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The BRICS club (Brazil, Russia, India, China and South Africa), which used to be known for its tremendous growth potential, is today in the midst of severe economic and political woes. Apart from the Federal rate increase which has contributed to the mounting debt burden for these economies; falling global commodity prices have affected these emerging markets which rely heavily on export led growth.
The BRICS club (Brazil, Russia, India, China and South Africa), which used to be known for its tremendous growth potential, is today in the midst of severe economic and political woes. Apart from the Federal rate increase which has contributed to the mounting debt burden for these economies; falling global commodity prices have affected these emerging markets which rely heavily on export led growth.
Moreover, the structural transformation of China, which has been
the main driver of this group, from an export driven economy to a one
relying on domestic consumption, has added to the current woes of BRICS.
Among these economies, India is the only country which has shown signs
of strong potential for growth. It has largely benefited from being a
net importer of crude and other commodities whose prices have fallen and
also has the advantage of being less susceptible to the market
volatility as it is less dependent on exports for its growth. The share
of exports of goods and services in GDP in 2014 was 23.2% in India,
while that of Russia was 30% and South Africa was 31.3%.
Image: Reuters
India has the lowest per capita GDP of $5,238 among the other
members of the bloc and is also lagging behind the other BRICS economies
in terms of quality of life. However, economic reforms initiated by the
Indian Prime Minister Narendra Modi, have led to greater foreign
investments and improved economic competitiveness in recent times.
India’s ranking in the World Economic Forum’s, Global Competitiveness Report
improved from 71 in 2014 to 55 in 2015. Nevertheless, excluding Brazil,
all the other BRICS countries are still ranked higher than India in the
report.
In terms of social development, BRICS economies have shown a mixed
performance. In the Social Progress Index (SPI) developed by the Social
Progress Imperative, a nonprofit organization based in Washington,
Brazil (70.89) surpasses all the other member countries, followed by
South Africa (65.64), Russia (63.64), China (59.07) and India (53.06).
Meanwhile, Russia outperforms the rest of the economies in terms of
Basic Human Needs (Nutrition and basic medical care, Air, water and
sanitation, Shelter and Personal safety), Brazil leads the group on
Foundations of Wellbeing (Access to basic knowledge, Access to
information and communication, Health and wellness, and Ecosystem
sustainability) and Opportunity (Personal rights, Access to higher
education, Personal freedom and choice and Tolerance and inclusion)
dimensions of the SPI. India, which belongs to the group of low social
progress countries, falls behind the other BRICS countries in both Basic
Human Needs and Foundations of Wellbeing and only stays ahead of China
in the Opportunity dimension.
Further assessment of the SPI for the bloc shows that Personal
safety has been an area of concern in South Africa and Brazil. The
homicide rate, defined as deaths deliberately inflicted on a person by
another person, per 100,000 people, is 5 on a scale of 1-5 for both
countries. In contrast, China has the lowest homicide rate of 1.
Moreover, the rate of traffic deaths has been observed to be the
highest for South Africa, followed by Brazil. Areas such as Water,
Sanitation and Shelter have been challenging for India primarily due to
lack of access to piped water, improved sanitation facilities,
electricity and household air pollution. In addition to this, India has
about 15% of its population which is undernourished, as compared to
Brazil, Russia and South Africa which have only 5% undernourished
people.
Maternal mortality rate and child mortality rates are also very
high in India relative to the others in the group. On the front of
health and wellness, South Africa has the lowest life expectancy for its
population (56.1) and China has the highest (75.2). Another major
aspect of a nation’s wellbeing is its environmental sustainability,
which could be measured by its amount of greenhouse gas emissions.
China, Russia and South Africa have high content of greenhouse gas
emissions relative to Brazil and India.
On the dimension of Education, Russia has the highest adult
literacy rate of 99.7%, while India lags behind with 71.2%. Moreover,
India sees the highest inequality in education among the other BRICS
economies. The average number of years of school attended by women
between the age group of 25-35 years is as low as 5.6 compared to Russia
(13.8) and South Africa (10.4). Another major aspect which is crucial
to a nation’s prosperity is Tolerance and inclusion. While, India shows a
weak performance on this front compared to other countries, it stays
far ahead of China and Russia on personal rights such as political
rights, private property rights and the like.
Thus, while the BRICS countries (except for India) have shared a
common economic downturn in recent times, their social environments are
diverse in several respects. A cross country comparison for the BRICS
shows that economic progress alone may not necessarily translate into a
higher quality of life for these economies. The chart below shows that
countries such as Brazil and South Africa, which lag behind Russia in
GDP per capita, are socially more progressive. In 2015, Russia (GDP per
capita of $23,564) had a SPI score of 63.64, while Brazil (GDP per
capita of $14,555) and South Africa (GDP per capita of $12,106) had SPI
scores of 70.89 and 65.64, respectively. Similar trends between GDP per
capita and SPI have been found also outside the BRICS club, in countries
such as the US, which has been ranked 16 for social progress. Countries
such as UAE, Kuwait and Saudi Arabia have also achieved a low social
progress score compared to their level of GDP per capita.
Image: socialprogressimperative.org
Since social progress of a nation may also affect its economic
prosperity, it is crucial for nations to undertake measures in the
social spheres in which they are lagging behind. While India still needs
to invest its resources in meeting its basic human needs, countries
such as China and Russia need to bring about institutional changes that
could protect the rights and freedom of its people. The bloc needs to
address environmental issues by building energy efficient technologies
that could lead to the path of sustainable development. Among the BRICS
economies, South Africa, China and Russia should lay greater emphasis on
policy dialogues to reduce the extent of their greenhouse gas
emissions. In addition to this, South Africa and Brazil should focus on
ensuring personal safety to its people. Greater government support
through increased spending on social sectors or though policy changes
may promote social development and protect the falling BRICS.
A measure in this direction has been taken up by the Brazilian
economy through a construction of SPI for its Amazon region, which
covers 772 municipalities and nine states. The region has been marked
down for social development compared to other regions of Brazil,
primarily due to activities such as deforestation, leading to depletion
of natural resources. Such sub-national level initiatives can play a
pivotal role in fostering social progress, through identification of
specific communities where a country is falling behind, and assist in
designing development models targeting the social or environmental
progress of these regions.
Read original article here: HERE
A new link here about the economic model
Read original article here: HERE
A new link here about the economic model
