BRIC will rule the world, but not that soon – former WB boss

For 40 years the US was the dominant economic power, but today China and India are emerging and there is a complete change internationally, former World Bank president James Wolfensohn told RT at Davos.

“If you take a view in 10-20 years, there is no question that China and India will become dominant powers, China first and later India. By 2030-2040 the US will rank, perhaps, #3 to those two. But the US is still a hugely important power, not just because of the economics, but because of technology and income per capita, which is still far in excess to China and India, and because of its political leadership,” stated Wolfensohn. “We are not going to see a change that is too dramatic. But you certainly will find the emerging powers will want a greater share of discussion in the global scene and in particular the BRIC countries, and of the BRIC countries in particular, China and India.”

Answering a question about the role of the IMF and the World Bank in helping smaller countries overcome the great economic downturn, Wolfensohn stated that these organizations were “giving a great deal of money to come and help to solve the problem.”

“I rather feel the IMF and the World Bank emerge stronger as a result of this, because people came to realize you cannot live without them,” he said.

Wolfensohn believes the management of these organizations is already changing due to the fact that “it is no longer the US-dominated World Bank and the EU-dominated IMF. All this is now subject to examination, and in particular, the role of China and India, Brazil and Russia are becoming very important.”

Wolfensohn thinks it would be hard for emerging economies to pick up the slack from the US and EU economies, but that this would change rather quickly.

“All BRIC countries, China, India, Russia and Brazil together, are less in terms of GDP than the United States, maybe less than half of the US,” explained Wolfensohn. So “China and India alone cannot rescue the world economy at the moment.”

As for the probability of Russia becoming Europe’s biggest economy by 2020, Wolfensohn said it takes “the government and the Russian people to understand that to compete internationally, it is not enough just to have hydrocarbons, timber and natural resources. That gets back to the educational system, to the management system, to the system of incentives, to the move away from centralized government to a more diversified structure.”

Though Russia [in comparison to China and India] has some intellectual advantages it should pursue, said Wolfensohn, “high tech does not create lot of employment.”

Besides the issue of employment in the world’s biggest country, Wolfensohn also named such problems as ageing population, educational system, the incentives system, the judicial system and corruption as issues that need to be addressed urgently.