New Centers of Power in the International Arena
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Doctor of History, Professor of the Comparative Political Studies Department at MGIMO-University, RIAC expert
At the beginning of the 21st century, the international community has witnessed the emergence of new centers of power, namely China, India, Brazil, Turkey, and Iran. It is natural to associate their rise with globalization and the entrance of new countries into stretches of rapid economic growth. In this regard, analyzing the reasons for unevenness in economic growth is quite interesting. What determines the success of some countries and the failure of others? Despite their large population, vast resources, and progress in raising the general level of education, countries such as Pakistan, Egypt, Nigeria, and Argentina have failed to take part in this race.
At the beginning of the 21st century, the international community has witnessed the emergence of new centers of power, namely China, India, Brazil, Turkey, and Iran. It is natural to associate their rise with globalization and the entrance of new countries into stretches of rapid economic growth. In this regard, analyzing the reasons for unevenness in economic growth is quite interesting. What determines the success of some countries and the failure of others? Despite their large population, vast resources, and progress in raising the general level of education, countries such as Pakistan, Egypt, Nigeria, and Argentina have failed to take part in this race.
From an economic standpoint, the development of any country is determined by a number of factors. These include, primarily, education, the presence of natural resources, total population and the amount of investment per citizen. Over the course of a single decade, the first three factors are rather stable and unlikely to undergo significant changes. In contrast, the level of investment turns out to be very sensitive not only in relation to these above-mentioned factors, but to other, no less important factors as well. This second group of factors is political in nature and reflects the stability of the political regime and its attitude to business, property rights and corruption. It seems reasonable to assume that investment will occur in a country with an unstable political regime which fails to promote business development, violates the rights of ownership, and does not fight corruption. Therefore, the problem of developing new centers of power boils down to the ability of the state to create the conditions stated above, while providing for a high level of investment.
Most of the new centers of power are relatively “young” states, established after World War II.
At the same time, most of the new centers of power are relatively “young” states, established after World War II. The formation of their public institutions took place during the collapse of the colonial system. Contrary to the belief popular in the mid-20th century, the state is not born as a comprehensive whole. The conviction that the “right” constitutional order will ensure conditions for investment is now regarded as quite naïve in the first half of the 21st century.
According to the latest theories, at the time of its birth, a state inherits a set of social institutions that existed previously on its territory. Moreover, the “new” state is always established as a balance of contending political forces, and its development, including in the constitutional realm, results from the struggle between them. Thus, the constitution is under continuous pressure from the previous set of institutions, and the idea that one can arbitrarily “design” a constitutional order almost never proves true.
The constitution is an equilibrium outcome of this struggle involving the pre-existing social forces, with all of their specific interests. Being imposed from the outside, the constitution faces the pressure from these forces, which may eventually lead to its destruction. There are many examples testifying to this. Thailand has changed 18 constitutions since World War II. There have been many attempts to reform constitutions in countries such as Egypt, Turkey, Iraq and others. Therefore, the fundamental issue for the development of the state as a new political force is not a formal constitutional order, but the actual consent of its formative forces to provide adequate conditions for investment in the economy, that is, respect for the rights of business, property rights, and the establishment of the non-corrupt state apparatus.
The fundamental issue for the development of the state as a new political force is not a formal constitutional order, but the actual consent of its formative forces to provide adequate conditions for investment in the economy.
Following World War II, many “new” countries have tried to solve this problem by creating an economic system with the complete domination of the state. However, practice has shown that this approach does not ensure the establishment of conditions necessary for economic development. Regardless of whether the established system was single-party or multi-party, the fighting clans involved in certain activities – the army, the security service, the ministries of natural resources production – still remained real political actors. Nobody has managed yet to avoid unseen political pluralism, and if this pluralism is neither embedded in the political system, nor marked clearly, the struggle often takes violent forms and its outcome becomes unpredictable.
This lack of predictability, which results in a sudden reversal of state policy and the replacement of a part of the ruling elite, places a serious obstacle in the way of economic development. Indeed, under such circumstances, internal and external economic actors lack confidence and cannot not but worry about either sudden changes in political preferences over the distribution of economic benefits, possible property seizures, or corruption claims.
It makes sense to take a closer look at some new centers of power that have emerged in the beginning of the 21st century. China appears to be the most striking example. Over the last decade and a half of the 20th century, China carried out intensive economic reforms. Thanks to its huge population, the country could take advantage of cheap labor. Having combined traditional with modern technology, China began to show very high GDP annual growth rates at the end of the 20th century, namely 10-12 per cent.
