Change Ahead? Sustainable Governance in the BRICS -  - ebook

Change Ahead? Sustainable Governance in the BRICS ebook



The emergent powers of Brazil, Russia, India, China and South Africa (BRICS) are drawing attention as they change the political and economic map of the 21st century. But does each country have the institutional framework needed to advance its path of development and to effectively address needed reforms with sustainable solutions? With the support of an international network of experts, the Bertelsmann Stiftung has conducted an indicator-based inventory of the state and performance of governance in each BRICS country. Focusing on success factors and policy challenges, this study draws upon the analytic tool of the Sustainable Governance Indicators (SGI), allowing for a cross-national analysis of the need for reform in core policy areas such as economic and social affairs, environmental policies and innovation strategies. At the same time, the capacities of each country's system of governance are explored in each BRICS state. explores the the extent to which problems are identified and strategic solutions implemented in each of the five political systems. By looking at both reform needs and reform capacities, this study points to considerable differences in the prospects for development in each country - prospects which, in some cases, fall short of the expected growth and progress.

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Bertelsmann Stiftung (ed.)

Change Ahead?Sustainable Governance in the BRICS

Bibliographic information published by the Deutsche Nationalbibliothek

The Deutsche Nationalbibliothek lists this publication in the Deutsche Nationalbibliografie; detailed bibliographic data is available on the Internet at

© 2013 E-Book Edition

© 2013 Verlag Bertelsmann Stiftung, Gütersloh

Responsible: Najim Azahaf

Editing and translation: Barbara Serfozo, Berlin

Production editor: Christiane Raffel

Cover design: Elisabeth Menke

Cover illustration: Fotolia-cpauschert; Fotolia-sam; Markus Diekmann, Bielefeld

Typesetting and Printing: Hans Kock Buch- und Offsetdruck GmbH, Bielefeld

ISBN 978-3-86793-435-0 (Print)

ISBN 978-3-86793-550-0 (E-Book PDF)

ISBN 978-3-86793-551-7 (E-Book EPUB)


List of Figures and Tables

Executive Summary

Introduction: Successful Factors and Political Challenges of the BRICS

Measuring Governance

The BRICS’ Governance Capacities in Cross-National Comparison

Economic Policy and Social Affairs in the BRICS

Global Players in Research, Innovation and Knowledge: The BRICS

Conclusion: Beyond Growth – Pathways to Sustainability in the BRICS

Country Profiles

Appendix: Comprehensive List of Indicators

List of Contributors

List of Figures and Tables

Figure 1: BRICS GDP as share of the world total

Figure 2: GDP per capita in the BRICS

Figure 3: The world’s largest 500 corporations

Figure 4: Annual GDP growth in the BRICS

Figure 5: Mean years of schooling in the BRICS

Figure 6: High-technology exports as a percentage of manufactured exports, 1990–2010

Figure 7: Population living on less than $2 a day

Figure 8: Income disparities in the BRICS

Figure 9: The rule of law

Figure 10: Corruption control

Figure 11: Demographic window of the BRIC

Figure 12: Environmental Performance Index

Figure 13: The Status Index

Figure 14: The Management Index

Figure 15: Steering capability

Figure 16: Strategic capacity

Figure 17: Interministerial coordination

Figure 18: Societal consultation

Figure 19: Policy communication

Figure 20: Policy implementation

Figure 21: Institutional learning

Figure 22: Citizens’ participatory competence

Figure 23: Media reporting

Figure 24: Non-OECD share in world GDP

Figure 25: Pleasant and unpleasant public debt dynamics

Figure 26: Shifting global economic power

Figure 27: Beta convergence outside the OECD

Figure 28: SGI economy and employment

Figure 29: Degree of direct state control, BRICS 2008

Figure 30: FDI inflow controls, BRICS 2010

Figure 31: Public debt-GDP ratios, BRICS 2012 versus 1999

Figure 32: SGI social affairs

Figure 33: Population share attaining tertiary education, 2010

Figure 34: Changes in the Gini index in the BRICS, 1990–2007

Figure 35: Youth un(der)employment in low- and middle-income countries

Figure 36: BRICS exports by technology intensity, 1996–2010

Figure 37: Public spending on education

Figure 38: Expenses-population ratio, 2010

Figure 39: Quality of math and science education, 2012–2013

Figure 40: School enrollment, tertiary

Figure 41: Gross expenditure on research and development as a percentage of GDP

Figure 42: Gross expenditure on research and development by sector of performance (business, enterprise, government)

