Broken BRICs. Why the Rest Stopped Rising

Transcription

1 Home International Editions Digital Newsstand Job Board Account Management RSS Newsletters SEARCH Broken BRICs Why the Rest Stopped Rising By Ruchir Sharma November/December 2012 Article Summary and Author Biography Login Register (0) My Cart Over the past several years, the most talked-about trend in the global economy has been the so-called rise of the rest, which saw the economies of many developing countries swiftly converging with those of their more developed peers. The primary engines behind this phenomenon were the four major emerging-market countries, known as the BRICs: Brazil, Russia, India, and China. The world was witnessing a once-in-a-lifetime shift, the argument went, in which the major players in the developing world were catching up to or even surpassing their counterparts in the developed world. These forecasts typically took the developing world's high growth rates from the middle of the last decade and extended them straight into the future, juxtaposing them against predicted sluggish growth in the United States and other advanced industrial countries. Such exercises supposedly proved that, for example, China was on the verge of overtaking the United States as the world's largest economy-a point that Americans clearly took to heart, as over 50 percent of them, according to a Gallup poll conducted this year, said they think that China is already the world's "leading" economy, even though the U.S. economy is still more than twice as large (and with a per capita income seven times as high). As with previous straight-line projections of economic trends, however-such as forecasts in the 1980s that Japan would soon be number one economically-later returns are throwing cold water on the extravagant predictions. With the world economy heading for its worst year since 2009, Chinese growth is slowing sharply, from double digits down to seven percent or even less. And the rest of the BRICs are tumbling, too: since 2008, Brazil's annual

2 growth has dropped from 4.5 percent to two percent; Russia's, from seven percent to 3.5 percent; and India's, from nine percent to six percent. None of this should be surprising, because it is hard to sustain rapid growth for more than a decade. The unusual circumstances of the last decade made it look easy: coming off the crisis-ridden 1990s and fueled by a global flood of easy money, the emerging markets took off in a mass upward swing that made virtually every economy a winner. By 2007, when only three countries in the world suffered negative growth, recessions had all but disappeared from the international scene. But now, there is a lot less foreign money flowing into emerging markets. The global economy is returning to its normal state of churn, with many laggards and just a few winners rising in unexpected places. The implications of this shift are striking, because economic momentum is power, and thus the flow of money to rising stars will reshape the global balance of power. FOREVER EMERGING The notion of wide-ranging convergence between the developing and the developed worlds is a myth. Of the roughly 180 countries in the world tracked by the International Monetary Fund, only 35 are developed. The markets of the rest are emerging-and most of them have been emerging for many decades and will continue to do so for many more. The Harvard economist Dani Rodrik captures this reality well. He has shown that before 2000, the performance of the emerging markets as a whole did not converge with that of the developed world at all. In fact, the per capita income gap between the advanced and the developing economies steadily widened from 1950 until There were a few pockets of countries that did catch up with the West, but they were limited to oil states in the Gulf, the nations of southern Europe after World War II, and the economic "tigers" of East Asia. It was only after 2000 that the emerging markets as a whole started to catch up; nevertheless, as of 2011, the difference in per capita incomes between the rich and the developing nations was back to where it was in the 1950s. This is not a negative read on emerging markets so much as it is simple historical reality. Over the course of any given decade since 1950, on average, only a third of the emerging markets have been able to grow at an annual rate of five percent or more. Less than one-fourth have kept up that pace for two decades, and one-tenth, for three decades. Only Malaysia, Singapore, South Korea, Taiwan, Thailand, and Hong Kong have maintained this growth rate for four decades. So even before the current signs of a slowdown in the BRICs, the odds were against Brazil experiencing a full decade of growth above five percent, or Russia, its second in a row. Meanwhile, scores of emerging markets have failed to gain any momentum for sustained growth, and still others have seen their progress stall after reaching middle-income status. Malaysia and Thailand appeared to be on course to emerge as rich countries until crony capitalism, excessive debts, and overpriced currencies caused the Asian financial meltdown of Their growth has disappointed ever since. In the late 1960s, Burma (now officially called Myanmar), the Philippines, and Sri Lanka were billed as the next Asian tigers, only to falter badly well before