Читать книгу The Political Economy of the BRICS Countries - Группа авторов - Страница 11

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, titled Building Better Global Economic BRICs, Partha Ray in Chapter 2 notes that the BRICS has emerged against the backdrop of the global financial crisis. In deciphering the economic momentum, the chapter takes a look at trajectories of various macroeconomic variables (such as economic size, monetary, fiscal, and exchange rate policies) across the BRICS countries. His analysis indicates that while the Goldman Sachs report has stood the test of time and generated a movement toward economic cooperation among these nations, there are issues of heterogeneity among the constituent countries. Illustratively, in terms of economic size when measured as per GDP (at PPP) in 2017, as against a USD 23 trillion economy of China, India stood at USD 9.5 trillion, the sizes of Russia, Brazil, and South Africa stood at USD 4 trillion, USD 3.2 trillion, and USD 766 billion, respectively. There are differences in their underlying economic models as well. While Chinese growth seems to have been driven primarily by exports and investment, in case of India, growth momentum has been dominated by domestic consumption; for Russia and Brazil, coil and commodities played leading roles. Such differing economic models got reflected in their economic policy configuration. In foreign trade, while BRICS accounts for roughly 20% of global exports and 15% of global imports, China alone accounts for nearly 14% of global exports and 10% of global imports. Notwithstanding the establishment of the New Development Bank (popularly called the BRICS Bank) in 2015, he concludes that the Chinese dominance coupled with lack of any binding force of history, politics or shared identity could come in the way of effective emergence of BRICS as a block.

In dealing specifically with China’s and India’s economic performance after the financial crisis, Nagaraj notes that economic growth in China and India (together accounting for about 18% of global GDP in 2015) decelerated sharply after the financial crisis. As the export-led boom for both the economies ended in 2008, they are now faced with a severe demand constraint. China’s sustained rise in investment and decelerating output growth has led to a fall in productivity; India witnessed a sharp decline in investment demand. Both the countries are now saddled with bloated private corporate debt due to credit binge during the boom. Nagaraj feels that if China can avoid (potential) debt deflation and a bubble-like situation in the property market, reorient investment toward social infrastructure, and consumption, economic growth could possibly turn around. On the contrary, India probably needs to revive demand by stepping up public infrastructure investment to release critical supply bottlenecks, redirect bank credit for agriculture and small- and medium-sized enterprises to stimulate agriculture growth and labor-intensive manufacturing. China’s constraints to shift the policies appear more political-economic; India perhaps needs to reconfigure the fiscal rules for a more active role of the state in promoting investment. While there was recovery until 2011–2012 on account of monetary and fiscal stimulus, and resumption of capital inflows on account of the QE, with modest recovery of developed economies, the widely asked question is this: Can these giant domestic-oriented economies help revive global economic growth?

Achin Chakraborty and Simantini Mukhopadhyay look into a particular aspect of inclusive growth, namely inequality between groups, rather than interpersonal inequality. In the process, they reexamine some of the issues in the measurement of inter-group inequality and tried to relate changing interpersonal and inter-group inequality to the fact that some of these countries have been growing at a much faster rate compared to others in the developed world. They find that while in the 1970s and the 1980s Brazil was seen as a case of ‘un-aimed opulence’, since 1988 when Brazil made the transition to a regime of democratic governance, a number of radical pro-poor measures have been undertaken, which have had visible impacts on the overall inequality as well as inequality between the racial groups. In India, by contrast, overall inequality has increased in the past two decades, and the recent evidence suggests that the degree of inequality in the space of income and wealth is no less in India than that in China and the Latin American high-inequality countries. Brazil’s transition from ‘un-aimed opulence’ to a more inclusive approach based on active social policies can be a lesson for India, which is clearly faltering in the task of making the growth process inclusive. They note that while there are some similarities among the three countries — India, China, and Brazil — in their policies over the last 15 years (such as attaining macroeconomic stability associated with high growth and low inflation), there are big differences in the roles played by policies directly aimed at redistributing incomes. Looking more closely at their histories and policy regimes, they arrive at the conclusion that Brazil and India seem to have more in common with each other than with China.

In comparing inequality and poverty in India and Brazil since the early 1990’s, Sripad Motiram noted that while India has been one of the fastest growing countries in the world, disparities have increased on many dimensions and progress on the front of poverty reduction has been disappointing. While growth in Brazil has been less impressive, considerable progress has been made in the reduction of inequality and poverty. After documenting findings on inequality and poverty from India and Brazil, this chapter discusses the explanations for these findings. The chapter argues that a crucial difference between the two countries has been in the implementation of public policies, particularly policies oriented toward the social sector.

