‘BRIC’ countries unable to pass 2011 exam
Not long ago, almost everybody was talking about the miraculous economic progress in Brazil, Russia, India and China. This group of countries (called the “BRIC” in short) implemented rational policies that made them the most successful examples among emerging economies.
Their high growth rates, low inflation, brilliant export performances, huge foreign exchange reserves, minimal unemployment and large financial institutions made even rich countries jealous. In Turkey, people frequently wondered why the performance of their national economy could not reach the level of these countries even though all of Turkey’s macroeconomic figures were brighter years ago.
When the 2008 crisis began to hurt highly developed Western countries, especially in Europe, most of the politicians, business people and even some academics, hoped that the high economic performances of the new powerhouses of the world economy would contribute considerably to the salvation of Western governments. This wishful thinking finally collapsed in 2011. It is now clear that even the total economic potential of those countries could not create an effective leverage effect to save the world economy.
There were various reasons for that exaggerated optimism and subsequent disappointment. For example, the social and political situation in these countries was not discussed thoroughly. People who envied their economic performances preferred not to see their social and political conditions.
Why could some of the wise people in the Western world not comprehend that despite the low wages, lack of trade unions, wide use of child labor, lack of respect for copyrights and patent rights and many other similar issues, the emerging economies still could not achieve a high growth rate when Western economies were in trouble? The reason is obvious: Western economies are their biggest markets. If the total demand in those markets is weak, their growth potential also weakens.
In addition, new problems are emerging in those countries. For example, the inflationary effects of the stimulus program implemented in order to prevent the damage of the recent crisis will surely become the main concern of the new Chinese leader after the Chinese transfer of power in 2012. Besides foreign policy problems and its indecisive government, India also now faces slowing foreign investments and growth. This year, Russia has presidential elections, which will again mean that much social and economic energy will be consumed by discussions about the transfer of political power. Although its growth has slowed recently, Brazil has no such complex political problems, but it also doesn’t have enough power to contribute to the salvation of the world economy.
However, even if these emerging economies find a way to grow at the same pace and solve their political problems, their combined economic potential is not enough to help the Western world. So, who failed the 2011 exam? Hopeful Westerners, or proud but uneasy BRIC countries? Maybe both of them.
In short, if a worldwide crisis is still going on, an individual country or a small group of countries cannot even help themselves by crippling the social and political structure in order to create miraculous economic performance. And it is impossible to become a powerhouse of the world economy by depending only on brilliant economic performance.