Regional :: The St. Kitts-Nevis Observer

Below the surface of the rough and tumble of day-to-day international politics and economic relations, the traditional major powers have begun to take notice of a new economic development phenomenon, namely, the rise of a group of countries which a Western observer has christened "the BRICs." The term is meant to describe the recent economic behaviour of four countries - Brazil, Russia, India and China" which have had dramatic (intended to mean unexpected) growth patterns over the last ten to fifteen years. And interestingly, it was invented in 2001, not by any proud national of any one of the four countries, but by a British economist, a Mr Jim O'Neil, employed by one of the West's big banking firms, Goldman Sachs.

The term suggests both admiration and fear. Admiration which indicates that after all of the literature of development economics suggesting economic growth to be a relatively slow and painstaking process, few people noticed that a few countries normally described as having characteristics of backwardness which were impediments to sustained economic growth, had seemed to overcome some of these negatives in relatively quick time. These countries, now seen as taking advantage in one way or another of the processes of economic, cultural and information globalization spreading over the globe, have surprised the major economic powers. The latter look in amazement as these BRICS seem to have found the economic growth secrets previously deemed to be the property of the Western world. They wonder whether the balance of economic power rigidly held by that world since the Second World War, is about to change to their detriment.

Only twice since 1945 has this question of the balance of economic power been an issue of concern in the post-war world. First when Japan, rising from the destruction of Western atomic power, showed an uncanny capacity for becoming competitive with the United States in particular. It challenged the technological innovativeness of that country, and claimed a significant portion of Western and world trade. But then the Americans in particular, saw the country as a ward of itself, helped generously after the war to regain the trends in economic growth which it had previously begun to display, while being firmly subject to rules of international production and trade dominated by the US. Thus, as the US perceived the economic strength of Japan, as indeed that of the newly founded European Economic Community (later European Community, now European Union), to be presenting a challenge, the Kennedy and Uruguay Rounds of trade negotiations were initiated to ensure that no unfair advantage was sustained by these 'emerging powers' seen essentially, however, as a part of an existing Western system managed by the US.

The other example of challenge to the US and its post-war system was, of course, the rise of the Soviet Union. But in Western economic thinking, the predominant view held of the Soviet economy was that it was in some way an artificial construct. This meant that it was the result of the workings of a so-called 'command economy' dominated by state power and direction, and taking advantage of its geopolitical dominance of what came to be called the 'world socialist system.' Further, the Soviet Union maintained a so-called closed economic system which the US and its allies did not seem to resent in economic terms. They did not see it as competitive, and, indeed, they helped to maintain it by a regime of restrictions on trade which, they insisted, was a necessary part of the geopolitics of the Cold War. So while many Western observers were surprised by the sudden demise of the Soviet Union and its Comecon integration system, they claimed that what surprised them was that suddenness, rather than the event of disintegration itself.

Western surprise at the evolution of what are now described as the emerging powers of the non-Western, non-Soviet world has been, however, of a different order. When the Goldman Sachs economist, O'Neil, created and propagandized the term in 2001, it was greeted with widespread skepticism, and as a journalist's propaganda tool to facilitate the strategies of the private financial institutions anxious to extend their arenas of investment. After all, Brazil, for one, seemed to have had a history of stop-and-go economic development, a view strengthened by the so-called 'lost decade' of Latin American economic development. The Russian economy had been miniaturised by the collapse of the Soviet system, and seemed unable to make the transition from command economy to a liberal economic regime, even under a Yeltsin favoured by the West. India was characterized as hampered by the diversity and claimed cultural impediments of its ethnicity-dominated social system. And China, in spite of Deng Tsiao Ping's attempts at innovation was seen as being hampered by its continuing command political system now deemed, following the demise of the Soviet Union, to be a basic impediment to sustained, rational economic decision-making.

O'Neil had predicted in 2001, that "over the next ten years, the weight of the BRICS and especially China in world GDP will grow," a prediction which has turned out to be correct. Now, much economic analysis is devoted to determining the elements of economic decision-making that have led to the change. Analysts note today that Mr Deng's assertion against opponents of his policy of economic liberalization that "it doesn't matter whether the cat is black or white as long as it catches mice," signalled the de-ideologising of the country's economic decision-making, a process assisted by the defreezing of political relations between the US and China, and China's eventual commitment to observe the rules of the revised Western trading regime, the WTO.

In the case of Brazil, they note lessons learnt by the Collor, and then more decisively by the Cardoso and Lula regimes from the apparent failures of statist, tariff-protected development thinking, and the continuing dependence of the Brazilian economy on global (that is Western-determined) commodity trading systems. India has remained more of a puzzle to Western thinking, since the continuation of its cultural systems delegitimizes their favoured analysis. So, much emphasis is placed on a reorientation of Indian economic policy that recognized the changed nature - the globalization-liberalization - of international economic relations, and the recognition from the Rajiv Gandhi period through the Janata period and into the placing of a definitive stamp of liberalization during the regime of current Prime Minister Manmohan Singh, as decisive. And in the case of Russia, Western analysts now view Yeltsin's liberalization measures, though initially apparently socially and economically disastrous, as decisive in quickly forcing an adjustment of the command economy into a liberal mode.
Critics of the O'Neil-Goldman Sachs thesis of a decisive turn to sustained productivity and economic growth on the part of these BRICS, tend to argue that in some measure it has been based on favourable demand by the traditional Western powers for traditional commodities, particularly in the cases of Brazil and Russia. They have more difficulty in explaining the continuing trends in China and India, though they are willing to argue that China's case has been substantially assisted by the maintenance, and opening to China, of the United States economic system. This latter, they sometimes claim, is now partially acting as a brake on the freedom of American economic policymaking, as the two economies seem increasingly twinned to each other.

But a wider concern of the United States, and in some measure the European Union, as a consequence of the emergence of the BRICS, is a change in their presumptions about the dominance of decision-making pertaining to the rules of international trade and production, specifically the course of future evolution of the WTO regime. The Western powers have been amazed and bemused by the stubbornness of the BRICS and some allied countries in ensuring what they consider to be the need for a more balanced international trading and production system, and by the BRICS' continuing resistance to accepting Western conclusions - in spite of the de facto integration of the two sets of economies. The spilling over of differences in future international policy into the Copenhagen Climate Conference has come as a shock to the United States and the EU. But it was predictable in the wake of the West's concession, at the virtual start of the 2009 global economic crisis, to a widening of global decision-making to a more meaningful G20.

Many Western analysts doubt the significance of the characterization of the BRICS as a specific group. Nevertheless, it appears that West now more clearly recognizes that the diplomatic assertions of the BRICS and their allies constitutes 'new business,' superseding the closed club nature of most post World War II global economic relations decision-making. How the traditional powers react to this is consequently a new item on their traditional agenda. But what it means for the smaller powers of the globe like ours, now also becomes an urgent item on our agenda. It supersedes our now more limited quarrels about the EU-Cariforum EPA for example, and drives us in the direction of how we, as Caricom, Cariforum or some yet more appropriate Caribbean institutional arrangement, are to relate to the BRICS themselves, and in particular our closest BRIC, Brazil.