they could even reach the middle-class average income of about $5,000 in current dollar terms. Failure to sustain growth has been the general rule, and that rule is likely to reassert itself in the coming decade. In the opening decade of the twenty-first century, emerging markets became such a celebrated pillar of the global economy that it is easy to forget how new the concept of emerging markets is in the financial world. The first coming of the emerging markets dates to the mid-1980s, when Wall Street started tracking them as a distinct asset class. Initially labeled as "exotic," many emerging-market countries were then opening up their stock markets to foreigners for the first time: Taiwan opened its up in 1991; India, in 1992; South Korea, in 1993; and Russia, in Foreign investors rushed in, unleashing a 600 percent boom in emerging-market stock prices (measured in dollar terms) between 1987 and Over this period, the amount of money invested in emerging markets rose from less than one percent to nearly eight percent of the global stock-market total. This phase ended with the economic crises that struck from Mexico to Turkey between 1994 and The stock markets of developing countries lost almost half their value and shrank to four percent of the global total. From 1987 to 2002, developing countries' share of global GDP actually fell, from 23 percent to 20 percent. The exception was China, which saw its share double, to 4.5 percent. The story of the hot emerging markets, in other words, was really about one country. The second coming began with the global boom in 2003, when emerging markets really started to take off as a group. Their share of global GDP began a rapid climb, from 20 percent to the 34 percent that they represent today (attributable in part to the rising value of their currencies), and their share of the global stock-market total rose from less than four percent to more than ten percent. The huge losses suffered during the global financial crash of 2008 were mostly recovered in 2009, but since then, it has been slow going.

3 The third coming, an era that will be defined by moderate growth in the developing world, the return of the boom-bust cycle, and the breakup of herd behavior on the part of emerging-market countries, is just beginning. Without the easy money and the blue-sky optimism that fueled investment in the last decade, the stock markets of developing countries are likely to deliver more measured and uneven returns. Gains that averaged 37 percent a year between 2003 and 2007 are likely to slow to, at best, ten percent over the coming decade, as earnings growth and exchange-rate values in large emerging markets have limited scope for additional improvement after last decade's strong performance. PAST ITS SELL-BY DATE No idea has done more to muddle thinking about the global economy than that of the BRICs. Other than being the largest economies in their respective regions, the big four emerging markets never had much in common. They generate growth in different and often competing ways-brazil and Russia, for example, are major energy producers that benefit from high energy prices, whereas India, as a major energy consumer, suffers from them. Except in highly unusual circumstances, such as those of the last decade, they are unlikely to grow in unison. China apart, they have limited trade ties with one another, and they have few political or foreign policy interests in common. A problem with thinking in acronyms is that once one catches on, it tends to lock analysts into a worldview that may soon be outdated. In recent years, Russia's economy and stock market have been among the weakest of the emerging markets, dominated by an oil-rich class of billionaires whose assets equal 20 percent of GDP, by far the largest share held by the superrich in any major economy. Although deeply out of balance, Russia remains a member of the BRICs, if only because the term sounds better with an R. Whether or not pundits continue using the acronym, sensible analysts and investors need to stay flexible; historically, flashy countries that grow at five percent or more for a decade -- such as Venezuela in the 1950s, Pakistan in the 1960s, or Iraq in the 1970s -- are usually tripped up by one threat or another (war, financial crisis, complacency, bad leadership) before they can post a second decade of strong growth. The current fad in economic forecasting is to project so far into the future that no one will be around to hold you accountable. This approach looks back to, say, the seventeenth century, when China and India accounted for perhaps half of global GDP, and then forward to a coming "Asian century," in which such preeminence is reasserted. In fact, the longest period over which one can find clear patterns in the global economic cycle is around a decade. The typical business cycle lasts about five years, from the bottom of one downturn to the bottom of the next, and most practical investors limit their perspectives to one or two business cycles. Beyond that, forecasts are often rendered obsolete by the unanticipated appearance of new competitors, new political environments, or new technologies. Most CEOs and major investors still limit their strategic visions to three, five, or at most seven years, and they judge results on the same time frame. THE NEW AND OLD