BRICS and global growth

NEW evidence linking the global economy to climate change emerged recently in a blue-chip UN report that gives alarming details on how poverty will increase due to environmental pressures.

International media reported that the rise of developing nations has cut poverty while the combined economies of Brazil, China and India are on a path to overtake wealthy nations, but failure to act on climate change could reverse those gains.

Developing nations are now driving economic growth, helping to lift hundreds of millions of people out of poverty and bringing billions more into a new middle class, according to the United Nations Development Program (UNDP).

The report sees a “dramatic rebalancing of global economic power” and forecasts that the combined economic output of Brazil, China and India will surpass the aggregate production of the United States, Canada, Britain, France, Germany and Italy by 2020. “The rise of the South is unprecedented in its speed and scale,” according to the document, titled ‘The Rise of the South: Human Progress in a Diverse World’.

China and India doubled their per capita economic output in less than 20 years, a rate twice as fast as Europe and North America experienced during the Industrial Revolution. The proportion of people living in extreme poverty worldwide fell from 43% in 1990 to 22% in 2008, with more than 500,000 million people rising above the poverty line in China alone.

The share of people living on less than $ 1.25 per day has been cut in half, meeting one of the main targets of the Millennium Development Goals. But the South faces similar long-term challenges as the leading industrialised nations, from an ageing population to environmental pressures and social inequalities.

Lack of action against climate change could even halt or reverse human development progress in the world’s poorest countries, pushing up to three billion people into extreme poverty by 2050 unless environmental disasters are prevented, the report said.

This is a fresh challenge for BRICS (Brazil, Russia, India, China and South Africa) but received little attention during their landmark conference last week, if media reports are to be credited. It is clear that internal differences hamper this key grouping of countries but they are keener to do business together rather than consider climate change issues. This report shows that environmental conservation is good business.

In the two-day summit in Durban, South Africa, the leaders of countries that make up more than 40% of the world’s population and a fifth of global GDP seemed to have little concrete to show from their mostly closed-door deliberations.

After mooting plans for a BRICS development bank at a summit in New Delhi a year ago, the leaders in Durban were only able to announce the start of formal talks on the constitution of the bank, a lumbering pace even for a group as diverse as the BRICS. This inability to found an institution that would rival the World Bank and the International Monetary Fund (IMF) was seen as a significant drawback to the BRICS, which wishes to change the economic world order – at least slightly.

Yet, with more countries such as Indonesia, Turkey, Mexico and Nigeria eyeing membership, the BRICS could expand to become as formidable a grouping as the G8, though there are some years and more hurdles to surmount before that goal is achieved.