Presentation
Shifting superpowers? An update on global geopolitics Bob Digby Geographical Association Conference April 2014 Sponsored by Provide some recent and relevant subject update for Edexcel A2 Unit 3 Understand some recent changes to the world’s ‘superpowers’ Assess some of the BRICs in terms of their superpower status Identify some concepts and complexities that students have to grasp in this topic Focus for this lecture HDI 0.69 0.94 0.79 0.55 0.63 0.73 GDP per capita US$ PPP Internet users (% pop) GDP from agriculture (%) Population growth rate (%) (2012 data) 9,200 49,900 23,500 3,900 4,900 11,900 40 78 48 11 22 46 10 1 4 17 38 6 0.5 0.9 -0.1 1.3 1.0 0.8 China USA Russia India Indonesia Brazil Powerful countries: who’s who? Use the data to guess the country Comprehensive National Power (CNP), Chinese Government Score 2007 Score 2011 USA UK Russia France 91 65 63 62 USA China Russia France 100 75 60 35 Germany 62 Germany 35 China Japan Canada S Korea India 59 58 57 53 50 Japan UK India Brazil Turkey 30 25 25 20 20 Two different ranking systems Both attempt to quantify hard (military) & soft (economic, cultural) power The CNP has changed hugely since 2007 European countries have lost out; China, India and Brazil have moved up 3 countries (USA, China, Russia) have pulled away from the rest Different ranking systems 120,000 100,000 80,000 60,000 40,000 20,000 (2010, Goldman Sachs) The BRICs: gaining traction? 2050 2045 2040 2035 2030 2025 0 2020 G7 140,000 2015 BRIC 2010 ‘BRICs’ coined in 2001, by Jim O’Neill at Goldman Sachs bank The argument: by 2050, the BRICs would exceed the economic power of the G7 Post-global recession suggests the ‘crossing point’ will happen sooner rather than later (2030/35?) What began as an economic idea, is now an official reality; the first BRIC summit held in 2009. In 2010, South Africa joined the group i.e. ‘BRICSs’ not ‘BRICs’! Combined GDP $ billions BRICS GDP totalled $16 trillion in 2012 Compares with $17 trillion for EU & $16 trillion for the USA However …… China alone accounts for 55% of BRICS’ GDP and 49% of their military spending Take China out of the ‘BRICS’, and the ‘BRIS’ look much less powerful 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% China South Africa India Russia Brazil Data in US$ trillions Between 2000-2012, China overtook the UK’s economy rising from 6th to 2nd largest (UK dropped from 4th to 6th) Does ‘BRICS’ make sense? ‘N11’ also coined by Goldman Sachs, in 2005 These 11 have all, or some of, the characteristics below However, it is ‘mixed’, ranging from Nigeria & Bangladesh to Turkey & South Korea Some N11 countries also appear on Citigroup’s 3G list from 2011 This Global Growth Generators (3G) list includes Bangladesh, China, India, Indonesia and Egypt • Open to global trade and investment • Economic stability • Broad education • Political maturity Next 11 (N11) Many emerging powers face a future 2010 2050 demographic dividend Top 10 Top 10 They have youthful populations now – economies economies sometimes even troublesome ones (Egypt) by GDP by GDP ...but their fertility rates are falling USA China Soon, they will have a window of opportunity with a large workforce, but China India without either a large young or old Japan USA population Germany Indonesia By 2050, big winners will enjoy combined France Nigeria population growth + economic growth • Citigroup expects 4 of the 10 biggest in be Compare the former economic powers UK2050 toBrazil ‘new’ – i.e. notgrowth in therate top now; countries with where demographic is 10 slowing Italy Russia falling pop will do badly Brazil Japan • (Russia climbs to 4th or 5th in 2030, then falls to 6th India Philippines Philippines +1.9% by 2050) Canada UK Germany -0.2% India +1.3% • Japan UK worth noting – the only one of the current major -0.01% Citigroup 3G study, 2011 Indonesia +1% economies that is undergoing rapid population Russia -0.01% Nigeria + 2.5% growth (annual pop growth %) Demographic dividend But projections can be wrong e.g. Japan ‘The next superpower’ in 1985, by 1995 it was floundering Japanese economic problems, the USSR collapse and the costs of German reunification alter the fortunes The USA lost 10% of global GDP 1985-95, but won most of it back by 2002 China is clearly rising, but are there problems ahead ....? Pre-95 A lesson from history? Post-95 Russia Sluggish global recovery dents Russia’s oil and gas exports (fossil fuels are 45% of all exports). Dependent upon Ukraine for gas exports India Economic reforms, that once encouraged investment, has slowed to a crawl. Still socially on a tightrope. China Not as cheap as it was for foreign TNCs; fears of a massive property credit bubble (Robert Peston 2014) Brazil Lack of investment, high cost of World Cup and Olympics, populist government ‘handouts’ e.g. pensions. Protest movement growing. BRICs – what kinds of future? The BRICS 1 Brazil Important regional power, its economy dominates South America At 198 million people, Brazil contains half the population of the continent (385 million) Spends more on its military than the rest of South America combined South American military spending, 2012 6% Colombia 6% Brazil 4% Argentina Venezuela Peru 22% 61% Uruguay Bolivia Brazil: a regional powerhouse 2012 GDP in $ billions Images from ‘The Economist’ – www.economist.com Brazil’s ‘trump card’ is its natural resources, making it more than self-sufficient in food and energy production: More potential agricultural land (400 million hectares) than any other country on earth An ‘agricultural superpower’ in terms of exports (graph) World’s second largest biofuel producer, after the USA 15th largest oil reserves (likely to rise as more deep water oil is discovered) 3rd largest producer of iron ore 3rd largest producer of HEP Brazil’s oil fields are only just being developed: Brazil’s resources Brazil’s natural resource strength is seen by comparing net imports of Brazil and India (right) India’s net imports are dominated by crude oil, minerals and even food and wood Brazil is more selfsufficient in basic resources and imports more chemicals, plastics, electrical and transport materials. Source of images: http://atlas.media.mit.edu/ex plore/tree_map/net_import/in d/all/show/2010/ Brazil v India Image from http://www.cbc.ca/news/world/brazil-protests-show-cost-of-hosting-major-sports-events-1.1358504 Brazil has recently stalled, relying too much on raw material exports Its middle class is growing, but less strongly than 5 years ago Protests in 2013 against higher public transport prices did not help – rebellions against 2014 World Cup & 2016 Rio Olympics These protests were really about a lack of decent public services for a growing middle class, compared to corruption and spending on global sport Long term, Brazils’ natural resources are likely to prove very valuable The Olympics and World Cup are being used to shine on the world stage – but can Rio deliver? FIFA World Cup 2014 Rio Olympic and Paralympic Games 2016 These two events give Brazil a chance to show what it can do. The last country to have both so close together was USA – Atlanta 1996 (a disaster!) & 1994 World Cup (dull!) Brazil: a future superpower? Strengths • • • • Weaknesses Agricultural power Energy secure • Economic history Large middle class (boom/bust) • Crime / corruption World-class companies e.g. Embraer Opportunities • Regional power • Developing the interior The most ‘developed’ of the BRICs in terms of its economic structure. Threats Rondonia: • Populism / political recent development instability • Inflation Photo courtesy of Google Maps Evaluating Brazil as a superpower The BRICS 2 China Students struggle with exactly what type of country China is. Where does it sit on the ladder of development? There are no easy answers Important that students at least discuss this and come to a ‘view’ which can be justified. Too many students calmly proclaim China is a: Superpower LEDC MEDC without evidence to support this ……. Superpowers: The China Question Important that students are aware where China sits in terms of its economic level of development. Look at GDP per capita and compare it to some other countries The 4 Asian Tigers Nominal GDP Other NICs Nominal GDP pc pc 2010 (US$) 2010 (US$) Singapore 43,117 Chile 11,827 Hong Kong 31,514 Brazil 10,816 South Korea 20,756 Turkey 10,309 Taiwan 18,558 Malaysia 8,423 Thailand 4,992 China 4,382 Indonesia 2,974 Philippines 2,123 • By comparison, Singapore is a HIC; and the GDP of many other Asian Tigers exceeds most EU A8 countries. • Hong Kong’s GDP is close to the EU average of $32,500. Is China a NIC? Malaysia China 14,744 7,544 HDI, 2010 0.74 0.66 % population living on less than US$2 per day (2009) Income share: • of poorest 10% 8% 36 % 1.7 1.6 • of richest 10% 38.4 34.9 58.8% 36.3 % GDP pc 2010 at PPP (US$) Internet access (% of population, 2011) China versus Malaysia China is an NIC …. but no ordinary NIC. Its sheer size combined with its level of development gives China global significance. There are other demographically large countries, but they are poorer than China and much less economically significant China Population 2011, million 1340 % global GDP 9 India 1210 2.5 USA 312 23 Indonesia 237 1 Brazil 190 3 Pakistan 177 Less than 1 Nigeria 158 Less than 1 What makes China special? 