Globalization and the BRICs: Why the BRICs Will Not Rule the World for Long

225 Pages·2012·3 MB·English

by  Francesca Beausang (auth.)

Globalization and the BRICs
Why the BRICs Will Not Rule the World for Long
Francesca Beausang
Globalization and the BRICs
Also by Francesca Beausang
THIRD WORLD MULTINATIONALS: Engine of Development or New
Form of Dependency?
Globalization and the BRICs
Why the BRICs Will Not Rule the World for Long
Francesca Beausang
Senior Economist, 4CAST
© Francesca Beausang 2012
Softcover reprint of the hardcover 1st edition 2012 978-0-230-24314-9
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First published 2012 by
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ISBN 978-1-349-31816-2 ISBN 978-1-137-27160-0 (eBook)
DOI 10.1057/9781137271600
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10 9 8 7 6 5 4 3 2 1
21 20 19 18 17 16 15 14 13 12
Contents
List of Tables vi
List of Figures vii
Preface viii
Acknowledgements ix
List of Abbreviations x
Introduction 1
1 BRICs: Beyond Developing? 13
2 BRICs and Global Economic Power 51
3 BRICs and Global Political Power 68
4 Limit No. 1: BRICs and Inequality 98
5 Limit No. 2: BRICs and the Silent Power of Ideas 138
6 Conclusion: The Innovation–Equality–Development Triangle 170
Notes 184
Bibliography 200
Index 209
v
Tables
1.1 B RICs and South Korea average annual real GDP growth
rates, 1980–2011 17
1.2 Indicators of globalization intensity, BRICs and South Korea 18
1.3 Indicators of indigenous innovation intensity, BRICs and
South Korea 19
1.4 F ive models of insertion into the global economy in early
development 21
2.1 Chinese trade with other BRICs, 2001 and 2009 57
2.2 I ndian trade with other BRICs, 2001 and 2009 57
2.3 Top host countries for Chinese outward investment, 2006–10 60
2.4 Chinese outward investment per host region, 2006–10 61
2.5 Sector patterns of Chinese outward investment, 2006–10 61
2.6 China’s outbound M&A value 62
2.7 China’s outbound M&A value per sector, 62
2.8 SWF assets to foreign currency exchange ratio 63
2.9 Largest SWFs, June 2011 65
3.1 IMF voting share 85
4.1 BRIC inflation and growth 107
4.2 Males per 100 females in the marriage-age population 129
4.3 Evolution of income inequality in Brazil, measured by the
Gini coefficient, 1977–2007 130
5.1 World Economic Forum innovation rankings/scores/data,
2010–11 153
5.2 Change in global patent applications, 2006–9, USA versus
China 154
5.3 Government versus business R&D expenditure as
percentage of GDP, 2008 155
5.4 S hares of various countries in total patents in ICT,
renewables, nanotechnology and biotech, 2005 162
vi
Figures
I.1 Percentage share of global GDP at PPP in US$, 2000 3
I.2 Percentage share of global GDP at PPP in US$, 2010 4
I.3 Percentage of world GDP 4
I.4 GDP per capita relative to world average 5
I.5 GDP per capita series 6
I.6 GDP per capita ratio to US 7
1.1 BRIC and South Korea share of world GDP at PPP, 2000(a)
versus 2010(b) 16
4.1 GDP per capita versus Gini index: US and BRICs
compared 117
5.1 US versus BRIC labour productivity growth,
1995–2011 152
5.2 US versus BRIC total factor productivity growth, 1995–2009 152
vii
Preface
It is the year 2050. An astronaut steps out of his spaceship. He has been
out of contact with the earth since 2010. He is surprised that the dele-
gation sent to meet him is using roughly the same iPhone as he had 40
years before. He is surprised by the obvious poverty and inequality that
he sees as he travels on the high-speed train (which seems to be travel-
ling more slowly and much more unsafely than trains did 40 years
before). And he is surprised that he cannot understand his hosts. But
then, he had never bothered to learn Mandarin. He has landed on
the planet of the BRICs, where innovation has died and inequality has
bloomed.
‘What could have caused this state of affairs?’ he wonders. The future
had seemed so full of promise when he left. Although developed nations
had been struggling under a heavy load of debt, the BRICs seemed
poised to take up the baton and lead the world forward. But all around
him the world looked the same, not better. And people looked poorer,
not richer. What had happened?
In this book I analyse why the BRIC miracle might not turn out
exactly as planned.
viii
Acknowledgements
I am greatly indebted to the critical eye of my husband, Christopher
Hunter, so much so that I have contemplated adding him as a co-author!
This book is the culmination of both my academic knowledge of Brazil,
Russia, India and China and my practical experience of their financial
markets. In that sense, my thanks go to the great thinkers who inspired
me during the years I spent as a lecturer at the London School of
Economics Development Studies Institute. Their influence helped in
shaping my interest in the meaning of economic development, which
this book is very much about. But my thanks also go to the traders,
economists and analysts with whom I have engaged as a financial ana-
lyst for the last eight years; they have given me a sense of the real chal-
lenges which the BRICs face through globalization today.
Every effort has been made to contact all the copyright holders for
tabular material in this book. If any have been inadvertently omitted,
the publishers will be pleased to make the necessary arrangements at
the earliest opportunity.
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