ECONOMIC ORDER In the decade to come, the United States, Europe, and Japan are likely to grow slowly. Their sluggishness, however, will look less worrisome compared with the even bigger story in the global economy, which will be the three to four percent slowdown in China, which is already under way, with a possibly deeper slowdown in store as the economy continues to mature. China's population is simply too big and aging too quickly for its economy to continue growing as rapidly as it has. With over 50 percent of its people now living in cities, China is nearing what economists call "the Lewis turning point": the point at which a country's surplus labor from rural areas has been largely exhausted. This is the result of both heavy migration to cities over the past two decades and the shrinking work force that the one-child policy has produced. In due time, the sense of many Americans today that Asian juggernauts are swiftly overtaking the U.S. economy will be remembered as one of the country's periodic bouts of paranoia, akin to the hype that accompanied Japan's ascent in the 1980s. As growth slows in China and in the advanced industrial world, these countries will buy less from their exportdriven counterparts, such as Brazil, Malaysia, Mexico, Russia, and Taiwan. During the boom of the last decade, the average trade balance in emerging markets nearly tripled as a share of GDP, to six percent. But since 2008, trade has fallen back to its old share of under two percent. Export-driven emerging markets will need to find new ways to achieve strong growth, and investors recognize that many will probably fail to do so: in the first half of 2012, the spread between the value of the best-performing and the value of the worst-performing major emerging stock markets shot up from ten percent to 35 percent. Over the next few years, therefore, the new normal in emerging markets will be much like the old normal of the 1950s and 1960s, when growth averaged around five percent and the race left many behind. This does not imply a reemergence of the 1970s-era Third World, consisting of uniformly underdeveloped nations. Even in those days, some emerging markets, such as South Korea and Taiwan, were starting to boom, but their success was overshadowed by the misery in larger countries,

4 such as India. But it does mean that the economic performance of the emerging-market countries will be highly differentiated. The uneven rise of the emerging markets will impact global politics in a number of ways. For starters, it will revive the self-confidence of the West and dim the economic and diplomatic glow of recent stars, such as Brazil and Russia (not to mention the petro-dictatorships in Africa, Latin America, and the Middle East). One casualty will be the notion that China's success demonstrates the superiority of authoritarian, state-run capitalism. Of the 124 emerging-market countries that have managed to sustain a five percent growth rate for a full decade since 1980, 52 percent were democracies and 48 percent were authoritarian. At least over the short to medium term, what matters is not the type of political system a country has but rather the presence of leaders who understand and can implement the reforms required for growth. Another casualty will be the notion of the so-called demographic dividend. Because China's boom was driven in part by a large generation of young people entering the work force, consultants now scour census data looking for similar population bulges as an indicator of the next big economic miracle. But such demographic determinism assumes that the resulting workers will have the necessary skills to compete in the global market and that governments will set the right policies to create jobs. In the world of the last decade, when a rising tide lifted all economies, the concept of a demographic dividend briefly made sense. But that world is gone. The economic role models of recent times will give way to new models or perhaps no models, as growth trajectories splinter off in many directions. In the past, Asian states tended to look to Japan as a paradigm, nations from the Baltics to the Balkans looked to the European Union, and nearly all countries to some extent looked to the United States. But the crisis of 2008 has undermined the credibility of all these role models. Tokyo's recent mistakes have made South Korea, which is still rising as a manufacturing powerhouse, a much more appealing Asian model than Japan. Countries that once were clamoring to enter the eurozone, such as the Czech Republic, Poland, and Turkey, now wonder if they want to join a club with so many members struggling to stay afloat. And as for the United States, the 1990s-era Washington consensus -- which called for poor countries to restrain their spending and liberalize their economies -- is a hard sell when even Washington can't agree to cut its own huge deficit. Because it is easier to grow rapidly from a low starting point, it makes no sense to compare countries in different income classes. The rare breakout nations will be those that outstrip rivals in their own income class and exceed broad expectations for that class. Such expectations, moreover, will need to come back to earth. The last decade was unusual in terms of the wide scope and rapid pace of global growth, and anyone who counts