Figure 43: Scientific publications, 1998–2009

Figure 44: Citations, publications and researchers, 2008

Figure 45: Patent family of origin and first filing office, total count by filing office

Figure 46: Royality and license fees

Figure 47: Balance of royality and license fees

Figure 48: CO2 emissions per capita

Figure 49: CO2 emissions

Figure 50: Environmental Performance Index

Figure 51: Patent applications by top fields of technology, 1996–2010

Figure 52: Patent grants in mechanical and electrical engineering, 2006–2011 total

Table 1: BRICS’ basic economic and social performance, 2000s

Table 2: Ranking BRICS’ economic and labor governance

Table 3: Spearman rank correlation coefficients

Table 4: Ranking BRICS’ social affairs governance

Table 5: Comparable health data in BRICS and OECD states

Table 6: SGI social affairs indicators, health and social inclusion, BRICS, late 2000s

Table 7: SGI education (indicators, mean score, rank)

Table 8: SGI research and innovation (indicators, mean score, rank)

Executive Summary

The rapid rate at which the emerging economies of Brazil, Russia, India, China and South Africa have in recent years been closing the gap with the developed world has been impressive. The popular BRICS acronym referring to these rising powers has in the last decade come to signify the major shifts underway in global economic and political relations. Yet those who assume that the patterns of growth observed in the last 20 years will continue unabated should bear in mind that the BRICS states face considerable obstacles to their individual paths of development. These obstacles include the threat of political and social instability arising from extreme social inequality and rampant corruption, as well as problems caused by an inadequate infrastructure unable to keep apace of the rapid economic growth seen in recent years. Further obstacles include massive environmental problems and the weight of demographic pressures on labor markets and education and social welfare systems.

Even if the BRICS manage to maintain their high rates of economic growth, this alone will not adequately equip them to meet the challenges ahead. Indeed, BRICS countries already marked by regional and social disparities will likely see problems associated with social inequality and environmental sustainability further exacerbated. Experience shows that only emerging powers, such as South Korea or Taiwan, that have made the right policy choices at the right stage in their economic development have managed to sustain solid growth without falling into the middle-income trap. Making good choices in this regard entails developing infrastructures, restructuring education, health care and innovation systems, as well as ensuring stable institutions and legal certainty. In fact, leaders exercising good governance use the dynamics of economic prosperity to advance the reforms underway in order to achieve sustainable growth with broad impact throughout society. However, the latest international research shows that this is precisely where more effective capacity in governance is needed.

How well do the political systems of the BRICS perform? Does each country have the institutional framework needed to advance its path of development and to effectively address needed reforms with sustainable solutions? What are the structural barriers to sustainable development within each political system? With the support of an international network of experts, the Bertelsmann Stiftung has conducted an indicator-based inventory of the state and performance of governance in each BRICS country. Focusing on 15 policy areas, including economic, labor, education, health care, social welfare, environmental and research and innovation policy, this study draws upon the analytic tool of the Sustainable Governance Indicators (SGI). This inventory allows for a systematic documentation of the need for reform in core policy areas. At the same time, the performance of each country’s system of governance, that is, the core executive and other policy stakeholders, is examined. In this way, the capacity for reform, or the extent to which individual political systems can not only identify problems, but also formulate and implement strategic solutions, is explored in each BRICS state.

Comparing each BRICS state to one another provides a profile of their individual strengths and weaknesses. This in turn yields insight into the factors driving success and the structural deficits in the political steering capabilities of each state. If we then link up in a comparative assessment the findings for reform need and reform capacity, we see considerable differences in each country’s prospects for development – prospects that in some cases do not match the widespread rhetoric of growth and progress ahead. What are the development prospects for each BRICS country and how do they compare in terms of the SGI findings?

