CAMBRIDGE – Last month, China’s new president, Xi Jinping, chose Moscow for his first foreign visit. He and Russian President Vladimir Putin announced a number of agreements and then traveled to Durban, South Africa, for the fifth “BRICS” summit, where they joined with the leaders of India, Brazil, and South Africa to announce the creation of a new development bank that could challenge the dominance of the World Bank and the International Monetary Fund. The five leaders’ speeches referred to a shifting world order, and Xi said “the potential of BRICS development is infinite.”
It looked as if the BRICS had finally come of age. Three years ago, I was skeptical about the BRICS. And, despite the recent summit’s apparent success, I still am.
Nearly 12 years ago, Jim O’Neill, then the chief economist for Goldman Sachs, coined the term “BRIC” to describe the “emerging markets” of Brazil, Russia, India, and China. From 2000 to 2008, these four countries’ share of global output rose rapidly, from 16% to 22% (in purchasing power parity terms), and their economies performed better than average in the subsequent global recession.
For investors, that outcome justified the creation of the catchy acronym. But then a strange thing happened: the investors’ creature came to life. In 2009, the four countries met for the first time in Russia in an effort to forge an international political organization. South Africa joined the bloc in late 2010 primarily for political reasons. As O’Neill recently told China Daily, “South Africa is quite fortunate enough to be in the group, as, economically, it is rather small compared to the others.” Moreover, its economic performance has been relatively sluggish, with a growth rate of just 2.3% last year.