25 years ago, a simple article titled "Goldman Sachs Economic Paper No. 66" changed the way business leaders viewed the world. The author was Jim O’Neill ( Jim O ’ Neill ), who was one of Goldman Sachs’ chief economists at the time and later became head of Goldman Sachs’ asset management department in 2010, overseeing $800 billion in client funds.
O'Neill and his team of economists and analysts noticed a new emerging market trend at that time: four countries were going to play a role in the global economy that far exceeded their size. Brazil, Russia, India, and China (which together accounted for less than GDP of the global total at that time) were to become new economic powers, with growth rates far faster than those of the mature Western economies.
The abbreviation “BRIC” has been in use to this day. However, O’Neal now jokes that perhaps it would be more appropriate to call this combination “ICs” given Russia’s propensity for war and economic difficulties, as well as the recurring political turmoil in Brazil, which have both weakened the overall performance of this combination.
"From an economic perspective, in 25 years, BRICS will be completely dependent on ‘ICs’," O'Neill told me, "China and India have surpassed the potential we envisioned back then. As for Brazil and Russia, in fact, after their initial golden decade, their share in the global GDP has returned to the levels I had in mind when I came up with that name."
For India and China, the growth figures are quite astonishing. According to data compiled by Fulcrum Asset Management, since 2000, India's per capita growth has reached 246%, while China's has reached 554%. During the same period, the figures for the United States, the European continent, and the United Kingdom were 45%, 30%, and 29%, respectively.
China's growth is still faster than that of the West, but O'Neill indicates that India has the advantage of a demographic structure that favors its development.
"This is India's highlight moment, due to its demographic advantage," he said. "In the next 15 to 20 years, it should be able to achieve growth of 7% to 8%. If India can truly make an effort in reforming, it is not impossible to easily reach 10% as well."
In 2001, O'Neill hoped that discussions surrounding emerging economies would not be limited to economic trends alone, but would also pay more attention to global cooperation. After the financial crisis, the inclusion of China and India emerged as a "terrible necessity," he said, "That's something new." Everyone was looking for new solutions and new ways to manage economies and capital markets. India and China, which were less affected by the collapse of the Western-dominated financial system, were also increasingly participating in global agreements.
But memory is always fleeting. Although a global banking regulatory agreement was reached, there were not many substantial actions taken to reshape the institutional structure or to allow more members from emerging markets to enter the core of power. Western countries, on the other hand, firmly held onto their privileges.
"That spirit of the world, that spirit of policy cooperation, just disappeared," said O'Neill. We were talking in London, where he launched a new think tank BRICS + Thinking, aimed at "fostering expert dialogue between the global South and North." He expressed frustration at the EU's failure to seize the opportunities presented by global growth and deeper partnerships.
“To some extent, Europeans are lazy and complacent, still carrying a colonial mentality subconsciously, and they lack ambition,” he said. “That’s why we live in a world where countries like France, Italy, and Germany still want to maintain their own foothold on the global stage. Although nowadays, one might question whether that’s reasonable… But by holding onto those positions, they also hinder others from gaining more power.”
Their attitude towards Donald Trump and tariffs is very hypocritical. Even within the EU single market, there is no real free market in the service sector, due to protectionism from Germany, France, and other countries.
Meanwhile, the President of the United States has seized a narrative that is highly appealing politically: the United States is being "eaten breakfast, lunch, and dinner" by China.
"This has become a huge and strong slogan within the United States, but it's really regrettable because there is no evidence to support it at all," O'Neill said.
Moreover, part of the reason for this is related to the fact that some high-ranking members of the Communist Party of China feel that they are losing control. As a result, China has tightened its grip on its liberal and entrepreneurial business community and decided that the survival of the party organization is of utmost importance. In order to justify this approach, they have become more nationalist.
Given the global volatility and the expected continued rapid growth of China and India, O'Neill believes that it is only a matter of time before the West must respond.
"This will force more centrist thinkers, as well as the core of liberal values, to re-engage with the rest of the world," he said. "That includes accepting what one might call Mark Carney's viewpoint: you may not like the way China is governed, or the way Narendra Modi governs India, but you have to admit that half of the world's population does not want to become like us. Therefore, rather than trying to pursue a world where you assume they will become like us, or trying to force them to become like us, it's better to let things be and move forward."
Gavin Davies, former chief economist at Goldman Sachs Global Research ( Gavyn Davies ), stated that O'Neill's initial BRICs paper "is one of the most influential works in the history of the investment banking economics department." Twenty-five years have passed, and G7 still does not make room for China or India, which indicates that people still hold a stubborn reverence for the institutions of the 20th century. For O'Neill, it is now time for a major upgrade.