1 China became globally significant when its GDP passed 5% of global total in 2005; now heading for 10% That level of global GDP gives it huge economic influence What makes China special? 2 Economic Per capita GDP in China is still only 1/10th of that in the USA The US attracts a constant stream of high skill migrants from all over the world; China still relatively isolated Universities with global reputations e.g. MIT, Stanford, Harvard. China tends to copy, rather than innovate. Cultural China has few (if any, Lenovo? China Mobile?) global brands The USA dominates the global entertainment industry Military China is a long way off in terms of global military reach International The USA is still the nation the world turns to in a crisis, such as a major natural disaster China does seem to shun international involvement and has yet to ‘get people behind it’. China lacks gravitas in terms of international negotiations because of its perceived double-standards and lack of moral authority USA versus China Image - http://www.jeffhead.com/redseadragon/varyagtransform.htm China’s ‘new’ aircraft carrier – its only carrier – entered service in Sept 2012 The “Liaoning” is actually the ex-Soviet “Varyag” launched in 1988. The USA has 11, with 3 more under construction China’s long term military plans are to be able to defend out to the ‘Second Island Chain’. Meanwhile Obama’s ‘Pivot’ is shifting forces to the Pacific. Carriers Operating USA 11 Italy 2 UK Building 3 1 (helicopter) 2 India 1 2 China 1 France 1 Spain 1 Russia 1 China flexes its muscles but…. There is no doubt that China is expanding Its state-run companies and banks, as well as its Sovereign Wealth Funds (worth about $1.2 trillion in 2012) are all investing overseas As the diagram shows, this is global - it is not confined to 1 or 2 regions Its 2005-13 overseas investment was about the same size as the entire Swiss economy. China also owns $1.3 trillion of US government debt (as does Japan) China goes global New View of Asia , Heritage Foundation, 2013 China’s FDI is different to that of many countries, as companies are often staterun enterprises 40% of all profits in China are made by state run companies State involvement makes some governments nervous – e.g. some private companies like telecom company Huawei Huawei’s apparent closeness to the Chinese government has been dubbed a ‘national security threat’ by US Congress (2012). Many Chinese companies are publicly traded (table) but still influenced by government Fortune 500 China global rank Rank Sales (US$ billion) 2012 1 17 Sinopec (oil) 131 24 China National Petroleum 110 3 29 State Grid Corporation 107 4 Industrial & 170 Commercial Bank 5 180 China Mobile Limited 35 6 192 China Life Insurance 33 7 215 Bank of China 30 8 China Construction 230 Bank 28 9 China Southern 237 Power Grid 27 10 275 China Telecom 24 2 State owned companies in red State led investment 36 Images from ‘The Economist’ – www.economist.com China’s investment in Africa is rising About 1 million Chinese now live there Chinese trade with Africa now worth US$200 billion per year 80% of Chinese imports from Africa are minerals (incl. oil) (see chart Other BRICs increasing their trade with Africa (see lower graph) – usually focused on natural resources China is sensitive to charges of neocolonialism; "China has built over 100 schools, 30 hospitals, 30 anti-malaria centres & 20 agricultural technology demonstration centres in Africa. China has trained .. 