The authoritarian political system in China contributed to investors’ confidence, since it made it possible to negotiate investment projects with just the government which would guarantee the safety of investments. The Chinese authorities were well aware of the fact that the breaches of contract would put an end to the flow of funds, and China managed to invite an exceptionally high level of investment. Creating special economic zones along the coast with easy access to areas of production made a significant contribution as well. In fact, China's territory was divided into two parts – the free economic zones, where the standard of living rose rapidly due to high wages, and the rest of the country which experienced poorer economic performance. The Chinese government has used this division principle under the slogan “some will get rich before others.” China still enjoys high rates of production growth, although over the last several years, they have averaged 8-9 per cent of GDP.
Nobody has managed yet to avoid unseen political pluralism, and if this pluralism is neither embedded in the political system, nor marked clearly, the struggle often takes violent forms and its outcome becomes unpredictable.
The Chinese performance was patterned after the Japanese model of economic development. In the initial period, production was focused on low-tech goods, such as toys and clothes, which were widely exported to the United States and the EU countries. As Chinese light industry successfully developed, the country moved on to producing consumer electronics and computers, and then – to the development of its car industry. Since most of these products were exported, the Chinese government has accumulated significant foreign currency assets. The country’s foreign exchange reserves now amount to about three trillion dollars and continue to grow. This concentration of resources has made the United States and the EU somewhat dependent on China's currency policy, since Beijing can influence the exchange rates of the major world currencies. The Chinese Yuan remains highly undervalued, as the government has deliberately maintained a low rate of exchange to promote exports.
In recent years, the Chinese authorities have adopted a large-scale program of naval development to back the country’s intensive economic expansion into Africa and Latin America.
Until recently, China has refrained from ambitious rearmament programs which might cause alarm among its economic counterparts. But in recent years, the Chinese authorities have adopted a large-scale program of naval development to back the country’s intensive economic expansion into Africa and Latin America.
In the past, China also used to refrain from active engagement with foreign countries, which, in a sense, continued the historical policy of isolation from the outside world that the country pursued in the 16th-18th centuries. But in the mid-1980s, China adopted a program of technological development, which included the training of hundreds of thousands of students in the best universities of the United States and Europe at public expense. Only a small number returned home after graduation, but the Chinese government had not insisted that they do so. Former students began to return to China in the middle of the first decade of the 21st century, enjoying a different status and opportunities to earn more money in their home country than in the West. Thus, China to date has, to a large extent, solved the problem of bridging the technological gap, and has become one of the leading industrial nations – the “world’s factory.” In the near future, China will surpass the United States in terms of GDP, and although the former’s GDP per capita indicator remains relatively low, China's role in the world economy is becoming more and more decisive.
India has taken a somewhat different path. This country moved towards a market economy in the middle of the 1980s, which was rather late and at about the same time as China. Prior to this, India had placed its main emphasis for its development on Soviet-type industrialization, that is, the creation of powerful industrial complexes owned by the state. Following the change in economic policy, the emphasis was placed on creating and developing information technology, which was largely due to the peculiarities of Indian culture; already in the first millennium AD, India was famous for mathematical creativity. In addition, Indian culture has always favored the development of speculative philosophical theories, which also proved to be quite useful for training programmers and developing software.
Economic growth in India has never reached the level of China and has averaged 5-6 per cent a year. However, even such relatively moderate growth, maintained for several decades, has led to an impressive volume of national product. In recent years, India has carried out an ambitious program of economic expansion in Africa, where many of its emigrants have lived since the beginning of 20th century. By the end of the last century, India, like China, had become a nuclear power and begun to develop a space industry. At present, India has an extensive program of rearmament, purchasing weapons both from Russia and from the West. Given the huge population of the country, India is beginning to play a more active role in world politics.
In recent years, India has carried out an ambitious program of economic expansion in Africa, where many of its emigrants have lived since the beginning of 20th century.
South Africa and Brazil offer two other examples of rapid economic rises. In the 20th century, South Africa faced a number of racial conflicts. Despite the fact that South Africa is the most developed country on the continent and enjoys a really high level of technological development, the difficulties of economic growth are still quite present, as well as the vestiges of racial conflict. The white population of South Africa, consisting of the Boers (descendants of Dutch colonists) and English-speaking descendants of the British, pursued a policy of segregation for almost the entire 20th century, trying to exclude the black population from governing the country. In South Africa, there are large segments of mixed population, as well as numerous descendants of Indian colonists.
Before the historic decision to abolish apartheid in the 1990s, the country successfully developed nuclear technology and coal liquefaction technology. This was largely due to international sanctions imposed on South Africa in response to the racial discrimination. After reaching an agreement to put an end to apartheid, Nobel Peace Prize winner Nelson Mandela was sworn in as South Africa's president and consistently sought to mitigate racial tensions. Despite this, the vestiges of prolonged racial confrontation still shape South African politics and society. The crime rate is very high and the white population is continuing to leave South Africa, but on the whole the country, with its great natural resources potential, namely diamonds, gold, uranium and coal, can achieve high rates of economic growth in the 21st century. This is evidenced, in particular, by South Africa’s accession to the BRICS group, which unites five promising and fast-growing economies that could account for more than half of the global GDP by the middle of the 21st century, as international economic analysts forecast.
