The new “breakout nations”: what role for BRICS?

Of all the explorations into the secrets of economic success across countries, one of the most fascinating in my view has been the treatise titled “Breakout nations” by Ruchir Sharma[1]. Breakout nations are the success stories of economic growth over extended time periods, their model of development being a reference point for the rest of the global community. And while from the vantage point of the recent crises and geopolitical shocks Sharma’s view of the composition of the future leaders of economic growth and modernization may be debatable, the very question of what will be the new economic wonders of the next several decades has been at the very center of the discussions on BRICS and other promising economic platforms and cross-country formations such as MINTs. With the formula of economic success still arguably elusive, an even more interesting question may be whether there are different conditions in the world economy that could foster a greater number of “breakout nations” – and whether in fact there is such a thing as an optimal set of “breakout nations” in the global economy?

From the point of view of global welfare, it may not be as advantageous if the economies that are staging a growth spurt are closed from the rest of the world. It may also matter whether these successful economies are important members of a regional integration grouping and are active participants in global organizations and fora. There may be other attributes that an “optimal breakout nation” would command such as “soft power”, active participation in global initiatives to tackle global problems such as debt, energy crises, food shortages, pandemics and climate change. In terms of the mechanics of how the world economy generates “breakout nations”, there may be a case for a more diversified pattern of such growth leaders to emerge in the various regions of the global economy, thus increasing the possibility that regional growth spillovers will provide a broader global growth momentum. Thus far, the growth impulses across the developing world were highly concentrated regionally, with East Asia, most notably Southeast Asia, playing a leading role.  

So what kind of breakout nations would be optimal for the global economy? Clearly, the world community would benefit the most if these are “open breakout nations” that share their growth impulses with the rest of the world economy. It is also important that these are “scalable breakouts”, meaning that their superior economic performance can be replicated by other economies, including within the framework of the respective regional integration arrangements. This latter point is important for the potential role of BRICS as “optimal breakouts” for the global economy as these economies play a significant role in their respective regions (now covering almost all of the main regions of the developing world) as well as at the global level, while also pursuing an active stance on resolving international problems on the global arena. One of the main downsides with BRICS playing the role of global growth locomotives is the low degree of openness of their economies, including the relatively low trade intensities in their respective regions.  

At this stage it is an open question whether BRICS+ can become an incubator of growth success stories across the Global South. In coming up with such positive growth examples for the developing world the BRICS will need to take into account some of the success stories in US-led support to such economies as South Korea, Mexico, Singapore. Rather than waiting for another round of the “world economic lottery” to deliver the next growth winner from the emerging market space, the BRICS will need to actively expand their array of economic instruments to support the “breakouts” of the Global South. This in turn will necessitate more work in bringing together existing regional development institutions as well as the regional integration arrangements from the developing world. And while domestic economic factors and strategies are crucial, past experience (including the rise of the “Asian tigers” in the second half of the 20th century) suggests that external economic conditions and trends in regional and global alliances will likely also have a pronounced impact on cross-country growth patterns.    

The emergence of the next wave of “breakout nations” will hence be driven to a significant degree by the unfolding scenarios of global economic development – which region takes the lead in growth and development, whether fragmentation is to set in vs. past patterns of globalization; what are going to be the economic division lines between India and China, the US and China as well as between the Global South and the developed world. In this vein, the continued rise of the Global South and greater prominence of BRICS+, with greater connectivity capabilities among their respective development institutions could benefit landlocked economies such as Mongolia, Ethiopia, Kazakhstan and Uzbekistan. A US-led economic expansion may favour such breakout economies as Australia, Canada, Poland, India, Mexico, Morocco, South Korea, Vietnam. A moderation in the divisions along the North-South axis could benefit such economies as Vietnam, UAE, Uruguay, India, Indonesia. Greater economic cooperation between China and India could benefit some of the “in-between economies” in the region such as Pakistan, Bangladesh, Myanmar, Nepal, Bhutan.

All of the above discussions concerning the possibilities for the “new breakouts” are perhaps not quite as tractable without a proper list of “breakout nations” for the next several decades (let us assume that it is the 2024-2050 period). Well here it is then – please meet the VIBEs of the 21st century – Vietnam, India, Brazil and Emirates (UAE). This selection of promising economies is based in part on the likelihood of these economies managing to build cooperative economic ties within the Global South (BRICS+) as well as with the advanced economies, with other factors including population growth, as well as the scale of likely economic transformation in green and digital development. Such a mix of “breakout economies” could also be viewed as being broadly positive for global welfare in view of the notable regional role of these economies and the sizeable scope for reducing poverty in Brazil, India and Vietnam. Again, in rendering this contribution more significant greater market openness will be needed in the coming decades, particularly from Brazil and India.

According to the IMF, in 2022 the fastest growing economy in the world was Guyana with a GDP expansion of more than 62%. Of the largest economies in the world India was the leader with GDP expanding by 7.2%. India is expected to stay among the fastest growing large economies in 2024, with growth of more than 6%; other high growth performers include the likes of Vietnam, Bangladesh, Ethiopia and Philippines – all are expected to post growth rates of around 6%[2].  But the key characteristic of a breakout economy is not only the attainment of high growth rates, but also the capability to sustain them over an extended period of time. In this respect, some of the longest winning streaks of continuous economic growth include Australia – a sustained expansion without a recession of nearly 29 years that only ended in 2020 during the COVID pandemic. An even longer period of economic growth without a formal recession of two consecutive quarters of GDP decline was demonstrated by Japan in 1960-1993. Poland’s growth record has been close to that of Australia, with growth performance among the best not only in Europe, but also globally in the past several decades.

In the end, the question of what are the new “breakout nations” that are to serve as role models for the economies of the Global South has important implications on the attractiveness of the economic platform and development paradigm that contributes to the emergence of such “success stories”. In this respect as expectations are building up on the potential of an expanded BRICS+ formation, this grouping is yet to show its capability to deliver “economic miracles”. And while the BRICS might not necessarily emerge as the breakout nations of the developing world, the BRICS+ formation may serve as a platform for such breakout success stories to occur. The good news is that past experience with breakouts suggests that almost anything is possible in the sphere of economic modernization – South Korea’s transformation into an OECD member from the lows of per capita GDP in the 1960s is a case in point. Perhaps rather than merely exploring the conditions for generating a greater array of “breakout nations”, the real question should be about the framework of global economic governance that would facilitate the “transmission” of superior economic policies and growth impulses from “breakouts” to the rest of the global economy. This, however, is to be the subject of a different exploratory foray, perhaps sometime in the year ahead.    

Image by WikiImages via Pixabay

[1] Ruchir Sharma. Breakout nations. In pursuit of the next economic miracles. Penguin. 2013