on that happy situation returning soon is likely to be disappointed. Among countries with per capita incomes in the $20,000 to $25,000 range, only two have a good chance of matching or exceeding three percent annual growth over the next decade: the Czech Republic and South Korea. Among the large group with average incomes in the $10,000 to $15,000 range, only one country -- Turkey -- has a good shot at matching or exceeding four to five percent growth, although Poland also has a chance. In the $5,000 to $10,000 income class, Thailand seems to be the only country with a real shot at outperforming significantly. To the extent that there will be a new crop of emerging-market stars in the coming years, therefore, it is likely to feature countries whose per capita incomes are under $5,000, such as Indonesia, Nigeria, the Philippines, Sri Lanka, and various contenders in East Africa. Although the world can expect more breakout nations to emerge from the bottom income tier, at the top and the middle, the new global economic order will probably look more like the old one than most observers predict. The rest may continue to rise, but they will rise more slowly and unevenly than many experts are anticipating. And precious few will ever reach the income levels of the developed world. View This Article as Multiple Pages Related ESSAY, NOV/DEC 2002 The Future of AIDS Nicholas Eberstadt In the decades ahead, the center of the global HIV/AIDS pandemic is set to shift from Africa to Eurasia. The death toll in that region's three pivotal countries--russia, India, and China-- could be staggering. This will ESSAY, NOV/DEC 2010 Globalizing the Energy Revolution Michael Levi, Elizabeth C. Economy, Shannon K. O'Neil, and Adam Segal Clean-energy technology is expensive and the United States is spending far too little on developing it. The U.S. government must do more to promote ESSAY, SEP/OCT 2010 Not Ready for Prime Time Jorge G. Castañeda The world s leading international institutions may be outmoded, but Brazil, China, India, and South Africa are not ready to join the helm. Their shaky commitment to democracy,

5 assuredly be a humanitarian tragedy, but it will be much more than that. The disease will alter the economic potential of the region's major states and the global balance of power. Moscow, New Delhi, and Beijing could take steps to mitigate the disaster--but so far they have not. Read cross-border innovation and protect intellectual property rights. Read human rights, nuclear nonproliferation, and environmental protection would only weaken the international system s core values. Read 38 comments 1 Leave a message... Discussion Community Share # Big Ben 2 months ago The author (Ruchir Sharma) brings up a great point that the great majority of countries do not graduate from emerging economies to developed economies. However, Sharma did not address the underlying reasons why. This is the biggest shortcoming to this article. After all, there are those selected few that have been able to catch up and continue to prosper. This article by Credit Suisse offers some of the key underlying explanations. Why some countries succeed and others fail? In fact, some of these reasons in one form or another can be seen in economic history over the last few thousands of years. 16 Reply Share phillip Wong > Big Ben 2 months ago This is a mistake. There is no magic formula. From the last 50s, only Japan, S Korea, Taiwan, Singapore, and Hong Kong have become developed. Why? Because they are either Chinese derivative countries( S Korea, and Japan), or Chinese countries such as Singapore, Taiwan, and Hong Kong. It is in the blood, and culture of the people. The pursuit of achievement, drive and wealth is what the rest lack, and the east got. The model cannot be exported. 11 Reply 3 Share GIJ > phillip Wong a month ago Hey Phillip Wong, do you realize that the notion of Chinese cultural/ethnic supremacy is every bit as stupid and foolish as the notion of white supremacy? And to reduce South Korea and Japan--countries inhabited by peoples who are ethnically, linguistically, and genetically distinct from Han Chinese--to the status of nothing more than "derivative countries" of China is inaccurate and insulting. 11 Reply Share Luis > phillip Wong a month ago Sir, I'm afraid you are not only wrong, but also a racist. Your messages should be deleted. 4 Reply Share Michael X > Luis 24 days ago At the risk of encouraging him, I believe Malcolm Gladwell, in his latest book, tried to demonstrate a link between rice farming and a strong work ethic. In any case, I wouldn't dismiss the idea of an "Asian" work ethic out of hand. 1 Reply Share

