Poised for strong future

I first coined the acronym BRIC nearly 20 years ago. So, how do I think it has developed, and what do I think the future holds in store for the expanded BRICS?

I have mixed opinions on how it has developed. Obviously, the whole concept of grouping the emerging economies of Brazil, Russia, India, China and South Africa became much more popular than I could have conceived, and I am delighted by that fact, and what it did for me professionally. But it is a mixed bag, because my very first paper in 2001 was based around trying to articulate the case for a different, more representative form of global governance, not only for, but especially related to the economy. In that November 2001 paper, I argued that the existing order with the predominant G7 group of established Western industrial powers was no longer representative, or suitable for guiding the world. I showed that under any of four scenarios, it was very likely the combined GDP size of the four countries－Brazil, Russia, India and China－would become bigger over the subsequent decade to 2010.

And given that three of the G7 nations had already experienced two years of sharing a currency and monetary policy, it didn't make sense for Germany, France and Italy to be represented individually, and they could make space for some of the BRIC countries, by including at least China, and probably the other three BRIC countries. Over the subsequent decade, in fact, all four BRIC countries rose faster than any of the four scenarios I had painted, and their collective size rose dramatically. Yet in terms of global governance, the G7 remained dominant, even as its weight (and power) declined, although we did see the emergence of the BRICS club (including South Africa) as well of course, induced by the 2008 financial crisis, the appearance of the G20, which included all the BRICS countries.

The second decade of the BRICS has not been as kind to each of the members economically, although their combined GDP size has continued to rise sharply, primarily because of China, and to a lesser degree, India. Brazil and Russia have experienced a very disappointing second decades, as has South Africa. Indeed, these three nation's share of global GDP remains the same as it was in 2001, reversing their surge in the first decade.

Twenty years later, the economic power of the BRICS countries is primarily because of the huge rise of China, which has grown to be more than twice the size of the others put together. And even though some persist in talking about India's potential being as bright, the Chinese economy is between five to six times bigger than that of its southern neighbor.

So, as I say, the BRICS story has been a mixed bag, and if it weren't for China, there wouldn't be much of a story at all, either economically, or politically. As we commence the third decade, there will be some other large emerging economies, perhaps especially Indonesia, and I wonder why they are not regarded in the same exalted breath, not least with Brazil's recent and ongoing economic challenges. According to the World Bank, the Indonesian economy is now bigger in purchasing power parity terms than Brazil.

It is also the case, that the BRICS club, while highlighting the absence of these countries from a more central role in global governance－other than through the G20－has not really achieved anything of substance to advance their collective economic or social strengths, or indeed, have seemingly had much influence on their individual development.

Notwithstanding these observations, the start of the next 20 years should still be regarded with ambition. Looking at each of the BRICS economies, there remains a strong chance that in the next decade, China could emerge as the largest economy in the world in current US dollar terms (as it already is, in PPP terms) and India could become the third largest economy in the world after the United States, jumping ahead of Japan. It is likely to challenge each of France and the United Kingdom to become the fifth largest by the middle of the decade, if it can recover fully from the novel coronavirus outbreak, and introduce more economic reforms. As for Brazil and Russia, they really must try much harder to introduce reforms that among other things, allow them to become less dependent on the volatile commodity cycle, which seems to be at the root of both of their reoccurring challenges. While having these resources is an asset, as often described through economic history, it is almost as though there is a commodities curse. The same is also true for South Africa of course.

Despite these sober observations, the collective size of the BRIC economies remains poised to become bigger than the G7 during the next 20 years, but that is almost exclusively because of China and India, which as I said, may likely become the first and third largest single economies in the world.

As for global governance, I would really like to see the BRICS having more genuine ambition to pursue some collective economic actions, based around policies on shared trade among them, and to solve shared challenges, such as the many infectious diseases they face in common, such as tuberculosis. And going back to the spirit of my original BRIC paper, I would also like to see much stronger global governance, in which the G20 persistently has the importance it did briefly in 2008, but also within the G20, we could still see a revamped version of the G7, where the biggest economies in the world can offer stronger leadership.

The author is former chief economist at Goldman Sachs. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.