![]() In fact, Brazil, South Africa, and Russia had fallen into such a trap between the late 1990s and early 2000s (Figure 2). This is because the country is ‘unable to compete with low income, low wage economies in manufacturing exports and unable to compete with advanced economies in high skill innovations’ (ADB, 2011: 9). ![]() ![]() This term refers to a situation where in a country that has achieved the status of a middle-income country merely by extracting its natural resources for export, or by using its abundant and cheap labour force in export manufacturing, finds it difficult to develop further and achieve the status of a high-income country. In other words, it is possible that Brazil and South Africa may fall into the ‘middle-income trap’. Moreover, the IMF forecasts that the per-capita GDP levels for Brazil and South Africa would not approach the lower limit of high-income countries (the dotted black line in Figure 2). In its economic outlook published in the autumn of 2013, the International Monetary Fund (IMF) predicted that the growth rates in the gross domestic products (GDPs) for Brazil, Russia, and South Africa would be almost the same as the world average till 2018. ![]() Åslund (2013) expects much lower growth rates in the BRICS than advanced countries over the next decade, and proposes seven reasons limiting BRICS’ rapid growth, including the peak-out of the credit and international commodity booms, moderation in catch-up growth, slowdown in economic reforms, and state and crony capitalism. Setback for resource-extracting countries The latter’s growth rate decreased to become almost at par with the world average in 2012.įigure 1: With the exception of China, the real GDP growth rate would be almost the same as the world average However, Brazil and South Africa have not realised significantly higher growth rate than the world average since the term BRICS came into existence (Figure 1). Traditionally, Russia, India, and China have contributed to the rapid growth in the BRICS framework, but following the Lehman Shock, Russia’s economic growth slowed, as did India’s. Thus, today, ‘BRICS’ is no longer a mere terminology rather, it has been transformed into a substantial inter-nation framework that aims to further consolidate the countries’ economic power in the world and strengthen their influence in economic discussions in the international arena. Referred to as the ‘BRICS Summit’, the meeting served to confirm the countries’ mutual cooperation in economic affairs. However, as the world focussed its attention on them, the countries conducted an informal summit meeting in 2009. Therefore, the BRICS initially did not have any mechanism for economic coordination and cooperation with each other. To begin with, the term was merely a coinage using the initial letters of the names of five emerging economies whose markets are home to a certain volume of financial assets and large populations. In 2001, the term ‘BRICS’ was introduced to the world of financial investment. The rapid-growth team (India and China) and the normal-growth team (Brazil, Russia, and South Africa) ![]() Their huge populations coupled with relatively high income levels will continue to attract the attention of the world economy, as they will fuel huge final consumption demand. This does not mean, however, that the economic attractiveness of the BRICS quintet will disappear soon. As a result, in the near future, the term ‘BRICS’ may become a synonym for countries whose growth rate returned to normal after achieving rapid growth for a certain short period of time. Nonetheless, there have been no efforts to avoid this. Having failed to realise an economic structure that ensures sustained and buoyant growth after achieving the status of a high-income country, there is a possibility that these countries may fall into the middle-income trap. The rapid growth of the BRICS quintet (Brazil, Russia, India, China, and South Africa) was driven by the extraction and export of natural resources and/or the huge input of cheap labour in manufacturing sectors. ![]()
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