Senior fellow Arvind Subramanian was mentioned in a Businessweek article on the BRICs and the European debt crisis.
From the Article
In their Oct. 26 plan to resolve the Continent’s debt crisis, European leaders pledged to increase the size of the euro zone’s bailout fund from €440 billion ($604 billion) to €1 trillion. The money won’t come entirely from Europeans themselves. Responding to Western requests, Chinese officials are considering whether to contribute some of their $3.2 trillion in foreign currency reserves to the European Financial Stability Facility or possibly a new bailout mechanism set up by the International Monetary Fund. China also has signaled interest in investing in Greek infrastructure and buying up some of Athens’s debt. As Theodoros Pangalos, Greece’s Deputy Prime Minister, told reporters, “The Chinese deal in real things, in merchandise. And they will help the real economy in Greece.”
Beleaguered world leaders, corporate executives, and ordinary investors are looking to emerging powers—Brazil, Russia, India, and China (the so-called BRIC nations), and others like South Africa and Indonesia—to help revive the global economy. While the West is struggling, the rest are booming: Indonesia’s economy grew by 6.1 percent last year; Turkey expanded by 9.2 percent; India grew by 8.5 percent. At an October meeting of Group of 20 finance ministers, Brazil and other new powers proposed increasing their contributions to the IMF so that it would have more money to aid Europe and other indebted regions. Turkey has used its resources to promote liberalization in the Arab world. And Brazil and Russia, like China, are weighing the prospect of purchasing sizable quantities of European nations’ sovereign debt.
Despite such bold plans, however, the emerging giants are far from prepared to deliver on them. Notwithstanding their frequent shows of solidarity, the BRICs and their brethren have about as much unity as the cast of The Bachelor. Their economies have not produced the kind of innovation and competitiveness critical to long-term global growth. Western nations have amassed debt recklessly, but the new powers are about to confront massive economic problems of their own—challenges that could bring them down before they can realize their promise. If they can rebalance their economies and bury some of the disputes that divide them, the BRICs have the potential to continue to raise living standards in the developing world. Just don’t count on them to come to the West’s rescue.