6 HIDisqus > phillip Wong a month ago Brought to you by Wong Brothers Laundry Service. Two Wongs will make it white. 2 Reply Share Jessie 2 months ago While Brazil has a long way to go, I disagree about their promise as a rising global power and economic stronghold. Brazil is experiencing lower growth, a credit bubble, and high interest rates right now, but the entire global economy is still in the middle of a downturn. Brazil is strengthening the foundation of their institutions to promote democracy and improve their "crony capitalism" and rent-seeking practices by corrupt politicians and wealthy business owners. Due to this institution-building and their dominance and large market share in agriculture and energy industries, I would indeed say they will be a force to be reckoned with in the future, and would not be surprised if their economy continues to grow, albeit at a slower rate. 19 Reply 3 Share phillip Wong > Jessie 2 months ago Brazil will only be a raw material providers, but the source of demand is from China. 5 Reply Share Benton Cook > phillip Wong 5 days ago China seems positioned to have the Mandate of Heaven transfer once again. The mandarinate has pushed exploitation and corruption maximally, and the ever-turning wheel brings the reckoning nigh. Nothing new under the sun. EMILY DENT > Jessie a month ago Agreed for the most part, however "improving" corruption is not something that happens easily - particularly in a country like Brazil where corruption exists on every level. The Brasilia Declaration is a step in the right direction but anti-corruption practices need to be taught at a grassroots level in this country. Dylan Rees 2 months ago The BRIC concept is just a marketing tool. But the underlying concept might well be valid. Much of the "truths" of the paper (and of readers s comments) demonstrate profound ignorance and misunderstanding. Just as an example, Brazil does not depend on commodities exports nor is this the motor of growth. Exports represent 11% of GDP and commodities exports represent 5% of GDP. How can 5% of GDP be considered a motor of an economy? Brazil does not depend on exports to China. China exports represent 17% of exports or 1.9% of the Brazilian economy. Brazil s commodities exports are very similar in proportion to those of the USA yet the USA is not considered to be motored along by these exports. What motors Brazil s economy along is its internal market (89% of GDP), the growth of credit, the high rate of employment, the growth of services... Export of commodities helps but is not the motor. Another misconception is that though Brazil is a large economy it has little relations outside the traditional North-South relations. This is simply not true. The diversity of Brazils commercial and business ties is large and growing. Latin America is the major trade partner followed by Asia and only then, Europe and the US. Africa is growith quickly (the largest investor in Africa after China is Brazil). 7 Reply Share phillip > Dylan Rees 2 months ago This is a mistake. Brazil is expanding, but like western economies( not east Asians ones), it based on ease of credit as a driver of growth. The problem is bad debt. Ultimately, the China( Sino cultures such as the tigers, and Japan) is based on culture,

7 Ultimately, the China( Sino cultures such as the tigers, and Japan) is based on culture, and blood that cannot be replicated outside of a non-sino countries. The same is true of turkey where the grow is driven by bad debt. 2 Reply 1 Share rob.my.language > phillip a month ago You do realize that Japan has the highest debt-to-gdp ratio in the world outside of sub-saharan Africa, right? 2 Reply Share phillip wong > rob.my.language 24 days ago True, and this is because of the US. It is known as the plaza accord, and export restriction. LOL PSY 2 months ago Regardless of the whether the BRIC or other EM will eventually catch up to the per capita income of the developed world, they're already substantial players in the global economy. Today's EMs (especially the BRIC) are very different from EMs of the past like (Japan, S. Korea, Taiwan, etc) due to their sheer size. Never in modern history has EM have so much impact on the global economy. Take China alone as an example. It's officially the world's 2nd largest economy after the US. However, it's already equally as important. In both upstream (commodities) and midstream (manufacturing), China is already the world's largest player. In downstream (consumption), the US is still larger but that is all because of the service sector (partly China's service sector is understated). In consumption of goods (retail sales market), China is already about the same size as the US. Moreover, goods are tradable in the global market, so it has a greater direct impact on the global economy. Whereas, services are generally domestic oriented. 6 Reply Share igor.biryukov 2 months ago It s a bizarre article. First, he needs to check his figures: they are blatantly incorrect. His assertion that U.S. economy is twice as large as Chinese is plainly wrong. Second, he starts with tumbling, crumbling BRICS but ends up merely suggesting that their growth won t be as spectacular as before. No kidding? And thirdly, and more importantly he completely ignores debt. The problem with the developed countries (US, Japan, and Europe) is excessive debt. If you look at Russia, for example, it is a country with virtually no debt. The same is true of China. They are creditors. That will be engine of their further rise compared to the old world. That is where his blind spot is. This article starts by fireworks and ends with a thud. 4 Reply Share Harsh Vijaysingh 2 months ago The BRIC's had a good run, hopefully one of more to come in future. Their political leadership has got a lot of homework to do. A very well timed essay, especially when any minor development is painted as an indicator of economic forecasts for posterity. 6 Reply 1 Share Kenington 2 months ago There is current debate on relaxing the one child family policy which only applies to the urban areas and the Han people themselves. Minorities and rural areas are exempt from this policy. This article presupposes that the BRICs will never progress as they are dependent upon the current G8 nations for their further development. It does not take into account that the BRICs can develop and are developing intra trade among themselves and other emerging nations, Africa, Latin America, etc. The current G8 nations are caught in a financial mess due to their own bad policies. The BRICs and other nations are affected but will restructure their economies and trade ties to progress