Russia – Poorest performance within the BRICS group

Russia is the poorest performer within the BRICS group, with the government showing significant weaknesses in the area of steering capability. The country lags in terms of central-government strategic planning capacity, effective interministerial coordination and implementation capacity. Given the prevalence of political patronage and clientelism, the lack of involvement of independent experts and other stakeholders, and frequent contradiction in the communication of policies, forward-looking policymaking in the sense of sustainable government is practically impossible in today’s Russia. Even the medium term holds little hope of improvement, as the Russian Federation is also the worst performer in the “organizational reform capacity” criterion, which examines institutional self-monitoring and reform capabilities. In comparing structures for the involvement and participation of civil society, only China fares worse.

India – Immense problems, but a distinct national-level capacity for reform

India’s prospects are considerably more promising. The country’s economic outlook is positive thanks to its favorable demographic development. However, the SGI experts warn that optimistic growth projections are dependent on the subcontinent’s ability to overcome enormous social and regional disparities, modernize its infrastructure and make further progress in combating poverty through reforms in the education and health care sectors. At least at the national level, the SGI experts assess India’s central-government steering capability positively. The country’s top ranking on the criterion of strategic capacity can be explained in large part by the strategic role played by the cabinet, the technical expertise and strong coordinating function of the Prime Minister’s Office, an active exchange between scholars and the government, and consultation with societal groups that is to some extent institutionalized for important policy proposals. The subcontinent’s government has also demonstrated tangible progress in terms of how effectively policies are implemented, although, as in China, there are significant regional disparities that require attention. In the area of governance, it is particularly important that the government do more to battle the country’s rampant corruption by strengthening oversight mechanisms.

China – Continuation of growth is linked to far-reaching reforms

China’s classification, in comparison with the other BRICS, is somewhat ambivalent. On the one hand, the SGI experts note that it harbors considerable unexploited potential and has already made strategic decisions in its economic policy. However, China’s continued economic growth is predicated on far-reaching reforms being taken in key policy areas as well as within the institutions and system of governance itself. In fact, China’s political and social stability is put at particular risk by the country’s high level of social inequality, demographic development, growing environmental problems, an emerging real estate bubble, corruption and a lack of legal certainty. Experts also say the state-controlled financial system is in great need of reform. It is by no means clear whether China over time will be in a position to apply sound long-term solutions to the problems outlined above, as the country’s performance in the area of governance structures shows substantial variance as compared to the other BRICS.

The country stands out for its long-term strategic policy planning, and its hierarchical system of interministerial coordination also functions comparatively effectively. However, it is questionable to what extent the government actually does consult with independent academic sources. Like India, China’s multilevel political system shows strong regional differences in governance quality, which in turn has a negative effect on the quality of public services in peripheral areas. In the fight against corruption, China lacks both a free media system and a civil society sector independent of the state. The question for the future will be whether China’s leadership can retain the adaptability it has shown in recent years and – with an eye to the rapidly closing demographic window – commit to the necessary reforms. Opposition and power struggles by influential interest groups within the Communist Party of China (CPC) have to date prevented a reversal of these negative trends.

South Africa – Notable adaptability, but old problems remain

South Africa ranks in the middle of the BRICS group in terms of governance capacities. However, properly interpreting this position requires a closer look, as the middling score conceals a tension between the individual research dimensions. On the one hand, a number of recent developments point to an improvement in reform capacity, though significant weaknesses remain. On the positive side, the government has recently made significant changes to its institutional arrangements, enhancing its strategic planning capacities. Academic expertise is used by the government, and civil society actors and interest groups are in general successfully involved in the policymaking process. However, the South African government continues to show clear room for improvement in the areas of effective interministerial coordination, policy implementation and communication policy. In the key fields of education and labor market policy, South Africa still shows glaring weaknesses. The growth of political factions within the ANC and the significant levels of patronage, corruption and nepotism have a further negative impact. In addition, funds at the subnational and local levels are not used effectively enough.

