Thinking beyond the BRICs and avoiding the acronyms’ trap

Until it was all well and good there was general acceptance around the world of what the acronym BRIC meant. Coined by the then-chairman of Goldman Sachs Asset Management Jim O’Neill in a 2001 paper titled “Building Better Global Economic BRICs”, the term referred to Brazil, Russia, India and China (the capital S for South Africa was added in 2010). It stood for a small group of emerging market countries where growth roared at a time when developed countries started entering a prolonged slowdown. The Western financial community thought of it as a way of easily identifying newer and particularly promising investment prospects.

From the beginning, many were skeptical of painting the world in such broad strokes. Nevertheless, the label caught on and, particularly during the financial crisis, it became synonymous with the fact that these emerging markets had become the chief engine of global growth while the United States and Europe floundered under the weight of their debt overhang. More recently, however, most of the BRICS have not been doing so great, each in its own peculiar way. At the same time, other economies in the developing world have made themselves noticed for their growth rates. So much so that the BRICS brand is rapidly losing its shine and might actually be on its way out. “BRICS didn’t make much sense to begin with,” Parag Khanna told the news website Ozy.com at the beginning of the year. “But at least by now the concept has imploded upon itself, so I no longer need to argue [that] it’s a meaningless concept.” Khanna is asenior research fellow in the Centre on Asia and Globalization at the Lee Kuan Yew School of Public Policy in Singapore, and the author of several books on the emerging world order.

Largely as a reflection of this notion invented by Western bankers, the BRICS have tried to organize themselves in a coherent bloc. Starting in 2006, they laid the foundations for the creation of an association by the same name and have met annually since 2009. In 2011, they launched the BRICS Forum to enhance economic, political and cultural cooperation amongst themselves. In July 2015, after years of negotiations, they established the New Development Bank (NDB), formerly known as the BRICS Development Bank, a multilateral development institution to rival the Western-dominated World Bank. Nevertheless, doubts abound as to how effective their coordination can be, especially today as at least four of the five BRICS are experiencing serious headwinds. “The grouping doesn’t make much sense, and any expectation that these countries will form a new geopolitical bloc is outside of O’Neill’s original intent,” economist Daniel Altman told the Christian Science Monitor already in 2013. “Their political systems, population dynamics, and paths to economic growth are all different.”

Fast forward two years later and the International Monetary Fund has begun talking consistently about “uneven growth” across the BRICS and emerging market countries in general. Today, Brazil is in the grip of a recession and roiled by a corruption scandal, centered on the state-owned oil company Petrobras, that has enveloped the highest levels of its government and business elite; Russia is turning increasingly nationalistic and is embroiled in pretty much every front-page conflict and international crisis, while its economy stumbles as a result of low energy prices, Western sanctions and general mismanagement; China is contending with decidedly lower growth, whose negative effects are reverberating the world over, including in other BRICS; and much smaller South Africa is faced with a shrinking economy and mounting unemployment as a result of fallen commodity prices, increased volatility of its currency (the Rand), and inadequate electricity infrastructure at home. Only India offers some hope. However, there too the reform agenda on which Prime Minister Narendra Modi campaigned before being elected to office in 2014 is moving ahead at a very unhurried pace. This has the business community inside and outside the country increasingly disheartened. At the same time, the Hindu nationalist tendencies of Modi, his party and his base of supporters appear to be less restrained with each day.

That these five countries have all taken their own different paths should come as no surprise. “Big is not the same as cohesive,” wrote Antoine van Agtmael in ForeignPolicy.com in October 2012. “The BRICS are part of the G-20, but not a true power bloc or economic unit within or outside it […] India and China watch each other jealously. Brazil is a major supplier of commodities to China and has relied on it for its economic success, but the two powers compete for resources in Africa. Russia and China may have found common cause on Syria, but they compete elsewhere. Then there’s South Africa, which […] doesn’t have the population, the growth, or the long-term economic potential of the other four.” Van Agtmael, the man credited with coming up with the term Emerging Markets, also pointed out that each BRICS’s economic make-up was different from the other. GDP per capita for example is significantly higher in Russia and Brazil than in the other three countries.

The question then is what makes the BRICS the BRICS when countries like Kenya, Bangladesh, the Philippines, Thailand, Indonesia, Nigeria, Mexico and Turkey display growth rates that are on par, if not higher, than theirs and have political situations and overall prospects that are not worse, and often somewhat better. Increasingly, the answer has become that the BRICS label simply doesn’t make sense and that we must move in a new direction. “I believe the world is headed toward clusters of economic regions rather than individual nation-states,” Khanna said to Ozy.com. He suggested we abandon muddles of disparate countries that have little to do with one another in favor of concentrating on regional dynamics and on groupings like the Gulf Cooperation Council (which includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates) and ASEAN (the Association of Southeast Asian Nations).

Today’s global economy is so multilayered, diverse and yet interconnected, that we must find new ways of thinking about it and describing it. If in the past we had to do away with the distinction between First and Third World, now we might have to let go of an acronym like BRICS, if not of the dichotomy Emerging Markets vs. Developed Countries in its entirety. Yet, the temptation to lose the subtlety and the complexity of the modern world and reduce it to a cookie-cutter framework is strong. In 2014, everybody was talking about the MINT countries, another formulation whose popularization owes a great deal to Jim O’Neill. It encompasses Mexico, Indonesia, Nigeria and Turkey. Unsurprisingly, since rising to such prominence all these countries have encountered their share of unique problems and have ended up following their own distinctive trajectory. Will we ever learn?