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| Will Brazil, Russia, India, China Be Superpower? |
| World, 27.10.2008 |
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| In economics, BRIC or BRICs is an acronym that refers to the fast growing developing economies of Brazil, Russia, India, and China. The acronym was first coined and prominently used by the bank holding company Goldman Sachs in 2001.[1][2] Goldman Sachs argued that, since they are developing rapidly, by 2050 the combined economies of the BRICs could eclipse the combined economies of the current richest countries of the world.
Goldman Sachs did not argue that the BRICs would organize themselves into an economic bloc, or a formal trading association, like the European Union has done.[3] However, there are strong indications that the "four BRIC countries have been seeking to form a political club" or "alliance", and thereby converting "their growing economic power into greater geopolitical clout".[4][5] One of the recent indications was from a BRIC Summit meeting in 2008, in the Russian city of Yekaterinburg between the foreign ministers of the BRIC countries.[5]
Wikipedia
BRIC nations mop up $125 bn in 2008
NEW DELHI: Emerging nations like Brazil, Russia, India and China have raised over $125 billion from the debt markets so far this year, with India accounting for $15 billion in the entire kitty, says a report.
China leads the pack of BRIC nations contributing 47% to the total funds raised through the debt market, followed by Russia, which contributed 31% to the kitty moping up $38.43 billion so far this year.
Meanwhile, Russia and India have both seen a decline of seven and 22% respectively in debt volumes this year compared to the previous year, as per data compiled by global consulting firm Dealogic said.
India is third among the BRIC nations accounting for 12.4% of the raised amount cornering $15.52 billion, while Brazil has raised $12.54 billion through debt market so far this year.
Debt capital refers to funds raised by companies
The four emerging economies has raised a total of $125.2 billion through debt markets so far this, a 25% jump over $100.1 billion mopped in the same period a year-ago.
However, the number of deals has fallen to 444 this year from last year's 508 deals as the average deal size during the current year reported an increase.
The average deal size has been $282 million so far this year, a 43% increase from $197 million in 2007, Dealogic added.
www.utvi.com
Special Contribution
By Paul M. Kennedy
In the middle of the First World War, Vladimir Lenin, that notable expert on power politics, observed with a mixture of amazement and conviction, "Half a century ago, Germany was a miserable, insignificant country, compared with the strength of England at that time. Japan was similarly insignificant, compared with Russia. Is it 'conceivable' that in 10 or 20 years' time the relative strength of the powers will have remained unchanged? Absolutely inconceivable."
Lenin was referring to a common feature of international relations: that is, the law of uneven development. Just as some human beings grow faster and larger than others, so do some countries — and with much the same results. If you are powerful and muscular and stand around two meters tall, you can usually get your way against a smaller, weaker being.
If you are a great power or, better still, the world's greatest power, the smaller countries have little influence over you. This has been true throughout history, going back at least to the Melian dialogues in the 5th century B.C., where, according to Thucydides, the Athenians bluntly told their weaker neighbors that they must bend before the strong. Lenin would surely have agreed.
Economic might and military power therefore go hand in hand, and a tilting of the balance will, sooner or later, lead to a shift in the relative influence of nations. Seen in that light, you will be interested in a new study by a team of economists and planners at Goldman Sachs, called "Dreaming with BRICs: The Path to 2050." The BRICs — a new acronym in world affairs jargon — refers to Brazil, Russia, India, and China. They are large in territory and resources, they are populous, and, says the Goldman Sachs team, they are on their way up economically.
Now the middle of the 21st century is a long way off, and, as the old English proverb goes, "there is many a slip twixt cup and lip." Things can go badly wrong, and make long-term projections look foolish. Who now remembers the "Japan as Number One" forecasts of the 1980s? But the economists at Goldman Sachs are aware of these pitfalls and seek to take account of them.
