Jan 2 2011

BRIC and South Africa's place in the world

By John Baeyens | Share This South Africa

The term BRICwas invented by Jim O'Neill of Goldman Sachs in 2003 to identify countries with the fastest growing economies with a bulging middle class and promising internal markets that were likely to overtake the G7 (the US, United Kingdom, France, Italy, Canada, Germany and Japan) as the biggest economies by 2040.
It's important to remember the the term (it was merely a name) was invented to identify the countries which would lead the ranks of biggest economies by 2040. Since then some variations have surged: BRICK (K for South Korea), BRIMC (M for Mexico), BRICA (Arab countries: Saudi Arabia, Kuwait, Bahrain, Oman, United Arab Emirates) and BRICET (including Eastern Europe and Turkey).

In 2009, the BRIC forum was founded in Yekaterinburg, Russia.  It's a very informal platform to share views on globalization.  President Zuma of South Africa, always eager for status rather then internal policies, was not happy with the fact that he was not invited to  the BRIC forum.  Ever since then South Africa has sought to gain recignition as part of the BRIC formation.  A redicilous quest in itself. On August 25th, in Beijing, Zuma drafted an official letter(read: Financial Times):>Dear Sir/Madam,
I would like to apply, on behalf of my country, to be the firth Bric member. I think my country would be suitable for the role -providing an economy we hope wil grow at 7% per year, rich in natural resources and a base for exploring other emerging markets in the region...

We are also benefiting from recently hosting a major international sporting event.  We thi,k that makes us a good fit with China (Olympics 2008), Indian (Commonwealth Games 2010), Russia (Winter Olympics 2014) and Brazil (World Cup 2014, Olympics 2016).

Although not a barrier to entry, we are also a democracy with freely exchangeable currency, widespread use of English and a diverse population. Plus we could provide the wine for all meetings.

I do hope you will consider us for entry into your club.

Many thanks,
Jacob Zuma,President of South AfricaThe Chinese must have laughed and seen there occasion...
Last week, Beijing gave an OK for Zuma to attend a summit of BRIC leaders in April.  
As Marvin Zonis of University of Chicago puts it:
"This is something that China sees in its own interest with its aim of understanding the future of Africa and becoming an even bigger presence there.   It is really smart on the part of China to do this.
O'Neill, the economist who have birth to the term BRIC says radically that South Africa should not be included,read this excellent piece in the Financial Times on the matter.
Also many African journalists are critical, as one can read in the SA Times and this excellent piece fromFrancis Kornegay.The reality of course is that nothing fundamental will change. Zuma can bring his wine to the next BRIC forum in April 2011, China will use every chance to abuse South Africa in every way it can, and the letterword will remain BRIC.

Just look to the top 10 companies in the world by market capitalization, all of them are based in BRIC countries: Russia: Gazprom, Lukoil and Surgutneftgaz
China: China Mobile, China Construction Bank
Brazil: Petrobras and Rio Vale Doce
India: Oil and National Gas Corp

No South African company to be seen from far.

Let's just look to the list of countries with their respective nominal GDP in 2050:
All the 4 BRIC countries are in the top 6, if one includes Mexico (which be a much more evident fifth member than South Africa), the BRIMC countries would be the absolute top 5 countries by GDP, except for the United States.
This is what BRIC is about. South Africa even doesn't appear in the top 22 list. Countries by GDP in 2050 This brings us to the core of the matter: South Africa not only has amuch smaller economy and very limited market, it also lacks national commercial champions like Vale, Petrobras, Gazprom, China Mobile,... to command the same strengths  as the BRIC countries.  South Africa doesn't have and will never have these hard resource and infrastructure powers.  South Africa champions in its normatively grounded and progressive foreign policy, tackling poverty, climate change.  South Africa was strong the last decade in conformity to international law, consistency in policies of the African region and issues related to human rights and commitment to multilateralism.

Furthermore, South Africa was the pioneer of IBSA (India, Brazil, South Africa).  They discuss matters like strengthening multilateralism, the reform of the United Nations Security Council, the Bretton Woods Institutions, democracy and a people-oriented approach, human rights and sustainable development.

This raises the question: why would South Africa seek to participate in the BRIC forum?  And as a consequence diluting its normative character and a unique role it plays as a bridge builder between the North and the South?   South Africa already has a resource overstretch participating in groups and forums of all kinds?  Will this entry signal the end of IBSA?   And what about South Korea entering (place 13 in nominal GDP by 2050), or even Nigeria (place 11 in nominal GDP by 2050)?

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