Brazil – The best placed among the BRICS to achieve long-term social solutions

In the SGI experts’ view, Brazil has the most promising future prospects of any of the BRICS countries, an assessment that applies to current trends in key policy areas as well as to the quality of governance capacities. The legacy of the decades-long military dictatorship remains palpable, and South America’s largest country continues to face pressing problems, particularly in the form of inadequate infrastructure and high levels of social inequality, felt especially keenly in the area of education. However, the country was quick to recognize the signs of the times and in recent years implemented important reform measures that the current administration has elected to retain. The positive developments in the social sector speak to the success of the new social measures and active minimum wage policy begun under the previous administration and continued under the current government.

Despite the positive trends, however, SGI experts say the government should pay particular attention to further strengthening its steering capability. Even when orienting policy toward the long term, time horizons employed are sometimes too short. Thus, Brazil lags comparatively somewhat behind other BRICS countries in terms of strategic planning capacity, even though institutional arrangements designed for this purpose have been continuously strengthened in recent years.

Beyond these areas, interministerial coordination and policy steering function comparatively well. In the area of implementation quality, too, Brazil’s government performs quite well in comparison with the other BRICS. However, performance does depend on the specific policy area. While the government has been particularly successful in the area of social policy, it lags somewhat in terms of infrastructure projects and industrial policy.

Like South Africa and India, Brazil already has in place an active and constructive civil society, which is an essential resource for sustainable governance. The Lula government offered an impressive demonstration of the potential benefits of actively engaging civil society in the fight against poverty and social inequality – a challenging task during a period of transition. The new government under Dilma Rousseff would do well to maintain this openness.

Introduction: Successful Factors and Political Challenges of the BRICS

Najim Azahaf

Why examine governance in the BRICS?

The rapidly emergent powers of Brazil, Russia, India, China and South Africa (BRICS) are often deemed to be in the process of changing the political and economic map of the 21st century. In particular, the historically unprecedented economic growth observed since the 1990s in the “awakening giants” China, India and Brazil has not only aroused the interest of investors in these future markets; it has astonished the worlds of politics, science, economics and the media. The potential global economic significance of the BRICS nations is undisputed.

What is unclear, however, is what impact these emerging powers will have on the international balance of power and the future global economic order. These are the issues around which academic discussion of the “rise of the south” and the “decline of the United States” predominantly circles. It is often assumed that the economic development observed in the BRICS countries over the past years will continue uninterrupted into the future. However, these countries face significant political challenges, especially in terms of economic, social, environmental and demographic sustainability. Indeed, they cannot ensure their continued development without finding viable solutions to these challenges. Whether these nations are able to effectively face up to these challenges depends to a large degree on their ability to reform their political systems and on the quality of their governance.

In conceptualizing a study of sustainable governance in the BRICS countries, we decided to focus on internal characteristics of governance while exploring both methodological and substantive questions of comparability. The first question is concerned with the extent to which the conceptual framework of the Sustainable Governance Indicators (SGI) can “travel” (Sartori 1970), given that the instrument was specifically designed for highly developed industrial nations. Are the SGI 2011, the second edition of the SGI project, also suited to identifying sustainable governance outside the OECD regions for which they were originally conceived? If so, the SGI would provide entirely new insights into the characteristics of political performance and governance in a group of countries that have, in the past decade, been viewed with considerable awe but which differ from the current OECD countries in many political, economic and cultural respects.

With the initial findings established, the jury is still out on this methodological question. During the course of the study, it has became apparent that there are a few limits to the applicability of the Sustainable Governance Indicators’ analytical framework to this very special group of countries. These limits partly involve the availability of data, which is still very difficult to come by for these countries. Some of the 147 indicators also result in a few distortions that are not designed to account for the specific paths and stages of development observed in non-OECD countries. Nevertheless, unlike other governance indices comprised exclusively of quantitative indicators, the SGI, with their qualitative expert analyses, make it feasible to analyze relationships between policy measures and policy output and to identify flaws in the policy process. This latter point is important because it is precisely these flaws that are generally obscured by an exclusive focus on quantitative indicators.

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