Think Again: The BRICS
by Antoine Van Agtmael, author of The Emerging Markets Century
Reviewed by James L. Abrahamson, contributing editor
Whether measured by collective population (40% of world’s peoples), land mass (25% of the globe), economic size (20% of global GDP), or control of world’s reserves of foreign exchange (43%), the BRICSBrazil, Russia, India, China, and now South Africaare major economic players and worthy of careful attention, assuming they continue the recent fast pace of their growth.
Though now members of the G-20 and, apparently beyond being labeled as part of the Third World or as simply emerging markets, the BRICS do not yet constitute a “true power bloc.” Even in their own regions they are not universally recognized as “‘the’ leader.” Nor have they negotiated their own free trade agreement or become economically cohesive.
Despite the likelihood of the group’s continued but now slowing growth and its avoidance of damage from the global financial crisis, its demand for consumer goods could match that of the U.S. and the EU by 2030, though that is less than a certainty.
Nor are the BRICS “unbeatable competitors.” Cheap natural gas in the U.S., for example, is attracting new investment there. America’s stagnant wage growth while Chinese and Indian wages soar, even as both make poor use of mechanized production, is also a threat to BRICS dominance.
The era of American or Western economic domination may be over, but the BRICS will not soon gain the same status, even collectively. The authoritarian nature of several of the BRICS governments and their widespread corruption will also impede their advanceeven if they eventually put their stamp on the 21st century. Writing in the November-December 2012 Foreign Affairs, Ruchir Sharma offers a darker prediction: “the BRICs [he excludes South Africa] are crumbling, and the new global economic order will look a lot like the old one.”