"The BRICS Are Unbeatable Competitors."
No. The BRICS benefited for several decades from cheap labor, higher productivity, massive (but far from universal) investment in infrastructure and education, and a hunger to catch up with wealthier rivals. Their transformation was remarkable: With better-off populations, domestic markets finally became economically attractive, South-South trade exploded, and leading corporations transformed themselves from second-rate producers of cheap goods into world-class manufacturers of smartphones, semiconductors, software, and planes. China's Lenovo took over IBM's PC business. Brazilian and South African beer companies became leading global brewers. Just as had been the case with the Russians after Sputnik and the Japanese in the 1980s, the BRICS became feared and formidable competitors, even if some of the fears about their rise were exaggerated.
But the story is not over. Cheap, abundant energy from shale gas is attracting new investment in the United States, giving energy-intensive industries a renewed competitive edge. Abundant shale gas could also make Russian Arctic drilling and Brazilian pre-salt production too expensive. Stagnant U.S. wages and soaring pay in China and India are eroding the BRICS' labor-cost advantage, while their seemingly bottomless labor pool has suddenly started emptying out, leaving them with shortages of trained labor.
Mechanization is also allowing the developed world to make a comeback. Increasingly affordable and sophisticated robots can now do what 10 or more human workers did until recently. They work 24 hours a day and do not ask for higher wages or better benefits. Smartphones and tablets may still be made in Asia, but the BRICS lag behind in taking advantage of the productivity gains they bring. As a result, traditional multinationals are fighting back after years of retreat, from General Motors winning the biggest market share in China to General Electric's foray into producing low-cost medical equipment to Nestlé's invention of the wildly successful Nespresso machines, turning high-end coffee from a store-bought luxury into an at-home convenience. The competitive edge may be turning back to the West much faster than we thought.
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