BRICS seen outgrowing West by 2020

The combined output of three BRICS nations – Brazil, India and China – could exceed the aggregate GDP of the US, Canada and some of the top European economies by 2020, according to a UNDP report released today.

''By 2020, the combined output of the three leading South economies - China, India, Brazil - will surpass the aggregate production of the United States, Germany, United Kingdom, France, Italy and Canada, according to the Human Development Report, 2013, prepared by United Nations Development Programme (UNDP).

BRICS includes Russia and South Africa as well.

With living standards also rising in much of the South, the proportion of people living in extreme income poverty worldwide plunged from 43 per cent in 1990 to 22 per cent in 2008, including more than 500 million people lifted from poverty in China alone.

As a result, the world has already achieved the main poverty eradication target of the Millennium Development Goals, which called for the share of people living on less than $1.25 a day to be cut by half from 1990 to 2015, the reports states.

However, India's position in the Human Development Index was down at 136 out of 187 countries in 2012, from 134 in 2011.

Annual income growth in India averaged nearly five per cent over 1990-2012 and per capita income is still low, around $3,400 in 2012, according to the report.

India's performance in accelerating human development has been less impressive than its growth performance and to improve living standards, the Indian economy needs further growth, according to the report.

India, however, has capitalised on its stock of skilled workers in technology and opened up to trade and investment, the report points out.

India's pharmaceuticals, automobile, chemical and service industries are now vigorously competing in world markets, it said, adding, ''By 2011-2012, these industries were generating $70 billion in export earnings.''

In 2010, India's trade to output ratio was 46.3 per cent, up from only 15.7 per cent in 1990, it said.

The report noted the rise of the South is unprecedented in its speed and scale. Never in history have the living conditions and prospects of so many people changed so dramatically and so fast, it said.

The economies of China and India began to take off after their respective populations reached about one billion and per capita output doubled in less than 20 years, it said.

The report argues that ambitious, well-conceived policies can sustain this human development progress in coming decades and expand its reach to still more developing countries.

But it also warns that short-sighted austerity measures, failures to address persistent inequalities, and a lack of opportunities for meaningful civic participation could threaten this progress unless leaders take bold corrective action.

The number of people in extreme poverty could increase by up to three billion by 2050 unless environmental disasters are averted by coordinated global action, it says.

Severe poverty remains a major problem throughout much of the developing world, the report stresses. An estimated 1.57 billion people, or more than 30 per cent of the population of the 104 countries studied for the report, live in what it terms ''multidimensional'' poverty, including 612 million people in India.   

The report warns that nonresponsive political structures can prompt civil unrest, especially if economic opportunity does not keep pace with educational advancement, as in the countries that were part of 2011's uprisings in the Arab states region.

These social tensions are also acutely felt currently in many developed countries, the report notes, where austerity policies and declining growth impose hardships on millions.

''There is a 'south' in the North and a 'north' in the South,'' says the report.

The South itself has both the expertise and the resources to be a more powerful force in global development, the report argues. Developing countries now hold two-thirds of the world's total $10.2 trillion in foreign exchange reserves, including more than $3 trillion in China alone, and about three-quarters of the $4.3 trillion in assets controlled by sovereign wealth funds worldwide. Even a small share of these vast sums could have a swift measurable impact on global poverty and human development, the report says.

As older international institutions fail to adapt, new mechanisms are emerging, such as overlapping networks of national and continent-wide cooperation, including regional trade pacts, security groupings, development banks and bilateral agreements.  

The South needs greater representation in global governance, which also requires assuming greater responsibility, the report argues. The global system is overdue for reform, and the report calls for a more ''coherent pluralism'' in international governance driven at the national level by ''responsible sovereignty,'' or the recognition that in an interconnected world, national policy decisions affect neighboring countries and, often, the planet as a whole.

However, environmental inaction, especially regarding climate change, has the potential to halt or even reverse human development progress in the world's poorest countries and communities, the report warns.