Way back in November 2001, Goldman Sachs published a report looking at economic development in major growing economies around the world. It was titled ‘Building Better Global Economic BRICs’ and was written by the then Head of Global Economics Research (and now a member of the House of Lords) Jim O’Neill.
The paper emphasised the need to recognise the changing nature of the international economic order. It looked at bringing emerging economies further into both the economic conversation and international finance policy decision-making processes.
Using projected GDP figures, O’Neil suggested that by 2050, Brazil, Russia, India and China were to become some of the world’s dominant economies, overtaking many in the current G7. The concept of BRICs was born.
In 2009, the respective countries took this framework and established a formal, intergovernmental platform that would see the countries work closely together and hold annual BRICs summits. They also agreed that South Africa should be included in the forum, becoming the BRICS we now know.
Over time the term BRICS has been used widely in financial, political, economic and academic circles, a useful short-hand for the economic order of the future. Other organisations have also taken the framework and expanded upon it further.
Below we’ll look at the countries individually and see why they are projected to be world leaders in the next 25 years.
(On a side note- the order of the BRICS acronym doesn’t denote any future hierarchy of economic size.)
Today Brazil leads the middle of the pack when it comes to global economies, however, by 2050 it’s predicted to be the world’s fifth largest economy. The country experienced fast growth and increased direct foreign investment for a number of years before Covid and therefore rightly earned its place as one of the key future economies.
Brazil is physically one of the world’s largest countries, it is the fifth biggest sitting behind the USA but ahead of Australia (in terms of landmass.)
Brazil has a high population density in its cities but low density, fertile land outside, making the country perfect home for global agriculture which plays a major role in the country’s economy
Brazil benefits from being home to an abundance of natural resources from Iron Ore to farmable land.
It also has high levels of entrepreneurship and a relatively young population sitting at just 31 years old.
Right now, the country is in the midst of a deep recession and is facing profound effects from a disproportionally high Covid death rate. It’s also facing the international cold shoulder due to government policies that seem to encourage deforestation in the Amazon which is only making the effects of climate change worse.
Brazil’s economic future and growth are highly dependent on two key things a) structural reforms and b) further integration into the international trading system.
From the tax system being overly complex to uncompetitive import/export tariffs, Brazil will only realise its high potential if major change is undertaken in the coming years.
When looking at Russia, it is important to remember that the BRICs report was written in the early 2000s when Putin had only been in office for a couple of years and Russia was looking like it was on its way to becoming another European-style capitalist western democracy.
Russia’s growth was based on being home to considerable untapped potential, due to a huge lack of investment and development in the preceding decades during the collapse of the Soviet Union.
Russia is home to unparalleled natural resources, hundreds of thousands of miles of potentially farmable land, diamond mines, natural gas reserves and literal Gold.
Unfortunately, Russia’s path in the last fifteen years has dramatically swerved from the road most people expected them to go down. It has become what many call a ‘kleptocracy’ with wealth being stolen and held abroad and even once thriving industries under-developed and left to fallow.
The recent war in Ukraine has further isolated Russia from the international economy and the dramatic planned shift of European economies away from buying Russian products like gas and oil means Russia’s economic future is in peril.
It’s too early to tell now whether Russia is now still on course to be a world-leading economy.
Most people know that India is a huge country, but many fail to realise just how big. India’s population is virtually the same size as China with over 1.38 billion citizens, compared with 1.44 billion in China. It also contains 1.27 million square miles making it one of the world’s top 10 countries by physical size.
Experts expect that within the next 10 years, the population of India will overtake China and that by 2050, India will be the world’s number two economy, pushing the US into third place. Much of this is due to India’s natural resources, domestic labour market and entrepreneurial spirit.
One of India’s key advantages is its relatively young population, over 50% are under the age of 25 and the nation has a median age of just 28. India also has a thriving middle class and benefits from having a population with large numbers of English as a second language speakers.
In recent years India has experienced astronomic growth at nearly 10% YoY at times and is also home to a thriving science and technology sector which will only serve to benefit the country in the future.
The country also benefits from being a thriving multiparty democracy which endears it to the West more than some of its rival nations.
Without doubt, China is the world’s economic powerhouse.
If you use GDP with PPP (Purchasing Power Parity) taken into account, it’s the world’s number one economy and has been for a number of years now.
Within the next couple of years, it’s expected to overtake the US in real-term GDP as well.
China benefits from a gigantic population led by a government committed to economic growth and are laser-focused on getting to that number one spot.
China is a manufacturing giant, there is not much that the country doesn’t produce and export. There’s also not one country that the country doesn’t have trading relations with. You can find Chinese products in as diverse places as North Korea, Malawi, Sweden and Canada. Most countries have China as one of their principle trading partners.
The country’s population is one of the world’s most productive and is the world’s most populous with over 1.3 billion people.
Most experts don’t doubt that China will be the leading economy, however, it has a number of challenges coming in the next few decades. Many other emerging economies are now competing with China in the manufacturing space, able to produce quicker and cheaper at the same time as the domestic Chinese population grow in their expectations of living and working standards. They may find they are challenged domestically by demands for high wages whilst simultaneously being challenged internationally by countries who can offer to produce quicker and cheaper.
As mentioned at the start of this article, South Africa was never originally part of the BRICs theoretical concept. South Africa became a part of the grouping in 2010 following huge support from China.
The move to admit South Africa was not without controversy.
South Africa is currently around 30th in the global economic rankings and on many lists and studies doesn’t feature as a future economic powerhouse.
Many have speculated that admitting South Africa was more politics than economics.
Including an African nation gives the BRICS forum an even stronger case to claim to be more representative of the world’s population than the G7 and other western dominated international groupings.
There is no doubt that South Africa is a powerhouse in Africa (alongside Nigeria), with a young and entrepreneurial population, it is set to climb the world rankings of economic power. However, they will be challenged to compete with the other BRICS nations.
South Africa has a population of 59.3 million and a size of 471,000 square miles.
To compare populations, China has 1.4 billion, India 1.3 billion, Brazil 213 million and Russia 146 million.
Comparing geographical areas, China has 3.7 million square miles, Russia 17.9 million, India 3.2 million and Brazil 8.5 million.
Simply put, South Africa has nowhere near the geographic and population sizes of its fellow BRICS nations and will struggle on this simple fact alone. It will also face stiff competition on the African continent from both Nigeria and Ethiopia who are simultaneously positing themselves as key economic hubs and gateways to the wider African continent.