8 and other nations are affected but will restructure their economies and trade ties to progress further. They will not be permanently held back by the current shambles in the G8 nations. The G8 nations can participate and benefit from this global restructuring or be the proverbial dog in the manger trying to hopelessly maintain their current privileged status which benefits no one including themselves. 8 Reply 4 Share Juan Carlos 2 months ago I think the author presents very good points to discuss the emergence of the BRICs. But he mis leads the nature of Power in the BRICs for example how in different context now the BRICs have more important preponderance in international institutions like the IMF, for example. Also if the BRICs or emerging markets should be criticized, should be by the lack of internal reforms to produce more democratic societies, which still seems a problem that emerging markets must solve. According to the International Banking Systems the BRICs are running on the trend of growing. It should be also valid to analyse not only the GDP, but unemployment rate, production per capita and many social indicators that would lead us understand where really the BRIC are. It cannot be denied that these countries are advancing, after a Financial Crisis that hit everybody and its consequences are still damaging the economic panorama of the US and the EU. 2 Reply Share JoseAngel 2 months ago There will thirsty investment funds Behind the frenzie propaganda surrounding the rise of the so called BRICS, which tended to ignore facts and realities about these countries, social, economic and structural problems that still today continue to arrest economic development and growth in these brics nations. Brazil s growth collapse as soon as the commodity boom went flat, China s slow growth only underlies their dependence on US and European marktes, and on continued foreign investment, but the very factors that made China super competitive ten years ago are no longer there. Many industries are moving to Mexico, to Turkey, even back to the US, pushed out by rising wages, higher transportation costs, technology theft and piracy in China, pollution and other problems that country has today. A new Jeep SUV is even more expensive to make in Brazil than in the US, thanks to protective trade policies, India s growth has stalled, Russia, same as Brasil, has become a commodity producer, oil prices impact their economies more than anything else. 4 Reply 2 Share phillip > JoseAngel 2 months ago "China s slow growth only underlies their dependence on US and European marktes, and on continued foreign investment, but the very factors that made China super competitive ten years ago are no longer there." Actually no. China unique among the bric. It is a myth that China depends on export to the US, and Europe. China consumes more cars, energy, smartphone than any other in the planet. Its consumption is growing, and its services, and industries are diversified. China is following the path of other east Asian except it is better. Notice that S Korea, Japan, Taiwan, Singapore, and HK are all Chinese traditions, culture, and blood. There is certain culture, and genetic factors here. This is why people should not compare China, or east Asia to none non-sino-sphere cultures, and races. What is going to happen is China will become a continued source of end user consumers in the globe. It will become a continued source of consumption, and FDI investments. The US, and EU is in perpetual decline. Their debt cannot be serviced, and the lower level of culture in education makes their population uncompetitive( right now, they are trying to import as many chinese as possible). The problem is, without easy credit, the

9 western countries cannot grow like they did from the beginning of 1970s onward. What I expect is a gradual increase in FDI to China, and a lowering of FDI to the US. Lets be honest, the savers on the planet are mostly Chinese, and other east Asians. Without them, the US, and the west would be nothing. Technological changes are reduce a lot of middle skill level jobs, so here goes the age of average worker. The only way is for the US to lower its bearer to entry, but this would be eliminating monopolies. The US would not do that 6 Reply Share Bryan Kim > phillip a month ago Your knowledge of development economics seems to be based on some quite misguided notions about race. Cultural factors do affect development to some degree, but they are certainly not the primary driving cause... A focus on education, for example, is a characteristic of some eastern cultures, but that has more to do with the historical influences of Confucianism, etc., rather than the particular "temperament" of the Asian races. To attribute economic success to some sort of overarching racial characteristics "in the blood" is a wrong-headed and somewhat disturbing philosophy which seems to be based on some sort of racial supremacist worldview. 