One response to “Can intra-BRICS cooperation advance amid economic gloom?”

  1. James Holmes

    Olivier Stuenkel says that “things seem to have largely gone downhill for the BRICS countries (Brazil, Russia, India, China and South Africa)” and outlined the problems facing each of them. Oliver then went on to say that “doubts about the utility of the BRICS acronym are misguided”. I disagree.

    It was the British economist Jim O’Neill (ex-Goldman Sachs) who became famous for coming up with the ‘BRIC’, claiming Brazil, Russia, India and China could rival the advanced economies (South Africa was added to form BRICS in 2010).

    But grouping these countries together was always a superficial idea.

    China is without question in a category of its own. Its rapid industrialisation means it is now the second biggest economy in the world; it has just overtaken the United States as the biggest importer and exporter and in a few years time will be producing the largest share of global output.

    The rest of the BRICS are a very mixed bunch. Brazil and South Africa have both become increasingly dependent on supplying raw materials to China, indeed Brazil has slid sharply down the league table of industrial producers in the South over the past period. Russia, even before its extraordinary imperial-like grab for the Crimean part of Ukraine, was a declining economy heavily dependent on its exports of oil and gas; and India, although an important producer of software and manufactured goods, lags way behind China.

    Now O’Neill has come up with a new acronym in order to link together another group of “emerging economies” – the MINTs – made up of Mexico, Indonesia, Nigeria and Turkey. He asserted in a recent article for the BBC that if they “get their act together, some of them could match Chinese-style double-digit rates between 2003 and 2008”.

    This latest grouping is even more tenuous than the BRICS, as O’Neill in effect conceded in his article for the BBC: “Economically three of them – Mexico, Indonesia and Nigeria – are commodity producers and only Turkey isn’t. This contrasts with the BRIC countries where two – Brazil and Russia – are commodity producers and the other two – China and India – aren’t.” Confused? There’s more.

    He points out: “In terms of wealth, Mexico and Turkey are at about the same level, earning annually about $10,000 (£6,100) per head. This compares with $3,500 (£2,100) per head in Indonesia and $1,500 (£900) per head in Nigeria, which is on a par with India. They are a bit behind Russia – $14,000 (£8,500) per head – and Brazil on $11,300 (£6,800), but still a bit ahead of China – $6,000 (£3,600).”

    Hold on there! Income per head in the United States was £31,400 in 2012, and even in the United Kingdom it was £22,200. So there is a huge gap that still separates the BRICS (never mind the MINTs) from the advanced economies.

    The idea of the BRICS became popular particularly as the global economic and financial crisis in 2007-08 weakened the US and strengthened China.

    Crucially, most of these countries remain trapped in the North-South division of labour of supplying raw materials to the advanced economies.

    This makes them highly vulnerable to the ups and downs of the commodities markets. When the Chinese boom helped pull commodity prices up the BRICS and MINTs economies did well. But now China is slowing down and commodity prices have retreated.

    These labels of BRICS and MINTS are produced for the financial markets, to help them target countries where quick profits can be made, rather than sustained industrial development. In recent years, with the US and Europe in depression, speculative money has rushed into countries such as Brazil and Turkey. Perhaps O’Neill has picked out the MINTs for similar speculation.

    But the money is now beginning to pull out, partly because the American economy is looking a bit stronger and also because of the problems all the “emerging economies” themselves are struggling with. Oliver’s article has some interesting insights into the BRICS countries’ economic and political problems but they seem to be relevant for countries across the South not just those selected.