the group indeed holds huge potential. There is no argument that the bloc has huge investment potential because economic size is a key reflector of the capabilities of the countries (Robinson, 2009). There is need for the member countries to forge a more sufficiently strong economic partnership so as to build a functional momentum in the bloc. Likewise, the BRICs nations must also strive to engage each other in some specific strategic areas which will go a long way to give the much needed fillip. Such areas of interest include high-tech, space and nuclear areas (Goldman, 2009).
Furthermore, the bloc must work to address take advantage of the massive unexplored growth potential of the intra-BRICs trade together with investments especially at this moment in time there is a demand slowdown particularly in the Western markets causing injury to exports of member states. In addition, the bloc should be aggressive enough to explore other potential areas that can expand cooperation among the BRICs nations besides economic matters, sports for example. Focus should be directed at developing new intra-BRICKs trade and investment goals so as to realize improved easy flow of capital, knowledge as well as information. Finally, it is necessary the BRICKs devise mechanisms to fight against protectionist tendencies and instead promote international trade as recipe for economic growth and development.
Conclusion
The BRICs is largely a loose grouping which has come together to show the rise of the emerging powers. However, their apparent policy differences and disparities translate the there is not much prospect of the BRICs emerging as coherent bloc in terms or economic, political or security issues. It is therefore misplaced to preempt that the recent rapid economic growth of the BRICs nations effectively qualifies them to snatch the baton of global economic leadership. Indeed it will take much qualitative improvement and more growth so as to bring about such shift of power from the US and the Western Europe to the BRICs (Cameron, 2011).
Considering the many differences that bedevil the BRICs union and the fact the body is yet to seek any formal relation with any other body, their influence on the global scene is bound to remain negligible. Matters are made even worse by EU’s lack of recognition of the BRICs as a grouping worth engaging with in any worthwhile policy issue. On the other hand, the EU diplomacy continues to mind only the bilateral relations with each member country of the BRICs. The status quo is unlikely to change in favor of the BRICs in the future (Cameron, 2011).
However, all is not lost as the outfit can still pull their resources together and attain a worthy position on the global scenes. Much has to be done to harmonize the policies and looming tensions have to be resolved so that the member countries become on the same page (Hausmann et al, 2006). There must be greater policy coordination so as to attain not only a stable but also a thriving global economy.
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