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The Political Economy of the BRICS Countries


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‘Real Plan’ of 1994 to stabilize the economy and put it on a more stable growth path. This decade of lost growth was to have an impact on the quality of growth in later decades as well.

      Though considered a developed state, Russia inherited an economy from the former Soviet Union that was suffering from problems of underinvestment, inefficiency, and relative backwardness when compared not just with the more advanced Western economies but also with many of the more dynamic East Asian economies (Robinson, 2011: 9). Initial economic policy in the post-Soviet era was based on stabilization of the domestic economy by cutting budget and trade deficits, removing price controls, liberalizing the internal market by throwing it open to foreign competition, and privatizing state-owned enterprises. However, the process was deeply flawed and led to a period of economic crisis and declining economic output that lasted for the rest of the 1990s. The successor state to the USSR, which was the second largest economy in the world when it collapsed in 1991, became the twelfth largest by 1998 (Intriligator, 1998: 242–243). Economic decline was accompanied by a steep decline in living standards and growing criminalization of the economy (Zhuravskaya, 2007).

      Persisting Social and Economic Inequalities

      Countries that suffer from socio-economic inequalities face two significant challenges. The first is to raise total income levels of the population, and the second to ensure that it is more equitably distributed. The first is achieved by attaining high rates of economic growth and the second by socio-economic interventions, including taxation and welfare spending, that ensures that income is more equitably distributed. The varied paths that the five countries have followed is reflected in any current evaluations of the nature of economic growth and socio-economic outcomes in the five BRICS countries (Ardichvili et al., 2012; Arrighi et al., 2010). India, Brazil, South Africa, and Russia, despite having enjoyed periods of high-economic growth, continue to experience persistent inequality in income distribution. China, which was relatively more successful in achieving both high growth and greater income equality in the early years of its development, has seen inequality rise since the liberalization of the economy in 1978.

      India presents a paradox as far as equitable growth is concerned. Since liberalization in 1991, it has enjoyed very high rates of growth. The GDP has increased more than nine-fold from US $275 billion in 1991 to US $2.3 trillion (Turaga et al., 2018: 26). During this period, the government has enacted legislations to implement a number of welfare schemes to ensure greater growth equity. It has also implemented programs for providing employment, food security, and access to education. India also put in place, soon after Independence, a program of reservations (affirmative action) that is intended to overcome the inequities imposed on large sections of its population because of rigidities in its caste system. Yet, both in terms of wealth distribution and in terms of social indicators, its performance has been poor compared to many developing nations at similar stages of development, in some respects even worse than Least Developed Countries (LDCs) in sub-Saharan Africa. In health care, while there have been improvements in health indicators, inequalities between different regions has increased since 2001 (Goli and Arokiasamy, 2014: 162). In 2014, the UNDP Gender Equality Study ranked India 135 out of 187 countries, In addition to barriers to social mobility imposed by the caste system, social exclusion and low levels of human development seem to be major detriments to inclusive growth (Onis, 2016).

      There are two major problems that negatively affect the effectiveness of welfare programs in India. The first is lack of adequate resources. India spends only about 8% of its GDP on social services, which is not just behind OECD countries which spend 20%, but also behind countries like Brazil and South Africa which spend more about 16% of their GDP on social welfare schemes. The second is the inefficiencies in implementation with actual income transfers to those targeting being much less than funds allocated because of very high transaction costs (Jha, 2014).

      Brazil is unique among BRICS countries in terms of both improvements in income equality and socioeconomic indicators since 2000. Brazil was the only BRICS country which saw its Gini coefficient decrease between 1990 and 2010. The other four BRICS nations saw income inequality increase with an increase in economic growth. Brazil also saw the steepest decline in infant mortality