Sep 16, 2021 Jim O’Neill
In the two decades since Brazil, Russia, India, and China were recognized for their unique growth potential, they, along with South Africa, have so far proven incapable of uniting as a meaningful global force. This comes at the expense not only of the bloc, but of better global governance as well.
LONDON – Having created the BRIC acronym to capture the collective potential of Brazil, Russia, India, and China to influence the world economy, I now must ask a rather awkward question: When is that influence going to show up? Given today’s global challenges and the enormous issues facing the BRICS (which subsequently became a real-world entity and was expanded in 2010 to include South Africa), the bloc’s ongoing failure to develop substantive policies through its annual summitry has become increasingly glaring.
This November will be the 20th anniversary of the BRIC acronym, which I first used in a 2001 Goldman Sachs paper entitled “Building Better Global Economic BRICs.” At the time, I offered four scenarios for how each country could develop over the next decade, and made the case for why global governance needed to become more representative and include these four rising powers. That paper was followed by a series of others, starting in 2003, which showed how China’s economy could become as large as the US economy (in nominal dollar terms) by 2040; how India could surpass Japan to become the third-largest economy soon thereafter; and how the BRIC economies together could grow larger than the G6 (the G7 minus Canada). But the bloc’s economic trajectory since 2001 has been a mixed bag. While the first decade was a roaring success for all four countries, with each surpassing all four scenarios that I originally outlined, the second decade was less kind to Brazil and Russia, whose respective shares of global GDP have now fallen back to where they were 20 years ago. If it weren’t for China – and India, to some degree – there wouldn’t be much of a BRIC story to tell. Yet, notwithstanding the difficulties the BRICs have faced, China’s growth alone is on track to lift the technical aggregate of all four economies to match the size of the G6. In terms of global governance, the only notable shift over the past two decades has been the rise of the G20 since it took center stage in the response to the 2008 global financial crisis. Representing the world’s 20 largest economies, the organization seemed immensely powerful at the time, and it managed to implement policies of potentially lasting importance. But since then, it has generally been a disappointment, saying much but achieving very little.
For their part, the BRICs held their first annual meeting as a political club in 2009, in Russia (the first to include South Africa took place in China in 2011). And this year, Indian Prime Minister Narendra Modi hosted the BRICS leaders (virtually) for their 13th summit. Every leader made bold statements about what they had supposedly achieved together, and all discussed avenues for future cooperation. Yet they have accomplished very little; lofty statements are usually accompanied by only scant policy moves. Nothing in the bloc’s latest joint declaration suggests that anything has changed. Perhaps not surprisingly, most of the attention this year has been on security and terrorism. After all, recent developments in Afghanistan will have serious, direct implications for Russia, India, and China. But this singular focus is disappointing nonetheless, because it highlights the group’s limited joint ambitions. Modi would seem to agree, saying, “We need to ensure that the BRICS are more productive in the next 15 years.” Beyond creating the BRICS Bank, now known as the New Development Bank, it is difficult to see what the group has done other than meet annually. Following the bloc’s rather dismal second decade, there are many things that BRICS leaders could do collectively to help revive the kind of economic gains made in the first decade, all of which would be good for the rest of the world, too. In doing so, they could create a much stronger impression of their usefulness alongside the G20, strengthening the case for more substantive reforms to global governance.
For starters, the BRICS need to strengthen trade between themselves. China and India could both gain enormously from a more open and ambitious trading relationship, which would redound to the benefit of the rest of the region, the other BRICS, and the world. In fact, more India-China trade alone would visibly boost global trade. Moreover, while the BRICS have little in common other than large populations, they also share a significant exposure to infectious diseases. The Review on Antimicrobial Resistance that I led in 2014-16 showed that all of the BRICS were worryingly vulnerable to drug-resistant tuberculosis. And as COVID-19 has shown, most have health systems that are poorly equipped to deal with pandemics. Unless they treat global infectious diseases more seriously, they will never be able to reach their economic potential. Since the fall of 2020, I have had the privilege of serving on the World Health Organization’s independent Pan-European Commission on Health and Sustainable Development, which is chaired by former Italian Prime Minister Mario Monti. One crucial proposal from our initial Call to Action this past spring, now outlined in detail in our final report, is to establish a Global Health and Finance Board under the auspices of the G20. The reasoning is simple: unless we place global health challenges at the heart of regular economic and financial dialogue, we will remain ill prepared for them. And as the pandemic has shown, global health challenges are also economic and political challenges. This proposal already has the support of several key governments, notably those of the United Kingdom, the United States, France, Italy, and the European Union. Yet for reasons I fail to understand, the BRICS, especially China, seem to be opposed to it. Such resistance makes no sense and will have dire consequences for the rest of the world. It gives me and other longtime champions even more reason to doubt the group’s collective potential.