The BRICS fallacy

The BRICS fallacy

Focus on the BRICS began in 2001. Back then, the group only included Brazil, Russia, India, and China (South Africa was added in 2010). It all started with a November 2001 Goldman Sachs research paper titled ‘‘Building Better Global Economic BRICs,’’ written by Jim O’Neill. He predicted that over the following 10 years, the weight of the BRICs and especially China in world GDP will grow,, nd went on to suggest that ‘‘in line with these prospects, world policymaking forums should be reorganized’’ to give more power to BRICs.

But, this paper argues, the BRICS story may have begun to lose much of its sheen, and was possibly overhyped from the start. For instance, the author states that growth rate estimates for all five countries have steadily declined. Compared to 7.5 percent growth rate in 2010, Brazil’s economy grew by only 2.7 percent in 2011, making it the laggard among the four original BRIC nations.

Also, it was never obvious why South Africa, with a population of 40 million and an economy one twentieth the size of China, was added to the BRICS group in the first place, apart from the fact that China wanted South Africa in, as China views South Africa as an access point for the whole African continent.

India has been described as the ‘‘most disappointing’’ of the four original BRIC nations, its economic reforms programme losing traction under a weak government over the last three years, and the Indian rupee is the worst-performing currency in the emerging markets. China’s manipulation of its currency has resulted in significant problems for the manufacturing sectors of other emerging powers. India, Brazil, and South Africa all have expressed their disenchantment with Beijing’s economic policies at various times.

The author concludes that while the idea of the BRICS may morphed into a nascent political concept, it is not entirely clear if it translates into power at the global level. Their contribution to the global order remains tentative at best and problematic at worst. They have so far not been able to create institutions that would help them to consolidate and leverage their clout on the global stage. BRICS will remain an artificial construct - merely an acronym coined by an investment banking analyst - for some time to come.

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