The sphere of the ‘developing world’ has acquired new dimensions after the inclusion of South Africa in the BRIC (Brazil, Russia, India, and China) bloc. The expanded BRICS is being termed as significant due to its potential political ramifications on a global scale. Importantly, South Africa’s entry has drawn from China but the initial comment came from Jim O’ Neill himself who proposed the concept of BRIC.
Jim’s criticism is based on the description of original BRIC countries in his 2003 Goldman Sachs report, according to which BRIC countries’ size in terms of raw materials, population and economy together have the growth rate to become the world’s dominant economies by 2050. However, South Africa deviates from Jim O’ Neill’s original thesis with only 50 million people, GDP of $350 billion and covering a mere 0.8 percent of the world’s land mass.
Economic experts refer to the marketing effectiveness of South Africa which is significant in presenting itself as a potential regional candidate for inclusion in BRICS. South Africa has a relatively weak economy against the growing economies of Turkey, Indonesia, South Korea and Mexico. Experts argue that the keenness to invite South Africa to the fold is mainly driven by the interest of BRIC members to access the lucrative market of Africa, using South Africa as a gateway.
Africa offers a massive 800 million population, 20 percent share in global economic strength and commodity production, India’s pioneering role as an outsourcing industry leads in the services sector and Brazil’s standing as a leading exporter of agriculture products and construction raw material. China’s success in achieving economy of scales in the production of high tech products and in other high value industries is also a great advantage.
The strength of BRIC economies is surely appreciable at the G-20 platform, but its chances of actually impacting the status of developing world is rather hazy due to wide political differences between the member countries. Brazil, India and South Africa are vibrant democracies, with close ties to the United States, while China has low tolerance for political dissent and its relations with the US continue to be brittle.
China and India, despite a warming relationship, also share a disputed militarized border, along with concerns from India over China’s strong friendship with Pakistan. Brazil has expressed concerns over China’s Yuan currency being maintained at an unfairly low level, fuelling a flood of cheap imports into the country, while China is adamant over not including the Yuan issue as a subject of discussion.
The concerns of the global economy over the future direction of BRICS are well reflected in the statement of an Indian government official, “There is a lot of cooperation in diverse areas such as climate change and trade to name a few. Even in the G20 the BRICS formulation is a very strong grouping. But it cannot be a blanket or a default south-south political formation.”
Jacob Zuma, President of South Africa a $1 trillion economy. By serving as a gateway, South Africa will have the opportunity to leverage its corporate governance, financial services and technical skills on an elevated growth scale.
Despite the asymmetry of trade relations between the four BRIC countries, they have unanimously agreed to group with South Africa. It is anticipated that this grouping will project BRICS strength in G-20, thus positively impacting financial reforms in favour of the developing world.
Brazil, Russia, India and China themselves developed the grouping into an organization, designed to promote the interests of developing countries as G-7 does for the economies of developed countries. What adds to the force of the BRIC countries is Russia’s global leadership in
Heads of BRIC countries join hands.