BRICS – a step towards prosperity and democracy

The Hainan summit of BRICS (Brazil, Russia, India, China, and South Africa) gives a foretaste of what the world will increasingly look like in the 21st century.

The population of BRICS is 2,935 million, 42% of the world's total. To give a comparison, the G8's population is 887 million, 13%.

Nevertheless, for a long time in history power counted for more than people - the G8 took decisions affecting the other 87% of the world's population without the latter's involvement.

It would be nice to report that the present evolution beyond this, with the G20 replacing the G8 as the world's main economic body, and with emergence of BRICS, reflected only reasoned argument. But in reality it is developing economies increasing economic power that is changing the world's reality and more slowly its perceptions.

China is today the world's second largest economy, whether measured at market currency rates or economically realistic exchange rates assessing varying prices in different countries – Parity Purchasing Powers (PPPs). Measured by the IMF's PPPs, India's is now the world's 4th largest economy, Russia's the 6th, while Brazil's economy is already larger than Italy's and almost as large as the UK's and France's.

Only the US remains decisively larger than any BRICS economy. But even here by 2020, on IMF calculations, China's economy will be as large as the US.

In summary, to take the title of Bob Dylan's famous song, 'The Times They are a-Changin'.

Because this is a trend in the world economy, as yet an unfinished process, some perception still lag developing reality. The Financial Times, one of the world's most influential publications, headlined an article on the BRICS summit 'No common cause'. It argued: 'The BRICS nations… have little in common beyond size and growth. They are increasingly fighting for a share of the same markets – often each other's.'

But such economic analysis is confused in seeing the world economy as primarily a 'zero-sum game'. Economic ties between developing economies, such as BRICS, as between all countries, are primarily beneficial – primarily 'win-win'. Competition is certainly real but secondary. This economic reality was demonstrated during the international financial crisis, when developed economies fell into recession and growth by developing economies helped pull each other out of recession.

To see the underlying dynamic, it is worth recalling that twenty nine years ago Deng Xiaoping, with a famous ability to think long term, noted: "During recent years the Third World has developed to some extent… every country has some good things to exchange with other countries and can cooperate… If we want to change the international economic order… we have to find new ways to increase South-South cooperation."

Deng naturally didn't foresee 'new ways to increase South-South cooperation' included using a phrase invented by Goldman Sachs – BRIC. But he saw the trend of development entirely accurately.

The BRICS summit is part of one of the world's most powerful economic processes - a step on a path to mutual prosperity and international economic democracy.

John Ross is Visiting Professor at Antai College of Economics and Management, Shanghai Jiao Tong University.