Читать книгу The Political Economy of the BRICS Countries - Группа авторов - Страница 16

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.

The Global Inequality Report which tracks inequality around the world by measuring the percentage of national income accruing to the top 10% of the population of each country ranks BRICS countries as being among the most unequal in the world. In India and Brazil, the top 10% get 55% of total national income. In Russia, it is 46% and in China 41% (World Inequality Lab, 2018: 9). In South Africa, the top 10% accounted for 66% of national income (World Inequalities Report, 2018: 146). All five countries have seen this disparity increase since 1990. The growth in inequality comes despite the fact that three of these countries, India, South Africa, and Brazil, have programs specifically aimed at more inclusive growth and a more equitable distribution of national wealth. Equality is one of the core tenets of the ruling Communist Party in China. Russia too sees reduction of inequality as a policy goal and has reformed its wage regulation to ensure greater distribution of wealth (World Economic Forum, 2017).

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).

South Africa reflects a similar pattern. Efforts to remove inequalities in growth inherited from the apartheid government have been hampered by inefficiencies in implementation of equitable growth policies and also by lack of resources. When the new democratic government came to power in South Africa in 1994, it had the task of reducing inequalities in a country that was deeply divided, not just economically but also spatially. The black townships were separated from white areas, and these townships lacked the basic resources and infrastructure needed to ensure a basic minimum standard of living. Thus, the problem of equitable development was not just related to equitable distribution of wealth but also to balanced development of regions which had developed unequally (McDonald and Piesse, 1999). However, equitable growth policies that were enacted by the government primarily focused on overcoming inequalities brought about by decades of white apartheid government by bringing more blacks into employment and firm ownership through the BEE program. The Broad-Based Black Economic Empowerment (BBBEE) legislation emphasized black participation in ownership and management, increasing the number of blacks in the workforce and increasing indirect benefits to the black population through preferences in procurement contracts and enterprise development (Horwitz and Jain, 2011: 302). What was required, but was lacking, was greater investment in sectors that would have increased productivity in the economy, such as education and health care, better physical infrastructure, and access by providing rural workers with access to productive land. South Africa continues to perform very poorly in most socio-economic indicators. Income inequality remains high, with 60% of the population taking in 10% of national income. Lack of access to basic education hampers access to higher education, with only 1.5% of the population having a degree in 2012. Land distribution remains skewed, with 8% of the population owning 70% of the land, after almost two decades of post-apartheid governments (Omilola and Akanabi, 2014: 566). Poverty continues to remain widespread, with inequality hindering poverty reduction efforts across South Africa (Barros and Gupta, 2017: 29).

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 (69%) and child mortality (71%) among the BRICS countries (Mujica et al., 2014: 406).

This divergence from other BRICS countries is not surprising given significant shifts in political power that occurred in Brazil since 2000. The government of President Luiz Inácio Lula da Silva of the Brazilian Workers Party, which came to power in 2003, was left-wing in orientation. It laid considerable stress on reducing income inequality and implemented income transfer schemes to help poor Brazilians get access to health care and education. Brazil also spends about 23.7% of its GDP on direct transfers, pensions, education, and health (Lustig, 2016: 26), one of the highest among BRICS countries, and the impact of this is reflected in sharp improvements in socio-economic indicators that Brazil has demonstrated.

The income transfer schemes of the Brazilian government had two significant effects on the quality of economic growth. Some of the schemes, such as the Bolsa Famila scheme, were conditional transfer schemes which meant that the money transferred was used only for intended objectives — to ensure that expectant mothers visited antenatal clinics regularly and ensured that their children were properly vaccinated and attended school regularly. Other schemes such as the Continued Provision Benefits were unconditional transfer schemes which increased purchasing power among the poor. There is evidence to prove that such transfers led to increased private sector investment in underdeveloped regions of Brazil, particularly the North-East (Limoeiro, 2015). Brazil under the Workers Party government provides evidence, just as the Chinese case in the late 1940s and early 1950s, that targeted government intervention can have a significant positive impact on income equality and socio-economic development. However, as the experience of China demonstrates, such interventions can lose momentum as a result of significant changes in government policy leading to a reversal of policy gains.

China, despite its significant achievements in poverty reduction, gender equality, health care, and education, has experienced higher levels of inequality since beginning the process of liberalization and opening of its economy to Foreign Direct Investment (FDI). Household income inequalities have increased to levels which are considered ‘moderately high’ by international standards (Li and Sicular, 2014: 35). The disparities increased after the government established control after the Tiananmen Square uprising and focused on achieving rapid economic growth. Rising prosperity was not equally shared, and a society that was once largely egalitarian in character began to experience higher levels of inequality comparable to many of its East Asian neighbors. The increase in disparities was largely brought about by price reforms which increased costs to consumers. Reduction of government funding for health care and education, and introduction of user fees and higher charges has meant increasing disparity in access to them, especially in rural regions (Saith, 2008: 749). A second factor was the shift from a focus on agriculture to development of industries both through support for state-owned enterprises and FDI-led coastal industrial development. These coastal provinces were given benefits by way of tax concessions, regional autonomy, and the right to lease and sell land to foreign nations (Yao and Zhu, 1998: 146–148). The coastal development policies and the opening up to FDI in the 1990s led to mass migration of workers from rural to urban coastal cities, leading to greater inter-provincial inequalities in growth (Wei, 1999: 51). Inland regions were not given similar benefits. Provinces which are open to international trade and have seen increases in investment have also seen increases in income inequality (Chen, 2015).

Russia experienced a period of rapid economic growth after recovering from the initial phase of economic and social disruption caused by the collapse of the Soviet Union. This enabled the country to reduce poverty, which had sharply increased during the initial phase of the transition. However, one of the major problems that Russia has faced in ensuring greater equity in growth outcomes has been persistent, and increasing, income inequality (Benini and Czyzewski, 2007: 131–36). This makes poverty reduction and improvement in other social indicators dependent on government social sector spending. High commodity prices since 2000 helped the Russian government to increase spending on ‘populist’ social welfare programs aimed at increasing domestic political support. However, income inequality has increased, and in recent years when economic recession has forced cutbacks in government spending, there has been an increase in people living below the poverty line (Popova et al., 2018: 3). Wealth inequality has also increased quite substantially with levels of concentration of wealth increasing between 1995 and 2015 (Novokmet et al., 2017: 39). The share of national income of the top 50% of the population has increased to over 80% today from 70% in 1989. The share of the top 1% has increased to 45% (World Inequalities Report, 2018: 113).