Anup Sinha in his chapter compares the performance of the five BRICS countries on three parameters of sustainable development, economic, social, and environmental growth. He concludes that the five countries vary, not just in terms of their geo-political and socio-cultural features, but also in terms of performance on sustainable development indicators. He considers studies of their performance on the basis of three indicators — basic needs, well-being, and opportunities — which reveal that Brazil is the best performer among the BRICS countries followed by Russia, China, and South Africa. India performs the worst on these parameters. The analysis reveals that per capita income and levels of development are closely linked to sustainable development in BRICS economies. China and India which face major challenges of increasing growth rates and lifting people out of poverty ignore environmental concerns, while relatively more prosperous countries like Brazil are more willing to make voluntary efforts to ensure more sustainable growth. He concludes that none of the BRICS economies is likely to target sustainable growth as a priority, since they are more preoccupied with increasing economic growth rates. This choice, he feels, is likely to have a domestic political impact in these countries, with those affected by the negative impact of maintaining high growth rates like to raise their voices and protest at the nature of economic policies.

Indrani Gupta and Samik Chowdhury consider Universal Health Coverage in the BRICS economies. They attribute improvements in universal health coverage to two factors — the time period for which health has been a priority sector for national governments and the level of public funding for health care. China and Brazil have significantly improved health coverage by increasing spending. China, however, has performed better than Brazil because it has focused on health care for a longer period of time and also devoted significant resources to improve universal health coverage. Though Brazil has significantly improved health coverage, focused attention and greater resources for health care is a more recent phenomena in Brazil, and this is reflected in much poorer health indicators when compared to China. Though Russia has benefited from the health care infrastructure created under Communist rule, significant improvement in health indicators has not been observed in recent years, when compared to resources invested. This, the authors feel, can be attributed to the lack of focus on health care reform during the transition from Communist to democratic rule. South Africa has also not been able to reduce differences in coverage between the rich white and relatively poorer black population in the country. This is again attributable to lack of sufficient funding and lack of targeted reform. The authors conclude that India, the worst performer among the five countries, can improve access to health care only by increasing funding and extensive reform of existing health care programs.

Saibal Ghosh has analyzed a particular aspect of inclusive growth, namely financial inclusion with particular reference to India. In a fairly detailed empirical analysis, Ghosh finds that at a broader plane, driven by manifold developments, including technological advancements, there has been a marked progress in financial inclusion in the BRICS that can be traced in both economic and structural factors. To examine financial inclusion in the BRICS countries, he takes three main indicators, viz., ownership of account at a financial institution, the saving behavior at a formal financial institution, and the use of bank credit. He finds that between 2011 and 2017, most of these measures have witnessed a discernible rise. Illustratively, 66% of Chinese individuals had a formal finance account in 2011, which increased to nearly 80% by 2014 and has remained at that level. Only 56% of individuals in Brazil and 54% in South Africa had a formal account in 2011, which increased by nearly 14 percentage points in both countries in 2017. The situation is very much different as regards the use of formal credit. Just around 14% of the individuals in Russia reported having obtained formal credit in the past year in 2017 (the highest in the sample), the global average being 11%. In India, only 7% of individuals borrowed from a financial institution in 2017, the lowest among the BRICS. In his econometric analysis, he finds that GDP per capita and domestic credit to private sector turn out to be significant determinants of access to formal finance.

In the final chapter of the volume, Aparajita Gangopadhyay considers the case of social programs in Brazil, particularly the Bolsa Familia program, a conditional cash transfer program, which is often held out as an example of successful government intervention to reduce inequality and improve health and education outcomes. She finds that though the amounts transferred are low, it has guaranteed a minimum quality of life for its recipients. However, it has not been successful at moving them out of poverty. She also points to a major factor that has enabled the program to continue despite the dominance of elites in the Brazilian political system. The amount of resources that is spent on these programs does not threaten the entitlements of the rich or the middle class, and this reduces elite opposition to such resource transfers. She concludes that unless the political system evolves to such an extent that this elite dominance of the Brazilian political system can be effectively countered, the future of these programs will always remain uncertain.

The chapters in this volume discuss different dimensions of the political economy, economic growth, and its inclusivity across various matrices. While being exuberant about the growth potential of these countries, all the chapters remain skeptical about two aspects of this growth process — the internal cohesiveness of BRICS as an economic and political bloc, and concerns regarding the inclusiveness of the growth process. How these five countries resolve their internal contraction in future years remains to be seen. Unless they address the various challenges described in the chapters, the effectiveness of BRICS as a bloc will be seriously constrained.