40,000 African personnel ... and provided over 20,000 government scholarships" (Hu Jintao 2012) Neo-colonialism? Candidates get confused when considering China’s ‘colonial’ or ‘neocolonial’ role - it’s complex. Consider: Colonialism: Is China trying to force Chinese A lack of any Imposition of culture and values on the form of the rule of law countries in which it invests? democracy or by any means, Does it use colonial mechanisms of democratic almost at any maintaining power? cost In reality its investments are economic accountability – no more or less neo-colonial than Lack of local ‘Divide and those of USA or Europe (e.g. Shell Oil government rule policy’ to in Nigeria) capacity i.e. break up local The terms of trade are unfair, and little opposition there are examples of exploitation – investment in but this is far from unique social or public Some Africans view Chinese services investment as healthier than EU investment – it comes with fewer conditions. Colonialism? Students often lack a clear idea of China’s strengths and weaknesses This includes economic, military, cultural and geopolitical China’s economic strengths are often discussed freely, but rarely its problems (especially environmental and social issues) They need to have a realistic view of China compared to the USA, other BRICs, and the EU. China is not an MEDC or LEDC, it is an NIC Per capita incomes in China are around 1/7th of those in the USA 10% of GDP comes from agriculture and 35% of people work in that sector China is reluctant to ‘lead’ on the world stage it often tries to ‘abstain’ It lacks capacity to project its military power around the globe China’s ‘cheap labour’ is increasingly not cheap at all China’s reality – a summary The BRICS 3 India 3% of GDP is spent on subsidies for the poor – fertilizers, fuel, food – which is hugely expensive when the costs of importing these rises. Red tape and corruption are major problems, as are lack of power, water and transport infrastructure India? Inflation, the falling value of the Rupee, large government budget deficits – all make financial markets nervous 20% live in poverty, & few jobs for the poor – manufacturing peaked at 17% of the economy in 1995, now only 14% ; middle class IT / outsourcing jobs do not benefit the worst off. India – problems persist Since 2012, foreign TNCs can own 51% of a retail business in India Pre-2012, majority stakes were illegal Will this encourage WalMart and Tesco to invest in a retail market worth $800 billion? Many TNCs do not see India as ‘open for business’ On the other hand, local retailers are protected Investing in India? Difficult to meet these conditions, e.g. in sectors such as consumer electricals where most goods are imported. Images from ‘Wall Street Journal’ – http://online.wsj.com/news/articles/SB10001424052702304331204577352232515290226 India has increased generating capacity recently but is a long way behind China. Imports of fossil fuels are rising rapidly as the rupee weakens. Most analysts think India is several decades away from having a sufficient and reliable electricity supply Although growing, electricity generation capacity is tiny compared to China, growing more slowly India has large coal reserves, but cannot supply demand from domestic supply India’s energy crisis Oil imports are rising rapidly – with costs rising too as the Rupee remains weak July 2012 blackout: The largest power outage in history Affected over 620 million people, half of India's population in 22 states; 9% of world population 32 GW of power taken offline. Causes: very hot weather conditions increased power demand for irrigation pumps and cooling, while a late monsoon reduced HEP reservoir levels. Worth noting: 25% of people have no supply even when everything works. India has very low per capita electricity consumption compared with other BRICS, or the world Blackouts Blackout gridlock in 2012 World South Africa Russia India EU China Brazil 0 500 Electricity consumption watts pp Strengths • Education • English language • Youthful population • IT and Software Opportunities • Huge domestic market • Vast growth potential • Urbanisation Weaknesses • • • • Infrastructure Energy and water supply Poverty Weak inward investment Threats The least developed overall of the BRICs, with huge rural poverty, but also huge potential • Tensions within southern Asian region e.g. Pakistan • Resource / food crises • Red tape/ bureaucracy To conclude; evaluating India Every attempt has been made to cite the source of each image where appropriate Development data are from the ‘CIA Factbook’, which is continually updated. Some data may therefore now vary from those cited at the time of this lecture. If you note any images which are wrongly cited, please contact the Geographical Association (www.geography.org. uk) Acknowledgments
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