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The rapid growth of emerging economies, and their increasing global influence, has been one of the major features of the post-Cold War world. Countries in Asia, such as China and India, have ‘reemerged’ to become two of the largest economies of the world, reclaiming positions they held before the advent of the colonial era brought about their relative economic decline. Brazil in Latin America and South Africa have also achieved high rates of economic growth that have made them significant players in the global economy. Russia has emerged from the ruins of the former Soviet Union and reestablished itself as a major oil producer and political power on the international stage.

Despite these changes, the nature of international political and economic institutions such as the UN, the IMF, and the World Bank has not changed significantly to reflect the new realities. This slow pace of reform, and the reluctance of major global powers, particularly those belonging to the G7, to restructure international institutions has forced newly emerging economies to act collectively to bring about this change. The formation of the BRICS group of countries, comprising Brazil, Russia, India, China, and South Africa as a counterweight to groupings such as the G7 is one such attempt.

While the genesis of the BRICS group may be sought in an internal report of Goldman Sachs in 2001, over the last decade and half the group has emerged as an economic powerhouse. After all, the BRICS group of countries together comprise 2.8 billion people — over 40% of the world’s population — cover more than a quarter of the world’s land area, and currently account for about 25% of the world’s GDP. The five countries are undoubtedly major powers regionally, and at least one of them, viz., China, globally. But how effective are they as a group? Will they be able to work together effectively and achieve for themselves a more influential position in world affairs? Or will they be constrained in their ability to act abroad by domestic instability arising from growth that is iniquitous and non-inclusive? What are the different dimensions of such non-inclusivity? Will the dominance of China be counterproductive in making the group effective? Without any claim of completeness, these are some of the questions that this volume seeks to address.

The chapters in this volume discuss economic growth in the BRICS countries with a view to understanding whether the nature of their growth is such that it is broad-based and leads to equitable economic/social outcomes. The objective of the volume is neither to look at each economy exhaustively across different dimensions of growth, nor do we have a standard template to do so. What we do is analyze specific dimensions of growth in these five economies that constrain their ability to act effectively and cohesively in international affairs. The nine chapters in this volume address different aspects of economic growth in the five economies. The first two chapters discuss the political-economy of growth in BRICS and the economic heterogeneity of the five countries that constrain their ability to act as a cohesive international group. The third chapter discusses the growth experience of India and China after the global financial crisis. Two chapters analyze inequality and inter-group disparities in growth in BRICS economies. The remaining four chapters look at different socio-economic dimensions of growth, such as sustainable development, health care, financial inclusion, and social welfare programs.

In Chapter 1, Biju Paul Abraham looks at the economic development of the five BRICS economies from a political-economy perspective. He argues that while all five economies are increasing their share of the global economy, their ability to act externally is undermined by domestic weaknesses, in particular by iniquitous and non-inclusive growth. Such growth could potentially undermine both political and economic stability. The chapter analyzes three aspects of economic growth in the five countries that leads to this non-inclusiveness — their initial growth paths, development of socio-economic inequity in growth outcomes, and corruption and political capture of economic policy. It argues that in four of the five economies, the initial growth paths were such that they excluded large sections of these countries’ populations from effective participation in the growth process. The only exception was China, where, in the initial decade of Communist Party rule, there was significant growth in food production in rural areas, as well as improvements in health care and education through the commune system. However, both in China and the other four BRICS countries the evolution of growth policy was such that it fostered non-inclusive growth, which deepened socio-economic inequities. Policy reform in all five countries is hindered by the capture of economic policy by elites and that makes it unlikely that there will be significant improvement in equity and inclusivity in growth. The chapter concludes that this failure to reform means that all five countries are vulnerable to domestic instability. This is likely to have a significant impact on their ability to act cohesively as a group and constrain their international influence.

Tracing the formation of the block in the original 2001 report of Goldman Sachs Global Economics,

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The Political Economy of the BRICS Countries

Contents

Introduction