All four countries under analysis are BRICS members, who are seeking to transform the system of international finance and trade management, using the Group of Twenty (G20) as their main tool, and to intensify mutual coordination.
Brazil is another new economic giant with developed modern industries that produce a variety of products from computers to aircraft and compete successfully on world markets. Achieving economic success was easier for this former Portuguese colony than for the Spanish colonies in Latin America, since Spain had a highly centralized administrative structure and its population lacked skills of self-employment. Many contemporary analysts note that in contrast to Spanish colonization which drew a distinct line between the Creoles (descendants of Spanish colonists) and the local population (Indians and mestizos), the Portuguese colonies had no such division, and sociologically, Brazil’s population appears quite homogeneous, regardless of skin color.
In addition, Portugal’s trading prowess created better conditions in Brazil for participation in international trade and industrial development. Brazil took part in Latin America’s left turn of the last decades, and at the moment the country is headed by a “leftist” government, which favors a well-balanced approach to the distribution of economic wealth.
All four countries under analysis are BRICS members, who are seeking to transform the system of international finance and trade management, using the Group of Twenty (G20) as their main tool, and to intensify mutual coordination. This concurrence of actions, however, does not signify the absence of political disagreements among the BRICS countries, but the importance attached to these disputes has been largely shaped by a common desire to restructure the global economic system through joint efforts.
There are many other examples of emerging powers with rapidly developing economies that are beginning to exert influence on world politics. They include such countries as Saudi Arabia and the Gulf monarchies, Indonesia, Malaysia, Thailand, Mexico, and Turkey. All faced clear difficulties when the global economic crisis broke out in 2008, and the recovery of economic growth in developed countries has only aggravated their problems. The involvement of newly industrialized states in regional and internal conflicts may slow down their economic growth and complicate their domestic economic situations in the future. One such example of the difficulties that the economies of newly industrialized countries face, is the substantial devaluation of national currencies that India and Brazil were forced to carry out in 2013 under pressure from their currencies’ exchange rates.
Lagging behind in fundamental research may not be particularly noticeable at the present stage of economic growth, but it is bound to affect the pace of development in the future.
Another problem these countries are facing is the technology gap, particularly, in the basic sciences. Virtually none of the above countries can compete with Europe, North America and Japan in the development of fundamental sciences. Lagging behind in fundamental research may not be particularly noticeable at the present stage of economic growth, but it is bound to affect the pace of development in the future, if analysts' forecasts for the expected share of the newly industrialized countries in the world GDP turn out be overly optimistic. The successful transfer of technology cannot make up for the knowledge gaps that newly industrialized states face due to significant brain drain.
Assessing the prospects for newly industrialized countries, we should note insufficient coordination in their efforts to gain advantages in the global division of labor and wealth. Their involvement in regional conflicts and inadequate levels of education are the major obstacles in the way of tipping the world balance of power in their favor. It is quite possible that by mid-century, these countries will manage to overcome their current difficulties, and then the economic and political configuration of the world will surely change.
Complete “legitimation” of new centers of power is unlikely to take place before the middle of the 21st century, and by that time, the combined GDP of the BRICS countries is unlikely to make up more than half of the world’s GDP, as some optimistic analysts are forecasting.
Nevertheless, the new power centers have already begun to exert influence on world politics. We have already mentioned that China has intensified its activity in Africa, where Beijing has interests in oil resources. Saudi Arabia is pursuing an active policy in the Middle East by supporting Syrian rebels who fight against the regime of Bashar al-Assad. Turkey seeks to strengthen its positions in the Middle East and Central Asia. BRICS countries are applying efforts to change the situation in the global financial system, acting mainly through G20 summits.
The new centers of power are challenging the balance of forces in various areas of world politics, primarily in the field of economics. They are taking advantage of their higher rates of GDP growth and of the fact that the old world powers have been weakened by economic crisis. The United States and the EU are countering the newly industrialized countries with actions in the financial sector and in the sector of high technologies. Thus, Brazil, Turkey, Russia and India had to substantially devalue their currencies last year because of the outflow of Western investments from emerging markets, and the change in the balance of trade in favor of the old centers of power. The existing superiority of the Western countries in advanced technology greatly facilitates attaining this goal for them, since the development of the scientific potential of the new centers of power requires a long time, maybe several decades.
Summing up, we can assume that complete “legitimation” of new centers of power is unlikely to take place before the middle of the 21st century, and by that time, the combined GDP of the BRICS countries is unlikely to make up more than half of the world’s GDP, as some optimistic analysts are forecasting.
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