Despite the international debate surrounding economic liberalization – one that is given fodder by the current global recession -  it is likely that by 2025 the world will be more economically interdependent than it is today.  The “BRIC” countries – Brazil, Russia, India, and China – will increasingly become the world’s major economic players with respect to both production and consumption.

The March of Globalization

Globalization has forced the integration of emerging and developing markets into the global economy and increased the flow of goods and human capital through trade and investment.  The benefits of integration, to both developed and developing countries have become clear in recent decades. The Eurozone’s GDP is now higher than that of the United States, a development that has encouraged European nations to join the EU and countries in other parts of the world to form competing trading blocs - the Southern African Development Community and the Eurasian Economic Community serve as some notable examples. [1]   Worldwide exports have increased dramatically - they now represent thirty percent of GDP, up from seventeen percent in the 1970s. [2][3]  International bank lending grew from $265 billion to $4.2 trillion over a 19 year period from 1975 to 1994.  People are even traveling more, with 846 million individuals trekking internationally in 2006, a seven percent increase from 1980. [4][5]  Despite any short-term hiccups, the global market, with the help of new technologies and proactive financial institutions, is expanding to include new groups of people each day.

While some treat economic integration like a free lunch, the true effects of globalization are a mixed bag.  Our world is split largely between those who have benefitted from integration and those who have not. Concerns over national identity, heritage, and culture have come to the fore as more people, resources, and ideas are exchanged across borders.  In countries as diverse as Italy, South Africa, Indonesia, India, and Turkey, restrictions on immigration enjoy the support of over eighty percent of the population. [6]  This can be viewed as a negative reaction to the effects of globalization.  In this era of porous borders and complex information flows, governments are becoming more aware of security threats and strategic weaknesses.  By and large, people have benefited from economic integration, but we will need to critically examine the global economic system in order to spread its benefits more broadly and to avert protectionism, prejudice, and illicit activity that can result from rapid economic integration.

BRIC Economies

If they can consolidate the conditions necessary for structural growth, by 2025 the sum of the GDPs of the BRIC economies could equal half the equivalent of the G-6 countries (United States, Japan, Germany, United Kingdom, France, and Italy). By 2040, assuming strong and sustained growth rates, they could overtake the G-6 altogether. [7]  China is leading in this race to the top because of its high levels of foreign direct investment and double digit growth. [8]  Over the next 25 years, the GDPs of the BRIC countries will increase at break-neck speeds as they marshal their ample supplies of natural resources and human capital for economic development. However, over time, their markets will begin to appear more like those of the G-6 countries, and when this happens, growth will occur at a slower pace.  Furthermore, in spite of this tremendous progress, in 2050 per capita income in China will still be around $30,000, roughly what it is today in the West. [9]   The divisions between the haves and have-nots in the BRIC countries are stark, with millions of Indians, Chinese, Brazilians, and Russians excluded from the benefits of economic integration.  Eventually, resource scarcities, demographic shifts, price fluctuations, and political strife may prevent some or all of these countries from enjoying the prosperous future experts once predicted for them.  Of the four, Russia is probably most at risk.  Russia’s economy is largely dependent on oil and is subject to the vagaries of global demand and international crude prices.  If the government does not diversify and invest in non-extractive industries, Russia may fall behind, leaving us with just a “BIC.” [10]

Poverty & Inequality

Tremendous economic prosperity experienced in recent decades has not affected all people in the same way.  Globalization has failed to pull the poorest out of poverty, while in other parts of the world it has enabled the development of a middle class.  Disparities exist not only between countries but within them as well. The fact remains that a staggering 2.8 billion people live on less than two dollars a day and the richest ten percent of the population accounts for fifty-four percent of total global income. [11]  High levels of income inequality are bad for growth and are associated with many of the negative side effects of globalization, including nfant mortality and illiteracy. [12]  The prices of basic commodities continue to fluctuate, making it increasingly difficult for the poorest of the poor to meet their daily needs.  When citizens are starving or when they see their government keeping more than its fair share of national income, it can threaten social stability.

At the same time, we are witnessing the expansion of the global bourgeoisie.  When countries plug into the international system, their citizens are often able to attain better jobs with better pay.  In order to find these jobs, farmers move from small towns and villages into bustling cities.  Financial institutions also begin to extend credit to these individuals, previously ineligible for loan money, viewing their extra income as insurance against default. With time, the huge income gaps we see today may become relics of the past.  This middle class, freed from the burdens of subsistence living, may push for greater civil liberties and start to demand accountability from elected officials. [13]  This bourgeoning middle class could be the driving force behind the democratic movements of the future.

Erik Peterson on Economic Integration

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