Industrialized countries advanced by means that have been impermissible to the developing world, write Anis Chowdhury and Jomo Kwame Sundaram.
The notion of the BRICS (Brazil, Russia, India, China, and later, South Africa) was concocted by Goldman Sachs’ Jim O’Neill. His 2001 acronym was initially seen as a timely, if not belated acknowledgement of the rise of the South.
But if one takes China out of the BRICS, one is left with little more than RIBS. While the RIBS have undoubtedly grown in recent decades, their expansion has been quite uneven and much more modest than China’s, while the post-Soviet Russian economy contracted by half during Boris Yeltsin’s first three years of “shock therapy” during 1992-1994.
Unsurprisingly, Goldman Sachs quietly shut down its BRICS investment fund in October 2015 after years of losses, marking the “end of an era,” according to Bloomberg.
Growth spurts in South America’s southern cone and sub-Saharan Africa lasted over a decade until the Saudi-induced commodity price collapse from 2014. But the recently celebrated rise of the South and developing country convergence with the OECD has largely remained an East Asian story.
Increasingly, that has involved China’s and South Korea’s continued ascendance after Japan’s financial “big bang” and ensuing stagnation three decades ago. They have progressed and grown rapidly for extended periods precisely because they have not followed rules set by the advanced economies.
Industrial policy — involving state owned enterprises (SOEs), technology transfer agreements, government procurement, strict terms for foreign direct investment and other developmental interventions — was condemned by the Washington Consensus, promoting liberalization, privatization and deregulation favoring large transnational corporations.
Well-managed SOEs, government procurement practices and effective protection conditional on export promotion accelerated structural transformation. When foreign…