The accelerated explosion of the BRICs is changing the geopolitical dynamics of our planet. Brazil, Russia, India and China have grown at exorbitant rates in recent years and their policies have direct and immediate effects on the global economy. Italy cannot afford to ignore them: it must develop strategies that make it attractive in their eyes because the opportunities they offer us are important. Andrea Goldstein, senior economist at the OECD, presented his latest book today in Rome “Bric- Brazil, Russia, India, China at the helm of the global economy” which he commented in an interview with FIRSTonline.
FIRSTonline – Does it still make sense to start with BRIC today? Apart from the extraordinary GDP growth rates, what other factor do these four countries have in common?
Goldstein – First of all, they have some very similar physical characteristics: population, surface area, geopolitical interests and their ability to cause immediate effects on the global economy. Secondly, all four countries are investing heavily in innovation. Theirs is great research and development effort. The Chinese case is there for all to see: the numbers of papers, patents and trademarks filed every day are extraordinary. Furthermore, the various central banks, since the 90s, have embarked on a process of financial liberalization and they began to accumulate large reserves. Finally, it should be emphasized that, albeit in a different way, the State plays an important and strategic role in industrial development. If in China we can even speak of planning, in India and Brazil the governments intervene directly in the management of the major national companies.
FIRSTonline – What are the main differences between the BRICs?
Goldstein – The most obvious one is the political regime: India and Brazil are two democracies, Russia is an authoritarian regime and in China we can speak of totalitarianism. It is also very interesting to note the difference demographic trend in the various countries: in Russia the population is decreasing, in China and in Brazil it is aging (although in the Asian country much more rapidly), while in India it continues to increase. It is obvious that this also affects the per capita growth: in fact, even if the Indian GDP has risen in absolute terms more than the Brazilian one, at the per capita level the trends are reversed and the South American country reports better results. We must also add that they have been adopted anti-poverty policies more effective (and in greater numbers) in the South American country which have contributed to the increase in per capita wealth.
FIRSTonline – Il Brazil can it be considered a model, an alternative to the Chilean one, for all of South America?
Goldstein – I don't think it's right to contrast the two countries so sharply. Chile is not as Orthodox as many believe. In fact, let us remember that Codelco, the largest Chilean copper mining company, is in the hands of the State and no one has ever thought of privatizing it. Brazil is a country with a larger population and much more complex in many respects and President Lula has begun the reforms with the consent of Washington. Both countries are characterized by great pragmatism in their political-economic choices and this is their strong point. I would be cautious in considering the South American countries as a whole: each has very different histories and realities.
FIRSTonline – In the last year in India we have witnessed sensational cases of corruption. How does this reality coexist with economic growth?
Goldstein – There are two ways of interpreting the phenomenon of corruption In India. There are those who believe that it is an endemic phenomenon, that the press is freer to talk about it and the population is more ready to denounce it: therefore they simply talk about it more than before. There are those who, however, are less optimistic and believe that corruption has increased with growth and that today there are more opportunities to be corrupt. Access to positions of power remains expensive and entrepreneurs are subject to state authority: and as we know, the more the public is involved, the more corruption spreads. I am more pessimistic.
FIRSTonline – La China is it a country that we must fear or that we must consider a good ally for the future?
Goldstein – Seeing her as an ally is difficult, but for Italy, the Chinese giant offers many opportunities. We are not the United States that fears the phenomenon from the point of view of supranational balances: for us, the good opportunities are greater than the risks. We are two so different and distant realities not only on a cultural level but also in terms of international relations that our task is to react, to be more present in their market, going against narrow-mindedness and avoiding falling into stereotypes. Our problem is simple: the Chinese are not interested in Italy. Bright food, the Chinese Parmalat, has tried to acquire two different American biscuit companies in recent months, but has not obtained any results. Why didn't the Asians make a counter offer after the Lactalis takeover bid? We have to become more attractive to them too.
FIRSTonline – La Russia it looks different from other countries primarily because it is an industrialized nation and not a developing country. Is its growth model sustainable?
Goldstein – Russia is perhaps the country most similar to ours, at least if you look at the composition of society and the importance of the middle class. It is a young country, which has existed for less than twenty years. It has a higher literacy rate than the BRICs and does not have an endemic poverty problem like other countries. Population density is low while urbanization is high. Of the four, perhaps the Russian model of development is the least sustainable as it is mainly based on energy resources. But they have them in such excessive quantities that it is difficult to predict an end to the growth.
FIRSTonline – What are the most attractive opportunities for our country?
Goldstein – For Italy there are great opportunities in all the Brics. To date, we have the largest presence in China with more than 1000 companies. The closest relationship in terms of trade exchange intensity is instead with Russia, especially in the energy sector. Many companies are investing in Brazil and it is there that the largest Italian factory in the world is located: Fiat's Betim. India remains the one in which our presence is more modest. The main problem is that the companies of the Italian Fourth Capitalism are not offered the right tools to deal with such complex markets. The cultural, historical and linguistic differences are great and small-medium enterprises do not know how to manage large assets in those realities. More intermediaries are needed, able to help our entrepreneurs build their networks of acquaintances. There are no Italian banks in the BRICs, the presence of newspapers is limited and embassies do not have much weight. On the other hand, our country is also closed for foreigners: just count the number of students from abroad in our universities. We cannot close ourselves off and raise barriers, we must intercept the demands and capital of these countries. An effort is needed to create sustainable foundations for our country: strategies such as those pursued by Milan in the fashion, design and real estate sectors that have exported our brands all over the world. And if every Chinese buys a pair of Italian shoes, we're done: it's like selling an Airbus. But that doesn't change once a year, shoes do.
