BRIC to the face
The first BRIC summit, in Yekaterinburg
Today, Russian President Dmitry Medvedev published a glowing op-ed in the Russian business daily Vedomosti about the upcoming second annual BRIC summit.
Called “Common Goals, Common Actions,” the piece talks about all the wonderful things the BRIC countries are doing to move the world forward and all the things they have already done, including active participation in the UN and G20, agricultural cooperation, promoting energy efficiency, trading in each other’s currencies, and, of course, conquering space.
All well and good, of course, provided the piece didn’t sound like a justification for BRIC’s existence.
Or, let me be more clear: Medvedev was arguing that not only was BRIC a necessary conglomeration, but that Russia deserved to be included — which is far from certain these days. Back in October, economist Nouriel Roubini argued quite forcefully that it didn’t. At a Moscow economic forum in February, a panel on the future of the BRIC countries was nearly unanimous on this point. “Russia doesn’t quite fit with other countries in terms of growth,” said one of the panelists, reminding the audience that the BRIC countries are supposed to have “dynamic, fast-growing” markets. “The official estimate,” he added, “is -7.9% GDP growth. How can that be a dynamic fast-growing market?”
Russia, everyone notes, has an unsolved demographic — and thus labor — crisis, an economy (and government budget) still entirely dependent on commodity prices, problems with rule of law and corruption, which, even according to the government’s own estimates, eat up as much as one third of the federal budget. All of which punches a massive a hole in your dynamism and fast growth.
Not that the others don’t have problems, but the numbers are telling.
The BRIC summit starting in Brazil next week, Medvedev writes, may be a young group “but from its first steps, it has won much international authority…And this is not surprising,” he adds, since the member countries comprise “26% of the world’s territory, 42% of its population, and 14.6% of the world’s GDP.”
Landmass, fine. Russia’s big, and has always been a size queen. Population? Russia’s is shrinking. 14.6% of the world’s GDP? At a wobbly, shrinking $1.3 trillion, Russia’s is just over 2% of the world economy. And it looks like it’ll stay that way: Economists estimate that, in a few years, China and India combined will make up 45-50% of world GDP, while Russia and Brazil will make up around 4%.
Of course it’s nice for Russia to play friendly and be cooperative, but it shouldn’t overstate its economic influence in the world.
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Julia,
Allow me to respectfully disagree about the weakness of Russia’s economy: I think this has been very greatly overstated. Most of the predictions coming in now suggest that 2010 growth will be in the range of 5-6% (I’ve even seen predictions for 7+%) and that Russia will get back to pre-crisis levels of economic activity sometime in early-mid 2011. Does this make it a China-like global powerhouse and titan of industry? No. But considering Russia’s vastly higher levels of development (measured by PPP Russia’s per-capita income is about 50% greater than Brazil’s and well over twice China’s) I don’t think it would even possible for it to reach growth rates equal to those in India or China.
I guess I would agree with the general point that Russia doesn’t really belong in the BRIC grouping, but this is not because of its excessively weak economy but because it’s just a more developed and advanced society than the other members (not that that is a particularly high threshold to clear!)
The countries of BRIC were put in the same basket not a basis of a single parameter whether it is GDP growth or anything else but rather integrative estimate of their summary economic power to come vs today’s dominating group of Western Europe plus the US, which have well established, tested and integrated economic infrastructure especially financial. What countries of BRIC do not. The BRIC is put together by the fact the the “Old” boys not exactly welcome new kids on the block when they claim their place under the sun and no country of the BRIC can be successful in such pursuit acting alone. Hence the temporary alliance of such different countries end economies.
In response to another comment. See in context »That’s why this year econimic statistics in Russia has been “modernised” by Putin’s government? And figuers get higher than they would be under the old-fashioned calculation…
In response to another comment. See in context »I would also add that Jim O’Neill, the guy who coined the BRIC concept, categorically disagrees with excluding Russia from the BRIC’s.
http://businessneweurope.eu/story1919/RUSSIA_2010_Slow_build_over_first_half_to_boom_in_2011
Julia, I suspect that your (negative) focus on Russia prevents you from seeing that the other BIC’s also have severe problems. Brazil – huge inequality (yes, much bigger than in Russia), atrocious education system. India – primitive infrastructure, illiteracy and malnourishment still prevalent, caste system still in place. Etc. This does not however disqualify them from BRIC status.
Also, some factual mistakes. 1) Russia’s population is no longer shrinking as of 2009, 2) the idea that China + India GDP = 45-50% of world GDP in “a few years” is ridiculous and I have not seen any economists make that estimate. You do realize that since their combined population is about a third of the world’s population, to reach 45-50% of world GDP ordinary Indians and Chinese will have to become substantially richer than the world average?
Well, in Julia’s defense, it’s pretty difficult to live in Russia and not have a negative view of the country’s political and economic future.
Well, if she is masochistic and went to Russia to become a certified Russophobe – then she could wasted her time: could have spent the time more comfortably in some friendly asylum like Heritage Foundation.
For a professional it is unforgivable while writing on a topic to blew basic facts as the GDP trends are.
In response to another comment. See in context »Or at least put a disclaimer in the end of the confused piece: “I just repeat what my Moscow super liberal friends told me”.
Talk about decline in journalism professional standards.
the last Russian opinion poll that I saw in which the question is “whats your opinion on the future of Russia” or something to that effect said that something like 70% of those polled had a favourable view…
In response to another comment. See in context »As always: let it be good, oh God!
In response to another comment. See in context »I couldn’t care less about Julia’s – or anybody else’s, for that matter – opinions, if they are not grounded in facts and supported by strong logical chains. In this article alone there are two incontrovertible factual errors. In my defense, it is pretty difficult to notice this and take the rest of the article seriously.
Anyhow, I do thank Julia for giving me a topic for one of my next blog posts – why Russia is in fact a solid BRIC.
In response to another comment. See in context »Actually, only 48% of Russians think that the country is headed in the right direction. 63% say that they are still deeply and significantly affected by the undisputed fact that the bottom dropped out of the Russian economy in 2008-2009. Moreover, 38% of them feel that they are at the nadir of the economic crisis, a significant increase from this time last year.
http://www.levada.ru/press/2010030404.html
http://www.levada.ru/press/2010040900.html
I don’t believe this number – 48%. As I know my people very well there is no chance that any time in the history more than one person in the whole country believes it is going in the right direction: it is of course the one who is in charge.
In response to another comment. See in context »Fine. But the point is, outside of Moscow, things are very tough economically.
In response to another comment. See in context »Julia, you probably heard this question before, but have you actually lived in Russia during 1990s?
In response to another comment. See in context »I know that for outsiders we may seem to be completely obsessed with this period, but it is this time which really defined us and our view of the world. For us “very tough economically” really means the possibility of STARVING TO DEATH, which was a VERY real prospect for many of us just a decade ago. Thats when “bottom dropped out of the Russian economy” for real. Compared to that what happened in 2008-2009 was just a blip on the radar. Thats why quiet a few of us may get annoyed with overly apocaliptic analysis and predictions about the current economic downturn. We came close enough to apocalypse to actually KNOW what it looks like and while past 2 years have been difficult, when compared to our recent history there is nothing overly dramatic in them at all.
Really, what on earth are these figures supposed to prove?
Only 35% of Americans, even fewer than Russians, think that the country is headed in the right direction.
In response to another comment. See in context »Considering that the U.S. is losing power, influence, and wealth, I’d say that’s pretty reasonable. Isn’t one of your blog’s central arguments that American hegemony is in decline? Seems that America agrees with you.
In response to another comment. See in context »