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1 Emergence is More Than Just Economic Growth
Are there any particularities in the international production and the circulation of norms by southern actors? Can we speak of a new phase of integration among southern societies and states since the 2000s? What is the role of the so-called âemergingâ powers in this process of integration, and how do we define this category? These questions drive this contextualisation chapter. To begin with, the chapter relies on the notion of international âemergenceâ and begins with its politico-economic criteria. Moreover, the chapter also leans on the symbolic fundamentals of âemergenceâ, particularly linked to the notions of âdevelopmentâ and âpovertyâ. Finally, it discusses the recent context of deepening ties between emerging powers and their southern partners.
Empirical Context: Economic Growth and Diplomatic Activism
Expansion of Economic Markets and Redefinition of the Stateâs Role
Predominance of the Criteria of Economic Growth
The âemerging marketsâ were designated as rapidly transitioning and industrialising countries in the 1980s, presenting investment opportunities that resulted in their growth and the growth of their financial systems while also presenting remunerative investment risks, such as the Asian âtigersâ and âdragonsâ. The concept was coined by an International Finance Corporation (IFC) economist, a subsidiary of the World Bank, who wanted to demonstrate that contrary to the thinking of the time, the worldâs economic centre of gravity was shifting progressively towards a number of developing countries. These countries enjoyed significant growth rates and presented a set of promising avenues for foreign investment that had previously been ignored. For example, the IFCâs Third World Investment Fund became the Emerging Markets Growth Fund: âRacking my brain, I at last came up with a term that sounded more positive and invigorating: emerging markets. âThird worldâ suggested stagnation; âemerging marketsâ suggested progress, uplift, and dynamismâ (van Agtmael 2007, p. 5).
These ânew industrialised countriesâ of Asia had growing weight in the global economy, a weight attested to by the increase of exports as well as by the attraction of foreign investors. Other economies also followed suit from the 2000s, notably, China, Brazil, and India. While sharing factors such as relative institutional stability capable of ensuring market regulation (Jaffrelot 2008), these economies were also profoundly heterogeneous in terms of their growth structure or their GDP, as well as from the point of view of international activism (Salama 2014).
Given the origins of emergence and its development in the financial world, the centrality of the economic dimension appeared to be inevitable. Often used by international credit rating agencies, this category emphasised criteria such as market capitalisation, GDP per capita, the macroeconomic environment, the size of the market and its companies, and the level of corruption. These countries have also benefited from a significant demographic dividend, which contributed to the rise in the importance of these markets. The real success of the acronym BRIC (Brazil, Russia, India, and China), introduced in 2001 by the investment bank Goldman Sachs1 only confirmed the financial centrality of this concept. Emerging economies would have been âsuccessfulâ in the modern liberal world order, as they were products of liberal structural adjustments and evidence of the combination of rapid growth, increased globalised markets, and consolidated âinstitutional know-howâ.
Participation in world trade and in foreign direct investment have been two additional factors used to characterise an economy as emergent. Figure 1.1 below shows the annual change in the volume of exports of goods and services of BASIC (Brazil, South Africa, India, and China), which was consistently higher than the global average from 2010 to 2015. Although investments continued to be restricted to certain sectors and countries, the âincomingâ and âoutgoingâ investments of these economies towards southern and northern countries represented a new and major phenomenon (Richet 2014). Based on unclear definitions, the list of âgood performersâ in economic matters represented another âconundrumâ, as it has been extremely variable depending on the studies (Gabas and Losch 2008). As recalled by Alden et al. (2013), some analysts consider the term âemergentâ inadequate, as the growth of China or India reflect only a return to historical conditions that prevailed for almost a millennium until the eighteenth century. The same argument can also be used for Russia which, in spite of its economic results, represents an imperial â and not colonial â power that was excluded from the international scene in the aftermath of the Cold War.
Moreover, the economic and financial crisis that originated in the United States in 2007 in the mortgage markets and spread to global financial markets in 2008 has had significant repercussions for the global economy, and âadvancedâ economies in particular (Europe, United States, Japan, etc.). This resulted in an almost universal global recession for a short period of time. Simultaneously, the rise of food prices in the international markets drove a âfood crisisâ in a number of southern countries, especially in Africa. Indeed, as explained by François (2013), the idea of a global food crisis is too simplistic to describe climatic hazards and the impact on farming societies in the Global South; however, this episode contributed to push the fight against hunger and agricultural policies to the core of international concerns. These incidents created a structure of opportunity for emerging countries, which continued to experience higher growth rates than countries in Europe or the United States after the crisis.
Figure 1.1 Export volume of goods and services (percentage annual variability), 2000â2015.
Source: Adapted from IMF data (2015).
To sum up, in spite of its fragile character, GDP as an indicator of growth has been internationally recognised as a factor in characterising emerging economies and as the primary source of interest of financial institutions towards these countries in the early 2000s. Participation in international trade and financial flows or the trends towards economic convergence have been other factors that followed the growth factor in the study of emerging economies. However, this characterisation is weakened if we do not take into account political aspects, or even internal indicators such as social inequalities. In addition, the central role of the state in the macroeconomic orientations of a large number of these countries has not been considered by the financial agencies in their classifications. This is, however, a peculiarity of the political trajectory of most of these countries, which to a certain extent confronts the dominant orientations of the international financial institutions. This aspect will be discussed below.
Proactive Policies and Economic Specialisation
The specific role of the state in macroeconomic management has been highlighted by studies examining the political and economic trajectories of Asian countries, which fundamentally contrast with liberal orientations. In spite of the heterogeneity of these trajectories, the state generally runs state-owned enterprises, carries out voluntarist industrial policies, and does not hesitate to control capital (Plihon 2013). As a result, the industrialisation and growth of these countries has been more closely tied to their public policies than to the results of economic globalisation.