Their language is cautious, and conditional: "Assuming India's rate of growth continues at X percent a year, then the following is likely. ..." They are right to be prudent. All of this depends on Brazil, Russia, India and China successfully pursuing growth-enhancing policies: rooting out corruption, encouraging capital investment, improving infrastructure, enhancing education and becoming platforms of political stability and transparency.
Still, with that assumed, the rough conclusions made about the future of the BRICs are breathtaking and deserve attention. Given the population forecasts for all four countries, their material resources and appeal to emerging-market investors, the Goldman Sachs team believes, for example, that Brazil can grow at a rate of 3.6 percent annually over the next 50 years; if you can do compound interest and know the demographic forecast for Brazil, you will quickly see that such a growth rate means that its per capita income will be over five times larger within half a century.
The forecasts for China, India and Russia are even more glowing. Russia will grow at a faster pace than Brazil, but will taper off by mid-century. China's year-on-year increase in gross national product of around 8 percent will slowly ease to 5 percent, a figure most other countries would die for. And the forecast for India is the most striking of all: a 5 percent to 6 percent annual growth rate that will not fall away in the next 50 years, leading to a 35-fold increase in its per capita income. Whew.
The Goldman Sachs team is most interested in the implications of all this for global capital flows, investment opportunities and the enormous rise in the currencies of those states. And, indeed, those reading the BRICs report might be tempted to withdraw those low-yield pension monies from their mutual funds and send them to Delhi and Rio.
But the report is also fascinating because of its implications for the world's power balances. If this projection holds, Brazil will have overtaken Italy's economy by 2025, and France's by 2031. Russia will pass the UK in 2027, and Germany in 2028. In fact, the report suggests that by mid-century only the United States and Japan will rank among the world's top six economies (G6).
What this implies is a world in 2050 of three really big powers and a cluster of medium-sized ones, like Japan, Germany and Britain, with France and Italy (because of population decline and slow growth) beginning to fall off the map. This is not good news for Europe, and perhaps the best ever argument for real unification.
China's Hong Kong
But it is also not good news for our current hyper-power, the United States, to be overtaken by China as the world's largest economy ($45-$35 trillion), and closely pressed by India ($27trillion). To be sure, the average American will still enjoy a larger income than the inhabitants of China and India, but the gap will have narrowed significantly and — and this returns us to Lenin's point — those two Asian powers will be able, if they so choose, to match U.S. defense spending.
The full implications of such developments cause one's head to spin, but one thing seems clear: Neither the Indian Ocean nor the Western Pacific will be "an American lake" in 50 years' time.
What are the prospects for these scenarios? Despite the cautious language of the BRICs report, its authors are reasonably confident that their long-term economic projections are sound. One must wonder, however, whether sufficient attention has been paid to the political factors that could affect the futures of these four large nations. What will happen to India's economy if Pakistan explodes into strife that spills across the border?
How can an India of 1.5 million people with income and, therefore, consumption levels 35 times higher than they have today, prevent complete ecocide? Can Brazil avoid civil uprisings and the destruction of its environment? Can China, ridden with internal problems, hold together? Can Russia really grow economically when it is losing 750,000 people a year to death or migration? It is very hard for countries to grow and change so fast without major convulsions and setbacks, as both Russia and China demonstrated last century.
Now may not be the time to place all your pension funds in the BRICs, therefore; but this remarkable report suggests that shifting a share of your portfolio to the four coming giants might not be a bad idea. More important still, it suggests that Western politicians who think the current world order will last through this century need to do some serious rethinking. It is not too early to start.
If you have any views visit the discussion board.
Dr. Paul M. Kennedy is the J. Richardson Dilworth professor of history at Yale Univ. and director of Yale's International Security Studies Program. After earning his Ph.D. from Oxford in 1970, he came to Yale in 1983. As one of the world's most respected historian and an expert in international relations and security issues, he freequently contributes New York Times, LA Times and other prestigious journals and publications. He has authored or editted 16 books including his 1988 best-seller "The Rise and Fall of the Great Powers" and his more recent "Preparing for the 21st Century."
www.theseoultimes.com
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