Go East, Young Man

In 2003, Goldman Sachs, the investment bank, predicted that by 2050 the combined economies of Brazil, Russia, India and China (BRIC) would be larger than the rich G-6 bloc in dollar terms. With the economies of the developed countries hobbled by the meltdown, the possibility of the economic ballast shifting towards Asia seems even more real. There has been a dramatic turnaround in global power relations in this decade.The growth of Chinese and Indian economies and their resilience through the financial crisis has dramatically changed perceptions about the world's future. While the major developed economies contracted during the crisis, China and India only saw a deceleration of growth, and that too for a relatively short period of time. Today, many see these two countries as the twin engines that could put the global economy back on the rails. Of course, a lot depends on the stability of their political economies in the coming decade.
A recent UNDP study, 'The Global Financial Crisis and the Asia-Pacific region' , argues, "The US cannot and will not continue to be the engine of world growth through increasing import demand in the near future. This means that developing countries in general, and particularly those in developing Asia that continue to rely on the US and the EU as their export markets, must seek to redirect their exports to other countries and most of all redirect their economies towards more domestic demand." The study is not certain whether these countries will actually be able to redirect their focus inwards. Even so, a return to the pre-economic crisis era seems most unlikely.
The transformation of the economic landscape has been accompanied by a flux in global power relations. This decade saw a decline in the US' preeminence as a world power. The political economy that facilitated and necessitated America's role as the sole superpower is unravelling. The carbon-centric economic growth model, reflected in an excessive dependence on fossil fuels, is one of the key factors behind the US' undoing. America's West Asia policy of the past decade, influenced heavily by its oil needs, has had disastrous consequences. The Iraq invasion dented America's military and moral authority as a superpower. Even close allies in Europe began to distance themselves from US foreign policy initiatives.
In South America, a new wave of anti-Americanism swept Left-wing governments to office. Venezuela rode the high petrol prices to refashion oil diplomacy and build a new solidarity of socialist regimes in the continent, further undermining the influence of the US in its backyard. (Oil prices touched a peak of $148 per barrel in 2008.) Many economists argue that the carbon crisis may have fuelled the economic breakdown in the developed world.
The decline of US influence has coincided with China's efforts to use its new wealth to build bridges with countries in Asia, Africa and South America. Beijing has aggressively pursued new markets in other continents while continuing to offer itself as an attractive destination for global capital; its trade with Africa alone shot up from $9 billion in 2002 to $73 billion in 2007. Chinese dominance of the global political economy in the near future is unlikely, but Beijing's voice is likely to be more assertive than ever on global platforms.
BRIC may not work as a bloc like the European Union but the countries could have a tacit arrangement among them to push their case vis-Ã -vis the developed world, like they've done at the climate summit in Copenhagen . When BRIC leaders met - their first official summit - in June 2009, in Yekaterinburg , Russia, a major topic of discussion was how developing countries could be better involved in global affairs. Besides the BRIC economies, countries like South Africa can also be expected to weigh in to change of power equation in time to come, making for a multipolar world.
The rules of the game are likely to change in the near future. The financial meltdown and climate change will radically impact economic growth models across the globe. Countries that adapt to new energy economies will have a headstart over the others. In a recent article in FT, Guo Shuqing, chairman of China Construction Bank, argued that if "developing countries like China were to follow the US example in energy consumption then the entire global oil supply should be sent to China - and it would still not be enough." He wants China to make its growth model greener. It's easier to turn around existing production models and consumption patterns in countries like China than in democracies like the US or even India. Managing this change will be the big India challenge in the new decade.