2 Reply Share phillip 2 months ago I author over look the issue that the majority of those countries that rise above to developed country income are mostly Chinese countries, or Sino-culture dominated countries. Singapore, Taiwan, Hong Kong, Japan, S Korea etc. They are all of east Asian, or Sino origin. The focus is in material achievement, education, and capitalism. The Malay, and Thailand come close, but they are not pure Chinese, or Sino cultures. The BRIC was always a mistake. Russia, Brazil are producer countries, and provider of raw material. Without China, those countries would be nothing. India have a missive uneducated class of people, and never seek to build up its own industries. It is China, Taiwan, S Korea, Singapore, and Japan that have strive to compete by building domestic firms, and competitiveness. There is a level of blood, culture, and temperament that is part of the Sino, East Asian thing. 5 Reply 5 Share Ike > phillip 2 months ago Aside from Japan and the Asian tigers, Israel also succeeded in becoming an advanced economy. I would not say it is about ethnicity, but no doubt education (especially in science and technology) are critical factors. YU LIU 2 months ago Great observations. But I don't think they can be used for future economic predictions. 2 Reply 1 Share JS 2 months ago I've always wondered -- if everybody agrees that China's biggest problem is demographics, due to the 1-child policy, why can't it reverse that policy (slowly, or even in 1 shot) & reclaim some of the lost mojo that commentators such as this attribute to it because of that policy? They seem to have built adequate infrastructure to look after, educate & develop the extra kids that will be born, hence if they've reached this economic stage where overpopulation, instead of being a problem is now desirable, why won't they do it? 2 Reply 2 Share RG3 > JS 2 months ago China's demographics is a "POTENTIAL" problem. The key word is

10 China's demographics is a "POTENTIAL" problem. The key word is "POTENTIAL". It is well known that China's working age population is expected to peak between However, what is often overlooked is that its prime working age segment (those between 30-55) will continue to increase well pass This prime working age segment is normally the most productive for economic growth. The World Bank in conjunction with Barclays did a report on this recently. The big challenge for China is to continue to move up the industrial base, providing jobs for this coming group of increasingly educated prime working age segment. There is still a window for them to lessen the impact of the potential demographics problem down the road. 9 Reply 1 Share MARJORIE SWIFT > JS 2 months ago China had better wake up to the fact that the one child policy may have been handy in the past, but it spells doom for the future. Consider an economy on the skids and a population of mostly aging horny males, since most couples over the last thirty years preferred male children, either aborting or leaving their female children to die by the roadside. Is this a recipe for disaster? China has never been able to think further than next two weeks--and China you bought the one child policy--you own it--and we in the west will not pay for it. 1 Reply 7 Share James Stuart > MARJORIE SWIFT 2 months ago What an absolute nonsense. The Chinese plan decades ahead. You seem to be forgetting (or are ignorant of) that China still has a command economy planned in stages of development and revised as necessary. Indeed the Chinese political leadership talk in terms of centuries, not just decades. This is an old nation, they know that now is not forever. And China has a one child policy in urban areas (and even there, ethnic minorities are exempt). In rural areas, where 50% of the population live, the policy is not applied and this is of course where China's labour force is coming from. This has its own problems of course, but it helps demonstrate that the idea that China is running out of young people is a fallacy. However the demographics are shifting (in terms of gender as well as age) and this needs to be, and is being addressed. And the One Child Policy (such as it is) is being revised accordingly and China is now looking to a "Two Child Policy" in urban areas. However, since you make the pretty disgusting and racist assertion that "most couples...(are) either aborting or leaving their female children to die by the roadside", I am not sure why I am even bothering to explain anything rationally to someone who hold such deeply ill-informed and irrational (and indeed, inhuman) views about any other society. 4 Reply Share BEN months ago Having studied the article very minutely it is found the article has been written with care and caution and has been substantiated with statics in support of the cause of the changes that took place and would take place in the cases of the countries in future. The writer has in detail high lighted the financial aspect of the organization very eloquently as far as possible. I would still hold the fact that as the world itself is a place of uncertainty, would it not be better to include statements keeping a space to accommodate the unforeseen due to ups and down of mineral output, power supply, Industrial out put, agricultural out put, and international financial market fluctuation all these severely impacts the financial market of countries together with the impact of unpredictable climatic change. As the writer touched upon the future condition of the countries something should have been written about the unforeseen cause that could change the situation altogether placing the position of US and some other countries better than contemplated now by the writer. Because