Several Latin American countries, including Brazil, have followed proactive national industrialisation projects on the basis of import substitution. The centrality of the state as a social, economic, and political actor is a recurrent theme of economic literature in the region. In Brazil, substantial consumer credit and rising average wages (larger than labour productivity) helped boost the domestic market in the 2000s (Salama 2014). Social policies of conditional cash transfers helped in integrating previously excluded population groups into the durable goods markets. In short, rising consumption through government credit and the rise of a middle class has been an important source of growth. The expansion of Asian demand for agricultural commodities has increased the volume of exports.
It is worth noting that in China, the Communist Party became a catalyst for capitalism through a voluntarist model which coupled the market and imperative planning, with high investment rates and low wages; this resulted in low internal consumption (Coussy 2008; Salama 2014). Here, the developmental state is constantly building links between the public and the private sector (Boyer 2008). In India the state also had a central role in building an economic and scientific base that supported the initial stages of internal growth. In the second stage, growth based on export of services, particularly computer services, benefited regions that were characterised by a minimal urban and industrial fabric. Its economic results were based on a âdemographic dividendâ. South Africa, however, embodied the status of âeconomic giant of Africaâ, displaying characteristics that associated it with emerging trajectories although it was more economically fragile (Coussy 2008).
This voluntarism conducted by the state, however, has not prevented specialisation in the exports of some, in spite of decades of industrialisation and modernisation efforts. Chinaâs role in the supply of manufactured products and in the demand for high-tech equipment and the raw material of commodities has had a major impact on the global economy over the past decade (Pinto and Gonçalves 2014). In Brazil, as in South Africa, the export structure has been focused on primary products, whereas India has focused on exporting services. These countries affirmed their economic emergence through the export of mining and agricultural products. Chinaâs growth slowdown after 2013 has resulted in a sharp drop in global prices for these commodities, and in emerging economies feeling the impacts of such specialisation. These economies also faced other internal challenges, as will be discussed.
Optimism Undermined: Domestic Crises and Social and Environmental Constraints
Chinaâs slowdown had negative effects on Brazilâs economy, which has been highly specialised in agricultural exports. The focus on promoting consumption, especially in the automotive sector, has not been enough to revive the economy in a sustainable manner. The Rousseff government in Brazil (2011â2016) faced serious challenges and a deep political crisis, and the country was placed at a risk of an early deindustrialisation in the mid-2010s. These economic and political challenges contributed to roll back some of the results that have been achieved in poverty and inequalities reduction. Brazil managed to reduce social inequality through an increase in minimum wages, a decline in informal jobs, and the implementation of conditional cash transfer programmes among other measures (Salama 2014). However, the distribution of income and wealth remained uneven, especially in rural areas. These inequalities remained a hindrance to the dynamic growth of the internal market.
As a further complication to the social and economic challenges arising from the process of integration into global value chains, emerging economies also faced environmental impacts that tested their development models. Many authors consider these models as predators in terms of land and natural resources (Bursztyn and Bursztyn 2009; Lang et al. 2014). For other scholars, these countries recently entered the end of an expansion cycle initiated in the 2000s (Salama 2014). Besides, in Brazil, the specialisation in mining and agricultural products reinforced âenvironmental dumpingâ, which reduces the prices of primary goods in order to increase the competitiveness of exports, but at the expense of environmental degradation and living conditions (Bursztyn and Bursztyn 2012, p. 164).
Public policies such as deforestation monitoring and forest conservation, the development of a diversified energy matrix, and the reduction of poverty have contributed to significant progress for over ten years in Brazil. However, these dynamics were based on fragile power relations and low levels of policy institutionalisation. The supporters of a âhardâ productivist development line, concerned about the decline in the national growth rate, sought to revive an agro-industrial activity sourced from the largely unregulated exploitation of natural resources. It is interesting to observe that environmental constraints have not been mentioned with respect to demand in BRICS countries for Brazilian agricultural products, particularly beef and soybeans.
The economic optimism which had characterised emerging countries since the early 2000s was confirmed after the 2008 global crisis. While major âadvancedâ economies faced recession, stable growth was supported by these emerging economies for a few years. In Brazil, this was founded in the promotion of internal consumption and export of primary products. This model of growth combined with proactive public policies has been accompanied by a major effort to distribute dividends in favour of reducing poverty and social inequalities. The fragility of classification based on economic indicators, and the attention attracted by Brazil and other emerging economies, have created a unique political opportunity for Brazilâs diplomacy. However, this growth story showed its limits at the economic, political, and environmental levels, leading to a major domestic crisis since 2014. In this context, some authors (Badie 2014) have rightly questioned whether the notion of emergence would prove more promising in the diplomatic field than in the economic field.
Political Activism for Reforming the International Order
Increasing Visibility in the Diplomacy Stage
The governments of some emerging economies seized the opportunity created by their growth in the 2000s to assert themselves on the international political stage. By mobilising political and identity-based resources â for example, their compromise with multilateralism, their alleged representativeness in the developing world, and the shared political aspirations with the Global South (very often sovereignists) â they brought to the table reformist strategies for democratising international institutions (Badie 2014; SoulĂ©-Kohndou 2014; Cunliffe and Kenkel 2016). To participate more actively in the production of international norms and the decision-making processes of multilateral institutions, and to escape their âobserverâ status in such processes, their diplomacy machinery has been working towards their international projection.
This active diplomacy in the field of norms and decision-making in multilateral arenas has been common to several emerging countries. For example, South Africa has assumed the diplomatic power of representation and lead...
