BRICs: Aid and Investment and Impressions from the West

Emerging economies such as Brazil, China and India have always been recipients of foreign aid from Europe and North America since the end of the Second World War and were the subjects of global development projects that often failed to bring BRICs and similar economies out of poverty and create sustained and viable growth. In the late 1960s, some Asian economies like North Korea and Japan developed a model for growth that have made them into large industrial developed economies over the years since the 1970s. In the late 1960s, Latin America took to closing off their borders to trade and producing consumer goods from within in order to industrialise and move beyond being large agro-economies, but in the late 70s and throughout the 80s, Latin America was devastated by economic collapses that was worse than the 1920s stock market collapse and reoccurred several times in the region throughout the 1990s. Reforms and balanced budgets allowed some economies to rise out of the economic gulags. Brazil, China and India managed the economic crisis in 2008-2009 with temporary recessions during the global economic crisis, and were the first countries to see solid growth in 2010. As the US and EU struggle to manage their economies, countries like Brazil and China seek to invest in many developing nations, as well as give aid to many of those countries that have lost aid from the West or have political divisions with Western donor countries that often tie aid policy to political relations with their leaders.

Brazil has been able to avoid many of the fears Western countries have about a rising China due to the slower growth of Brazil matched with a pro-Western government that is seen as democratic by its allies in Europe and the US. Lula has also been able to keep Brazil at a balancing point between the leftist leaders in Latin America and capitalists and business class in the region as well. While China’s investment in Africa and abroad has given alarm due to its need for resources and policy of investing in African countries that have poor human rights records in exchange for oil and gas exclusivity, Brazil has been able to avoid any criticism as it gives aid to Africa and invests in developing countries without restrictions as well, including in Venezuela. In a July 15th article by the Economist discussing Brazil’s aid program, the author points out that aid from Brazil to places like Haiti and abroad is matching funds coming from advanced donor nations such as Canada and Sweden, but in Brazil’s case the funds are increasing while in many Western nations aid relief programs remain stagnant or are being cut. While an increase in Brazil’s aid abroad is welcomed by the West, an added benefit of Brazilian development programs that have been successful in Brazil are also being exported to developing countries with similar problems to that of Brazil. Some limitations to this new aid policy are that it could be seen as a personal project by Lula, who will likely not have his Workers Party win the next election and lose support for many programs in a country that still receives aid for its own population. As well, many impoverished in Brazil may see local needs and aid as having priority over foreign aid. As investment grows and controversy arises in countries where Brazil makes its investments, it might be criticised by the West if it does not react to human rights abuses in countries where Brazilian investment resides. This can be seen in Brazil’s action on Iran’s nuclear issue, putting Brazil against the US and EU and bringing some negative attention to Lula by Mrs. Clinton in the process.

While the BRICs are seen as one group of mega-economies that have reached the pinnacle of their development goals and are set to grow exponentially, there are differences and limitations between them. China and India are set to grow, but in China it seems that their growth may be offset by the age of its populations that will see a major dip since the one child policy took effect in the early 1980s. The large manufacturing class that has supplied Southern China with growth is nearing retirement age in China, these 40 something’s are close to China’s official retirement age, at 50, and there are fewer younger Chinese to replace a growing manufacturing sector. In addition, countries such as Brazil and Russia can produce and export oil and gas reserves and use their reserves for their own growth, China is in competition with Japan and India for reserves in the region and all share the same suppliers for their carbon based economies. Brazil could possibly export its ethanol technology and resources abroad, so when China is seeking to alter its economy so it grows out of the manufacturing stage of export growth, Brazil and Russia could use its highly educated technology sectors and resource wealth to supplement export lead growth instead of competing with European and North American economies that will be purely knowledge based economies over the next few years. While these factors and policies can be altered, it should be noted that BRICs are not invincible and are subject to the same policy successes and error as their European and American counterparts.