11 position of US and some other countries better than contemplated now by the writer. Because of the fact nothing can be taken as finally conclusive and fixed. Now, coming to the Conglomeration of BRICS, it is not because of only financial cause that BRICS came into being. It has a hidden cause to strengthen both financial and Regional Military Power and more. It may be acceptable that BRICS is a broken organization financially but is it the same in case of extending Regional Military Power? This could be a subject of research for the future consideration and adjustment. Already changes in some countries to the fact is under way. From the activities of BRICS it seems that it has effectively entered Mid East and is consolidating to divide Mid East in two Sunni and Shaii region. May be Israel's activity in Mid East would later be held responsible as the main cause of the Division if not now. 1 Reply 1 Share Javed Mir > BEN months ago Nicely hinted at. Economic strength needs to be protected by military strength. As regards division of the middle east into Sunni and Shaii regions is farfetched since growing economies especially like China and India will not like to antoganize any Arab oil producer whether Shaii or Sunny 1 Reply 1 Share spellar 2 months ago Well all nice and well, but how can one do any math without adding in the factor of unrest in unstable parts of the world, if obamanomics is re-elected, the horses of unrest will continue to gather with a stampead of wild actions breaking out in many places. All economies need cheap oil to succeed, high price oil slows economies to a sludge of low growth due to a restricked flow of coin into the hub of business both private & corperate. Malmarts suffer along with many others if oil steals the coin from the economic engine. 0 Reply 4 Share spellar > spellar a day ago And putin has gone to euro meeting days before Christmass to the surprise of many, to inform the EU, that they need to improve Natural gas supplies has the Russian pipeline is going to be shut down, as there is better policy initiaves in Asia, also the pending strike in USA ports will hault product delivery to Malmarts, { and no, Malmarts is not mis-spelled } so the wild horses of the Mid East and Africa are moving quickly while internal economic grid lock occurs in the USA. bridgebuilder78 a month ago India is certainly broken... Brazil is not doing so hot either. Russia? Well, at least it's got an armament industry and natural resources for sale. China? China is doing just fine, which must have pricked the pride of the author. disqus_drjjpcts3b a month ago Wow love that cartoon. buck-toothed Asians! Last time we saw those caricatures was in WWII. Shows real global awareness. wakeuptheworld a month ago China may be getting bigger, yet it has to sort out a building bubble of huge magnitude. As World Trade has been falling they have been building houses for millions of people and shops and factories, to keep unemployment down. They can not keep this up for long as the internal debts are becoming a crisis for their banks, There is also a huge problem

12 long as the internal debts are becoming a crisis for their banks, There is also a huge problem with the health service, and workers pay, that can not be kept so low as the cost of living is pushing too many under the level one can support life. The new leadership has had a rocky start loosing a few top dogs to scandal and corruption. They will not be buying many US bonds soon. Tony 2 months ago IS NECESSARY CHANGE THE CORRENT WORLD ORDER...the world is to persons of all contries and not only to one country... is time to the usa see this... Javed Mir 2 months ago A nicely written article. The economic growth however seems to be concentrating on the Asia side. Most of the Asian states have been showing although at a reduced level, positive growth. Most of the Asian economies are not showing heavy debts and deficits confirming that growth will continue. ALSO ON FOREIGN AFFAIRS What's this? Rebooting Republican Foreign Policy 4 comments a day ago 3 comments a day ago spellar Please lets not suggest that the majority of voters have a clue about foreign policy, the Obama han The Best of Web in 2012 spellar The topics of concerns listed here are ALL due to lack of leadership, the Libya failure that was aw Best International Relations Books of 2012 Eugene Tsvilik Good selections, but I would also add _Theories of International Politics and Zombies_ by Daniel W D The Fall and Rise of the West 3 comments 3 days ago 1 comment a day ago spellar Well this article says nothing of the ties to the Credit card of China of both the EU central bank a r Comment feed m Subscribe via