Official

News Business

Joseph S. Nye Jr, Neoliberalism Theory’s co-creator, claims that Russia is a force in downfall, not an emergent force. Check the reasons why other countries develop more ‘’soft power’’ then Russia.

By Maiara P. Costa 5 December 2011

In this article:

What is the BRICs? Who created the BRICs? Why does Russia have a weak ‘’soft power’’? Who has the potential to increase its ‘’soft power’’? What is the role of China in this matter?

Ten years ago the BRICs alliance was created (back then the group was formed by Brazil, Russia, India and China; the ‘’s’’ was added later with the integration of South Africa in 2011).

This group was formed by the British Jim O’Neill, Goldman Sachs’s Bank economist-chef at the time.

Joseph S. Nye Jr, now professor at the Harvard University Government School, who co-founded the Neoliberalism Theory, created the ‘’soft power’’ concept which defines the capability that countries have to reach their goals through the influence of their values, such as culture and politics , instead of using the military force.

In a recent interview he has exposed some ideas about this issue and why Russia would stay in a inferior position in relation with other BRICs countries.

He thinks that individually, China, India and Brazil perform more relevant roles in the group. But he does not believe that Russia really belongs to the group.

‘’Russia is a force in decay, not an emergent one.’’, he says.

Russia is now considered the odd one out of the BRICs and you can see now why. Its workforce is shrinking: incredibly, the working age population is likely to fall by around a third between now and 2050. It is outside the top 10 economies by GDP and expected to remain so.

Oil wealth will keep Russia at the top table of countries for some time to come, but it is unlikely to face the challenges of managing their economic success that China, India or Brazil has gone through.

We cannot forget that, between 1989 and 1998, Russia went through a severe crisis. It was a crisis of transformation caused by the collapse of the Soviet system and a wide range of reforms. As a result, Russia became a country with a market economy.

BRICs are able to transform the rise of the economic importance of ‘’soft power’’?

‘’Many of these countries have already some ‘’soft power’’ and are interested in increasing it. Brazil’s ‘’soft power’’ comes from its culture and has a successful growth. India has the ‘’soft power’’ of the movie industry of Bollywood that is quite impressive. The President of China, Hu Jintao, has already said that the country should increase its ‘’soft power’’. The Chinese government is using billions of dollars for this purpose.’’

He is right. Moreover, China is now tipped by the music industry as the market they most want todevelop too. About 75 million people have real disposable income - equal to the entire population of a large European country, and enough to create a consumer boom in entertainment.

While the economy has been growing at about 9% a year, record sales have been increasing at a rate of over 20 per cent a year since 2000. And that is leading to huge changes in Chinese music.

In contrast, China has the problem of being autocratic, which means that when they try to increase their ‘’soft power’’, it has to be on their own terms.

Brazil and India do have the great advantage of having a large home market and a lot of home consumers. Incidentally, you can say the same of Indonesia, which many think should now be an informal BRIC.

Brazil also depends a lot on commodities for its growth. Like India, its infrastructure is weak and its government institutions inefficient. Inflation in both countries is more or less endemic.

Can the current crisis in the European Union create a blank in the global space of forces that could be fulfilled by the emergent nations?

‘’I think that emergent countries will rise their influence no matter what happens with the euro. Countries like China India and Brazil will increase their part of the worldwide products whether the euro keeps its strength or not. But when and if the euro begins to collapse, the first effect of that will probably strengthen the dollar and not the Yuan (Chinese currency) or any other currency of any emergent country. If that happens, investors will pursue a refuge and will value even more the US currency than the emergent countries’.’’

Many economists, including the heads of the US and British central banks, say China's high savings and its semi-fixed exchange rate helped cause the financial crisis by producing a glut of global liquidity. Others say there is more than enough blame to go around.

But whether or not China helped cause the crisis, no need to say that it should be part of the solution, because, without higher Chinese consumption in China, the only way the global economy will become more balanced in the future, with less debt in countries like Britain and America, is by those countries also having little or no economic growth.