After years of stellar growth, the BRICS have plunged into economic turmoil. Not a single week passes without more bad news from emerging markets in the Global South. The Chinese economy is growing at the lowest figures in years, and Brazil, India and South Africa are barely growing faster than the US economy this year.
The political effects of this development are already palpable on a global scale. Disappointing growth in the emerging world has lowered the pressure on the United States and Europe to reform international institutions and increase the representation of countries like Brazil and India. U.S. Congress has still not ratified the historic 2010 IMF quota reforms, and some observers suggest it may not be voted on this year. A growing number of policy makers and commentators in the United States and Europe feel as if they have finally awoken from a bad, decade-long dream. Now, thankfully, things seem to be back to normal. Easy money from the Federal Reserve Bank is about to dry up, and China will increasingly focus on boosting domestic consumption. As a consequence, the BRICS will suffer. The ‘rise of the rest’ has proved to be unsustainable. The world’s key institutions can maintain their Western-centric design.
Such rhetoric paints the rise of the Global South as a phenomenon essentially dependent on easy Western money and Chinese imports, and emerging powers as helpless actors who happened to stumble into an unexpected and undeserved decade of growth.
Yet low economic growth in the Global South cannot do away the historic advances emerging powers have made, especially during the past decade, which has seen an unprecedented degree of emancipation of the Global South – including the African continent. The lull in the emerging world does not alter long-term predictions that China will overtake the U.S. American economy. Despite current problems, India is set to become a major pillar of the world economy in the course of this century. The world economy will not return to the distribution of power of the late 20th century.
As Zachary Karabell argues,
Sentiment may have shifted dramatically in the past few months, but there is a substantial difference between that and structural collapse and crisis. Yes, emerging world economies are seeing slowing growth relative to the heightened rates of recent years, and yes, the shift to domestic demand-driven economic activity is not easy. But that is not the same as re-writing the script of the past decade and turning the achievements of many of these countries into a mirage.
When it comes time to write the story of the first years of the 21st century, the global narrative will not only be the struggles of the United States to adjust to a world of diffuse power, or the rise of China and the decline of Europe. It will be the way that substantial portions of the planet emerged from agrarian poverty into the early stages of urban affluence. It will be the way the Internet and the mobile revolution anchored by the rise of China began to reshape the vast regions of sub-Saharan Africa; how India’s middle classes started to redefine that country, and how millions in Latin America sloughed off decades of authoritarian incompetence and began to blossom. Never in human history have more people become more affluent more quickly than in the opening years of the 21st century.
As a consequence, the fundamental logic of the need to reform global governance structures remains sound. For policy makers in Europe and the United States, engaging emerging powers is the only way of assuring that international institutions remain functional once the traditional powers are no longer in control. The difficult process of adapting to a new reality has just begun. In the coming years and decades, far more extensive reforms – in the World Bank, the IMF and the United Nations Security Council - will have to be implemented if these institutions are to maintain their legitimacy in the twenty-first century.
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Photo credit: Arko Datta/Reuters
