x Abu Dhabi, UAETuesday 23 January 2018

No matter how you look at it, there's a BRIC out of place

I never really "got" the concept of the BRICs, it just seemed like a catchy marketing gimmick designed to get bankers and businessmen thinking more about international investment.

I never really "got" the concept of the BRICs. When the term was first coined 10 years ago by Jim O'Neill, the global economist at Goldman Sachs, it just seemed like a catchy marketing gimmick, in the spirit of globalisation, designed to get bankers and businessmen thinking more about international investment. It usurped the position held for a long time by the phrase "emerging markets", which was also aimed at getting businessmen off their Euro-centric backsides to actually see some of the markets where they did business.

The BRICs - Brazil, Russia, India and China, as Mr O'Neill defined them - were rather more specific than the emerging markets, which was basically anywhere south of the Rio Grande and east of the Volga. Mr O'Neill, in a cute little bit of spin, unified them with the prediction that by 2050 or some other future date (the target has changed constantly) they would overtake the other big economies in terms of industrial output.

Now Mr O'Neill makes grander claims for his concept. "It has transformed my life," he said in a recent interview. "I really believe this idea can make the world a better place." I'm sure the renown that has gone with the concept has made his world a better place, and maybe he's right that these four big countries will surpass the creaking old economies of Europe and North America, especially in a world transformed by the financial crisis.

But what bothers me is the artificiality of the grouping. Whichever way you look at it, at least one of them turns out to be an exception; an odd man out. I guess what first worried me was the B, for Brazil. The other three shared some geographical contiguity and Asian identity, but Brazil was out on its own, on the slightly crazy and chaotic continent of South America. It satisfied the other criteria, such as having a big population and vast untapped economic potential, but then so does its neighbour, Argentina, so why not include them? BRAICS? It just doesn't have the same ring.

Then there's the R for Russia. OK, big population (though also the fastest declining of any major country), huge untapped natural resources, underdeveloped consumer market, like the others. But it is also weighed down by the Soviet legacy of inefficiency, bureaucracy and pollution. It remains, to adapt Churchill, a riddle, wrapped in a mystery, inside a web of systemic corruption. I for India. The oldest liberal democracy of the four, with not much in the way of natural resources, but with an enormous and entrepreneurial domestic market just waiting to stock up on the fruits of 21st century consumerism.

I suppose it qualifies as a BRIC on those latter grounds, but to join the ranks of the economic super powers India has to overcome two big problems: that which is euphemistically called the "infrastructure deficit", and the absence of centrally directed strategy that goes with being the world's biggest democracy. And finally C for China. The Middle Kingdom, what the Chinese call China when they don't call it the Peoples' Republic, really is the dynamo of the BRIC bloc (excuse the pun).

The most populous country in the world, huge consumer market, hard-working, hard-saving, entrepreneurial people and dynamic rates of growth. China is the BRICs' best hope, just as it has been the engine that has dragged the rest of the world out of recession. But as a succession of people have found, from Rio Tinto to Google to US exchange rate policymakers, it is not the easiest place for the rest of the world to do business.

China has the potential to become the world's leading economic power, but does not need membership of the BRIC club to achieve that. It can do it on its own terms and in its own interests. So I'm not sure I can see what really unites the BRIC countries. Their leaders recently met for the first time in the Russian city of Yekaterinburg and agreed to meet more regularly, but it's hard to see how their diverse, sometimes contradictory interests can have a common purpose.

Whether on financial issues, or energy matters, or labour markets, each has its own unique circumstances. And any one of them could drop out of the BRIC club at virtually any time. Brazil lapses back into Latin American anarchy? Russia becomes embroiled in some horrendous and expensive conflict in Central Asia? India and China go to war over their disputed northern border? All are possibilities that could negate the BRIC concept at a stroke.

I don't want any of those things to happen. Having visited all of the BRIC countries, I appreciate their contribution to the global economy and wish them peace and prosperity. But let's not get too carried away with the marketing slogans. @Email:fkane@thenational.ae