Emerging markets continue to feature prominently in global economic discussions on the back of perceived economic weaknesses in both the United Sates and the European Union. Perhaps the most prominent bloc of emerging markets is that made up of Brazil, Russia, India, and China - commonly referred to as BRIC. South Africa has long been wooing the four BRIC partners to be admitted to this very prominent club of emerging economies.
Jacob Zuma has visited each BRIC partner since assuming South Africa's presidency and admission to BRIC might be regarded as the central pillar of South African foreign policy under the Zuma administration. But does South Africa belong in this exclusive, if informal, club? This article looks at ten economic and living standards indicators in an attempt to find out.
What is immediately striking is that South Africa has by far the smallest population of the five countries. At 49 million in 2010 South Africa's population was only a third of the 142 million people in Russia, a quarter of the 192 million people in Brazil, and a fraction of the 1.14 billion and 1.32 billion of India and China respectively. South Africa therefore possesses a relatively insignificant domestic market compared to the current four BRIC partners.
On per capita incomes South Africa ranked third out of the five nations. At $9 780 per capita South Africa averaged an income level higher than the $2 930 of India and the $6 010 of China. Our income level was also only slightly under the $10 070 of Brazil but significantly under the $15 440 of Russia.
On the savings front South Africa, however, comes last out of the five. The ratio of gross domestic savings to GDP in South Africa stands at 16%. This compares with the 17% of Brazil, the 32% of Russia, the 38% of India, and the 54% of China. Boosting South Africa's savings rate is seen as key to boosting levels of GDP growth in the country.
South Africa also had the worst unemployment rate out of the four countries that could be compared. At 23% the South African unemployment rate was three times higher than the 8% of Brazil, four times higher than the 6% of Russia, and six times higher than the 4% of China. Data for India was not available. South Africa therefore faced a labour market challenge very different from that of the BRIC partners. To a great extent this is a policy challenge for South Africa and the country would do well to make a study of labour market policy among the BRIC members.
In terms of the Human Development Index (HDI) South Africa outperforms India but lags behind the other three BRIC partners. The HDI assigns measures to the level of human development in a country based on indicators such as life expectancy, incomes, and education. South Africa's score on the index is 0.683, which is higher than the 0.612 of India but significantly lower than the 0.772 of China, the 0.813 of Brazil, and the 0.817 of Russia.
On life expectancy the effects of the poor HIV policy in the country under former President Thabo Mbeki become very apparent. South Africa's life expectancy averages just 51 years compared to 64 in India, 68 in Russia, 72 in Brazil, and 73 in China. This low level is also the primary reason for South Africa's low HDI ranking.
When measured in terms of expenditure on education South Africa does very well. In spending 5% of GDP of education the country ties in top position with Brazil and outperforms both Russia and India at 4% and 3% respectively. Data for China was not available. That South Africa may not get the value from that 5% that India gets out of its 3% is the subject of another debate.
In terms of access to sanitation 66% of urban South Africans had access to an improved sanitation resource. This figure was higher than the 52% of India but lower than the 74% of China, 84% of Brazil, and 93% of Russia.
On the measure of access to mobile communications 92 out of every hundred people had access to a cellphone in South Africa. This compared very well with the 30/100 of India, the 48/100 of China, and the 78/100 of Brazil. On this measure only Russia's 141/100 beat South Africa. This remarkable figure speaks to the significant infrastructural advantages that South Africa can offer investors.
On internet users per 100 people the picture was different. Here South Africa scored 9/100 which was better than the 5/100 of India but lagged behind the 23/100 of China, 32/100 of Russia, and 38/100 of Brazil. But levels of cellphone penetration suggest that this figure could easily show exponential growth if bandwidth costs and the like were addressed.
South Africa would be by far the smallest BRIC member. It would also bring unique social problems and shortcomings, such as its low life expectancy and low levels of employment, to the BRIC club. Its poor savings rate and the implications of that for future growth further count against its membership of the club. But in terms of per capita incomes it competes very aggressively with the current four BRIC members.
It also demonstrates remarkably high levels of IT (cellphone) penetration that stand in strong contrast to its social problems. But perhaps the best argument going for South Africa is the geo-political one. Missing from the BRIC formulae is representation from the African continent which is arguably one of the world's largest untapped and underexploited markets.
BRIC's future standing may be greatly enhanced by taking early advantage of Africa's perceived growth potential. Here, however, South Africa needs to realise that it will face significant competition from the likes of Angola, Nigeria, and Ghana who might equally come to claim a place as BRIC's gateway to sub-Saharan Africa.
[Note: This article is based on a review of 34 indicators for the four BRIC partners and South Africa that were published by the Institute it the October edition of its Fast Facts bulletin.]
Frans Cronje is deputy CEO of the South African Institute of Race Relations. This article first appeared in the Institute's Research and Policy Brief.
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