Читать книгу The Political Economy of the BRICS Countries - Группа авторов - Страница 15

Identifying initial growth paths for the five countries that comprise BRICS can be difficult given their diverse histories. However, it is relatively easier to establish the dates of regime changes that led to significant changes in growth policies that impact the nature and quality of economic growth at present. India and China gained the ability to develop autarkic development policy in the 1940s — India when it gained independence from Britain in 1947 and China when the Communist Party captured power in 1949. Democratic governments were established in Brazil in 1985, in Russia in 1991, and in South Africa in 1994. Economic policy under new regimes in all five countries were designed with the objective of achieving rapid and equitable economic growth. However, the outcome of policy has been varied, and these could be traced back to the initial growth strategies adopted by these five countries.

India and China demonstrate most vividly how differences in initial growth paths can affect the nature and quality of long-term economic growth. Both were predominantly agrarian economies with an abundance of agricultural labor as well as a rapidly growing population. Both countries realized that the long-term challenge was to develop both agriculture as well as industries that would absorb the surplus labor which was unemployed or underemployed in agriculture. However, differences in political ideologies played a key role in the two countries choosing differing paths to achieve the same economic objectives. China under the Chinese Communist Party placed considerable emphasis on effective land reform and rural development through workers communes. The landlords and ‘middle peasants’ were almost completely eliminated, and their land distributed among landless laborers. The land was farmed by agricultural communes which, at least in the initial decade, addressed some of the critical problems that China faced. Collective land ownership by the communes, an effective taxation system, local mechanisms to share agricultural machinery, development of irrigation systems, and the setting up of rural banks were all critical in substantially increasing agricultural production in China in the late 1940s and early 1950s (Studwell, 2013: 14–16). However, it was not just in agricultural production that the communes played a positive developmental role. They ensured limited industrialization within the commune and provided basic health care, education, and food security (Saith, 2008: 735). The significant progress that China achieved in literacy levels, life expectancy, and other social indicators of development can be traced back to the development of communes which provided basic social security and created the conditions for later social and economic development. Significant poverty reduction had happened by the time the Chinese economy began to liberalize in the 1980s (Bardhan, 2006: 2). The high levels of literacy and life expectancy also laid the foundations of rapid economic growth and industrialization from the 1980s onward, when China abolished the communes, allowed private ownership of land, and liberalized foreign investment. The roots of the ‘Chinese miracle’ after Deng Xiao Ping opened up the Chinese economy in 1978 is traceable to policy in the late 1940s and early 1950s.

It needs to be recognized that China’s initial path to economic development was the consequence of a revolution in China that brought a Communist Party, committed to elimination of landlordism and capitalist modes of production, to power. China’s relative homogeneity, provided by the dominance of the Han Chinese in its population, also ensured domestic stability (Saith, 2008: 726). In India, by contrast, the government that came to power in 1947, though democratic and socialist in orientation, was dominated by urban elites, indigenous industrialists, and rural landowners. It placed greater emphasis on developing agriculture by incentivizing higher levels of production within existing rural land-ownership structures and in rapid industrialization through a process of planned economic development (Patnaik, 2000). The economy was also affected by violence that accompanied the partition of the sub-continent into two states, India and Pakistan. Land reform measures, though enacted were never implemented, except in a few regions, because of strong organized resistance from rural landlords who were often local leaders of the ruling Congress Party (Kaviraj, 2000: 50). Lack of access to economic resources meant that the vast majority of rural landless peasants were dependent on the rural landowning classes for their survival. This dependence reduced their ability to influence government policy through the democratic political process. It is ironic that this failure of government to ensure basic levels of social security and economic empowerment happened in a liberal democracy which held regular elections, and relatively greater success was achieved in China under a Communist regime that was not faced with the prospect of loss of power through democratic processes.

Brazil and South Africa transitioned to democratic governments under conditions that were far more peaceful and orderly than either India or China. However, initial economic policies in both countries were unsuccessful in laying the foundations of strong, inclusive growth. The 1985 transition to a democratic government in Brazil happened in the midst of an economic crisis. Military governments which had ruled Brazil between 1964 and 1985 had ensured rapid economic growth in the 1967–1973 period. However, when growth slowed as a consequence of the oil price shock of 1973 the government responded by resorting to heavy borrowing abroad. This contributed to a debt crisis and a decline in economic growth in the 1980s that finally forced the military to hand over power to a civilian democratic government. The restoration of democratic government posed unique challenges to Brazilian policymakers. Groups that felt alienated from the government under military rule began to demand greater resources and attention, and in a democratic environment, this led to populist responses (Kingstone, 2009: 108). ‘Social inclusion’ of groups that had been marginalized under military government was given priority over stable economic growth (Alston et al., 2016: 208). The use of economic stabilization plans for garnering greater political support was successful electorally for the ruling party in mid-term elections in 1987, but it had a catastrophic impact on the economy with inflation touching astronomical levels by the end of the 1980s. The government began to monetize fiscal deficits to fulfil populist promises, and by the early 1990s annual inflation rates was 3,000% (Sweetwood, 2002: 54–56). It required a period of economic austerity and the ‘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.

The nature of transition from apartheid government to a stable democracy in 1994 marked South Africa as one of the few countries that had managed change peacefully. While economic inequalities brought about by apartheid policies had impoverished large sections of the black population in South Africa, the newly democratic country had the benefit of strong institutions, such as an independent judiciary, an efficient civil service, and a modern industry with good infrastructure. However, what it lacked was good local-level ‘micro-institutions’ that could convert political freedom to economic opportunity. While good macroeconomic management stabilized the economy, it was not accompanied by a push for economic and social development in black townships. This failure was partly the consequence of a leadership vacuum that was created in black townships when many of the more capable local workers and activists left the townships to take up jobs in the provincial and national governments (Mangcu, 2012: 482). The focus of the national government was more at the macro-level on the policy of Black Economic Empowerment (BEE) meant to give the black population a share in ownership of firms and employment. This increased the representation of blacks at top levels of enterprises, but, in the absence of significant investments in education, did little to secure stable and well-paying jobs for black workers (Horwitz and Jain, 2011).

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).