BRIC countries may become leaders of the world economy if they overcome cultural hurdles

BRIC countries may become leaders of the world economy if they overcome their cultural hurdles, says Yevgeny Yasin, a leading Russian economist, former Minister of the Economy and currently head of research at the Higher School of Economics.

BRIC countries may become leaders of the world economy if they overcome their cultural hurdles, says Yevgeny Yasin, a leading Russian economist, former Minister of the Economy and currently head of research at the Higher School of Economics.

“The natural growth rate in developed countries is 2%-3% a year compared with 7%-8% in the developing world. But it does not follow that developed countries are in decline while the BRIC countries are catching up and overtaking them. They can only become leaders after they overcome what could be called a cultural hurdle,” he said in an interview to RIA Novosti.
In Mr. Yasin’s opinion, it is only after they tackle their cultural hurdles that the BRIC countries will have incentives to promote innovations. That will give them a chance to become active players in the world market. “So far this is a remote prospect,” the expert added.
Mr. Yasin believes that the most influential country of the four is China “due to the size of its population, the huge untapped domestic market and cheap labor”.
“China undoubtedly will have the greatest growth potential for another 15-20 years,” he predicts.
His forecast is based on the fact that China is going through the phase of late industrialization. In addition, China has immense human resources: There are 200 million Chinese living in rural areas, while agriculture does not need that many, and so these people will go to the cities to seek employment at industrial enterprises.
“As for other BRIC countries – Russia, India and Brazil – the question of jobs is still more acute there,” Mr. Yasin says.

THE HURDLE
Mr. Yasin notes a serious cultural hurdle in India. “India’s 800 million rural residents are in thrall to the conservative religion which goes some way to explain the fact that 35% of India’s population is illiterate and 40-50 million children do not go to school,” he says.
Russia, according to the expert, occupies an intermediate position and is already an industrialized country.
“The industry is not as competitive as in the West but it employs the greater part of the Russian population. We have no untapped manpower reserves. This is a feature that we share with developed countries,” he adds. Simultaneously Russia has some features that put it in the same category as developing countries.
“One is cultural backwardness, and I know what I am talking about. We have nothing to boast about in terms of culture,” Mr. Yasin says.
He explained that so far Russian people, and he himself, can only pride themselves on the achievements of the past: Pushkin, Tolstoy – this is our past that we should be proud of. But what do we have now? What trump cards do we have?”
Mr Yasin is sure that the main cultural hurdle in Russia is that the individual, his life and dignity are still not regarded as the supreme value.
“Our cultural hurdle is that the individual is not treated as he should be,” he concludes.
Mr. Yasin believes that “Russia stands closer than the others to the cultural hurdle and can no longer delay tackling it.”
“However, the hurdle here is lower than in the other countries. We are a country belonging to the European culture and we embrace the same values as the Europeans,” he concludes.

A CLUB WITHOUT SHARED INTERESTS
The expert is skeptical about the BRIC countries creating an influential international organization. He points out that G8 is not an international organization but its weight in the world is such that its opinion is heeded by all the other countries.
“BRIC does not have such a future. I think it will remain an informal club in substance and in form,” Mr. Yasin says. He elaborates his thesis: The four developing countries are very different in terms of their development, economic structure and cultures. “Nothing unites them and they cannot unite, for example, in order to control the world economy. They have totally different goals and practically no common interests, unlike, for example, the OECD,” the expert says.
Mr. Yasin notes that the BRIC countries will continue bilateral cooperation but “creating a pool that would dictate the rules of the game to the whole world – I don’t think that will happen.”

NEITHER THE ROUBLE NOR THE YUAN
Mr Yasin does not think that the task of turning the national currencies of the BRIC countries into world reserve currencies will be accomplished any time soon. “The rouble may become a reserve currency, but only on one condition: If there is a high level of trust in Russian institutions on the part of other countries, and that is only possible if Russia’s institutions are trusted by its own people,” the expert maintains.
Another important factor that may change the status of the rouble should be production diversification. Russia should not depend on the commodity market. Mr. Yasin believes that so far the talk about turning the rouble into a reserve currency is premature.
“This is a declaration of our ambition, the wish to show that Russia has got up from its knees, but this is not enough. It is necessary to have a stronger foundation. Hopefully we will achieve this over time,” he says.
In the meantime the Russian rouble can only claim to become a regional reserve currency “if we agree with our next-door neighbors (Kazakhstan, Belarus, Kyrgyzstan) to have payments in roubles,” the expert explains.
As for the yuan and its chances of becoming a reserve currency, the expert points out two circumstances that stand in the way so far.
“The yuan is not a convertible currency, so that closes the question. To make it convertible means that once it emerges in the market the yuan, whose rate is fixed by the state, will rise sharply and the potential of Chinese export would dramatically diminish,” Mr. Yasin explains. If China makes its national currency convertible it will no longer be able to sustain its high rate of economic development.