Whatever Happened to the BRICs?

05/19/2015 01:56 pm ET | Updated May 18, 2016

When James O'Neil of Goldman Sachs invented the BRICs (Brazil, Russia, India, China) in 2001, many were excited that these nations would lead and transform the global economy. For the next few years the BRICs appeared to fulfill his prophecy. China's GDP spurted ahead at 10 percent per year while Russia and India doubled their GDP in the first decade of the new century. Brazil's economy grew 40 percent.

Now, the very concept of the BRICs seems to be in question. Russia and Brazil are fading with negative growth rates. India is moving faster (7.5 percent per year) but from a very low base. Only China, with a GDP per capita more than four times that of India, is moving ahead as predicted.

Most of the BRICS are far from becoming major powers. While the United States has $57,000 GDP/capita, the BRICs' GDP/capita ranges from a tiny $1,500 (India) and low level of $6,800 (China) to modest levels of $11,200 (Brazil) and Russia ($14,600).

While the American GDP is almost $18 trillion and the EU $10 trillion, three BRIC countries have small GDP each of around $2.0-2.5 trillion. Only China, with a huge population (1.35 billion people), has a GDP nearing $9 trillion.

Large-scale pervasive corruption plays a major role in retarding economic growth. The Corruption Perception Index shows Russia at a stunning 136th place, China at 100th place, India at 85th place and Brazil at 69th place in the world. Corruption drains away needed money for development and investment while harming the ability of businessmen to attract market share from corrupt enterprises.

The early assumption that the BRICs would have a relatively peaceful ascent has not worked out. The BRICs were often humbled in the past and seek revenge. China had a century of shame and humiliation (1838-1945). Russia (1853-1917) was defeated by France, England, Japan and Germany and the Soviet Union fell apart in 1991. India was humiliated by British colonial rule (1757-1947) and China (1959, 1962) and Brazil were humbled by Portuguese colonial rule (1624-1824).

Russia has invaded parts of Georgia (2008) and Left Bank Ukraine (2015) and all of Crimea (2014). China has moved aggressively in the South and East China Seas and upped its military spending to $140 billion. India has fought four wars against Pakistan (1947, 1965, 1971, 1999). Brazil, remote from Europe and Asia, has engaged only in localized conflicts.

The leading economic powers in the last 200 years (Great Britain, United States) have been relatively modern, democratic states with the rule of law. But, China has been a Communist state since 1949 and Russia, after 74 years of Communist rule, is under the authoritarian grip of Vladimir Putin. Brazil had an authoritarian past until the advent of an unstable democratic state in 1985 and more stable democracy after 2002. Only India has been a long-term democracy.

The BRICs lack key elements of economic power. None have a first rate high-tech zone or enjoy mass immigration. All have millions of emigrants. China and India together have 1.4 billion poorly educated, impoverished peasants while Brazil and Russia together have 60 million peasants. They discriminate against their minorities and lack modern agriculture.

They nearly all have weak rule of law. In Russia and China authoritarian regimes control the legal process. Brazil and India have many good laws but much overlapping and lack of enforcement amidst significant corruption.

The BRICs flourished when the key powers were growing mildly. Now, the American economy is growing at an anemic two percent per year and the European Union is growing at less than one percent per year. Japan, after two "lost decades," is still not growing much; its Nikkei Index is barely half the level of 1988.

With Russia and Brazil fading and India growing rapidly but with less than three percent of America's GDP/capita, there is no longer a BRIC group but a single country - China -- that very likely will become a global superpower by 2030 or 2040.

China still faces huge problems, including lack of transition towards democracy and rule of law, 675 million poor peasants, 1.2 million people dying yearly from pollution, large-scale corruption, numerous ghost towns, aging population, elite emigration and weak high-tech creativity.

But China's positives as a number one global exporter, a number one market in automobiles, its $3.5 trillion in government reserves, massive infrastructure investment, 200 million college graduates by 2030, hard work ethic, 600 million people on the Internet, transfer of 200 million peasants to the cities by 2025, and help from Overseas Chinese give China a strong chance in the next 15-25 years to become a global superpower.

They will likely do it without the other BRICs.