BRICS & India moderndiplomacy.eu

Today, the BRICS countries, with a third of the world’s land mass, more than 43% of the world’s population,18% of the global trade, and 20% of the world’s Gross Domestic Product (GDP), have now attained a levelof economic importance since 2006 that may see no turning back. And those BRICS countries are now apolitical reality (Mielniczuk, 2013).

While the international financial meltdown in 2008 produced economic crises in the developed world,BRICS demonstrated steady development and even outperformed some developed countries. Forinstance, when in 2009, the economies of Japan and Germany declined by 6%, Brazil sustained its growth,India’s economy showed a 5.9% growth and China 8.1%; Russia’s economy declined by 7% (Biggemannand Fam, 2011).

When in 2012, the GDP growth for the USA was 2.2%, Japan 1.9%, Canada 1.7%, Germany 0.7%, and theUnited Kingdom 0.3%, BRICS largely outperformed the developed nations with GDP growth for Brazil at0.9%, Russia 3.4%, India 3.2%, China 7.8%, and South Africa 2.5%( http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG).

Reviewing the 2009 real GDP statistics, the World Bank noted that Brazil took the spot as the world’s 10thlargest economy, Russia 13th, India 11th, and China 3rd; in 2009, the BRICS economies together wereequivalent to 50% of the world’s largest economy, the U.S. economy.

But 10 years back in 1999, Brazil was the world’s 10th largest economy, Russia 15th, India 16th, and China7th; and together they were equivalent to 30% of the U.S. economy. The World Bank further noted thatbetween 1999 and 2009, the U.S. economy grew by 20%, Brazil’s growth was 36%, with Russia 69%, India92%, and China was 2.5 times richer.

BRICS countries are now key players in the emerging economies’ world dominance; and with thisemerging dominance of BRICS, some economies in the developed world are now on the defensive. BRICScountries continue to transform Wallerstein’s world system theory, among others, where for decades, if notcenturies, under different ideological labels, there have been unequal economic and political relationshipsbetween the developed and the developing world.

BRICS countries persisted in the knowledge and applications that they will not allow themselves to remainin a state of permanent dependence. And they have moved on by removing the foundations of permanentdependence vis-à-vis making a dent on export dependency, the debt trap, and multinational corporations,as these remain poor nations’ predators.

The author presents a comparative focus on India in relation to the BRICS countries, as India debatably isthe least formidable of the BRICS countries in terms of economic dominance. And using India, and perhapsany of the other BRICS country, may demonstrate that poverty is not a permanent condition, and manysmall, poor economies could strive for betterment vis-à-vis applying the BRICS model, where appropriate.Of course, you would need far more than the BRICS model to transform poverty into surplus.

Drawing mainly from the IMF World Economic Outlook, India carried a 3.5% economic growth rate from the1950s through the 1970s, sporting a stagnant economy for almost three decades. But in the period 2000-2005, India experienced just over 6% average GDP growth rate, less than 5% inflation, and all BRICScountries had about 10% unemployment; and in 2005, India’s GDP volume was about US$800 billion andits GDP per capita tottered around US$1,000. Among BRICS countries in terms of GDP composition in2004, India had the largest agricultural sector with a growing service sector; India had no current account

surplus in 2005, when the other BRICS countries did; and in the same year had a small amount of foreignreserves, approximating US$150 billion.

Extracting data from the IMF World Economic Outlook (2011 and 2012), here are some selected statisticsfor India and the other BRICS countries (Brazil, Russia, China, and South Africa) in 2010: India’s real GDPwas 10.6% (Brazil 7.5%, Russia 4.3%, China 10.4%, and South Africa 2.9%). In 2011, India’s real GDPwas 7.2% with the other BRICS countries as follows: Brazil 2.7%, Russia 4.3%, China 9.2%, and SouthAfrica 3.1%). In 2011, India’s balance on current account was -2.8% of GDP (Brazil -2.1%, Russia 5.5%,China 2.8%, and South Africa -3.3% ) and projected to be -3.2% in 2012; India’s consumer prices were5.4% (Brazil 6.6%, Russia 8.4%, China 8.6%, and South Africa 5.0%) and projected to be 8.2% in 2012.

As stated earlier, in 2012, GDP growth for Brazil was 0.9%, Russia 3.4%, India 3.2%, China 7.8%, andSouth Africa 2.5% ( http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG).

On the basis of these selected data, India continues to be the weakling among the BRICS countries on

average growth rate, consumer prices, and balance on current account. And its faltering growth rate may begradually regressing toward the average GDP growth of 6% it had between 2000 and 2005. A high growthrate is necessary for a growing population and a growing workforce, and also a critical economic indicatorto maintain its status within BRICS.

In addition, India would need an active Knowledge Economy (KE) to sustain a high growth rate that has arelationship with total factor productivity (TFP); TFP is the nation’s capability to create and use knowledge.And the World Bank projected that India’s TFP will grow by more than 50% in 2020 than what it was in1991/92.

Nevertheless, in light of the IMF World Economic Outlook 2011 and 2012 statistics on India, it may be worthrevisiting the concerns raised in the following: Das et al. (2010) found that in the 1980-2004 periodproductivity was moderate with pointed fluctuations; and productivity increases arose largely out oftechnical change, as there was little efficiency over the last 30 years (Alejandro, Yu, & Fan, 2009).

The World Bank (2005) noted that India would need to develop policies concentrating on effectively utilizingknowledge to increase productivity and the nation’s welfare. And, invariably, some people refer to thisknowledge economy as ICT industries.

The World Bank suggests that KE is broader; KE refers to how an economy channels and applies new andexisting knowledge to raise productivity and total welfare; for this reason, KE will make a differencebetween poverty and wealth.

India is forging ahead at a brisk pace with its KE. And perhaps, small, poor countries around the world, inorder to rid themselves of their poverty, would have to show more than keen interest in KE, and startintensively building KE to spur economic growth; and to ensure that that economic growth reaches the poorand vulnerable population.

What is challenging for India is that its real GDP declined from 10.6% in 2010 to 3.2% in 2012, and itscurrent account balance is now negative (where domestic investments are funded through foreigners’savings) and way behind Russia and China. Only a few days ago, the IMF reduced its growth forecast from5.6% to 3.8% for this fiscal year, and the rupee (India’s local currency) fell in the wake of this IMF’s forecast.And so India’s quest to becoming a robust knowledge economy remains a formidable challenge, as aconsistently high growth rate requires a KE. And would India be able to sustain its status as a constituent ofBRICS?