The BRICS and The Rich-Poor Divide — Social Apocalypse or Just a Phase?

Maria Andreivna,

Correspondent (Our World)

Although the emerging countries are playing an ever-increasing role in the growth of the global economy, it cannot be said that everyone in these countries is benefitting equally — if anything, as the economic centres hurtle into bright new futures, the gap between the poor and the wealthy is increasing.

I would like to take you into a journey into Russia, a country I am most familiar with, in order to illustrate this problem. Russia is a country, which has always occupied an indefinite position in the world. It straddles both Europe and Asia and although its capital city strives for a western mien, it has some distinctly emerging world characteristics — notably, the infamous rich-poor divide. Russia is notorious for its handful of nouveau riche, the richest one per cent who according to Credit Suisse own 71% of household assets in the country (the world average is 46%)

Travel 150 km outside of Moscow and you’ve waded into the countryside. You will not find any designer brands here, instead quaint little shacks crouch quietly, satellite dishes tacked crudely on. There is no plumbing or sewage here in indoor toilets. Occasionally the overly opulent mansion of the nouveau riche will raise its vulgar head, but these, reflective of Russia’s population, appear only ever so often.

This isn’t poverty; this is the standard of living there. These are summer residences (dachas) of middle class Muscovites — it may be crude, but the fences are lined with grapevines, neat wells stand by and babushkas squat dotingly over vegetable patches. It may not be much, but it is every city dweller’s private paradise. With none of the uniform look of beachside villas, no dacha is the same.

The true, unheard poverty is revealed in a voyage far deeper into rural Russia. The Republic of Bashkortostan, a federal subject of Russia, lies about 1,400 km Southeast of Moscow. It is the largest republic of Russia, the population of its capital, Ufa, is roughly 10 times less than that of Moscow’s 11.5 million. The population of the entire republic is still only a third of Moscow, while the area is 50 times that of Moscow at 1,43,600 square km­­_­.

It is an area of wild beauty, massive hills roll into the distance and untouched forests grow thick — the stuff of childhood fairy tales. In this visually rich landscape lie sparse settlements so outside the ceaseless, bustling tumult of modern life that they seem to be lost in time.

The towns and villages of Ural once thrived on agriculture and small-scale industries (having a wealth of raw materials). Before the October Revolution a huge market thrived in Ufa, the capital of Bashkortostan. Farmers, craftsmen and merchants from all over Russia would flock to sell their goods. However the market was abolished and although the big cities continued to flourish due to the engineering, coal, oil and gold industry, the rural regions languished. Nowadays the newer generations migrate to the cities, leaving family farms and businesses to die out. Unfortunately this also means the fading of age-long traditions.

This is a mirror of the other BRIC countries – while the economies are growing in all four, these countries are still developing. This means that the capital generated by the centres has not yet leaked into the far regions; therefore the rich-poor divide is felt most keenly in these areas. Time is the best cure for this problem – already tourism has made a first tentative step into these wild regions. Attractive to the more adventurous sort of tourist, Ural offers horseback and rafting expeditions into its untouched depths. The place is brimming with potential, should the right measures be taken the tourist industry would boom – as yet these are untapped assets.

Undeniably Russia’s economy has been growing and the capital’s subsequent extension into the Moskovskaya Oblost is proof of this — despite a widening gap between the rich and poor, worldwide economic development has resulted in a decrease of absolute poverty. One day this growth will inevitably reach even the furthest corners. Inevitably, because that is the law of expansion, the growth of cities cannot be stopped and eventually affluence will reach the remotest of nooks. These rural villages may look sad now, but what will the residents think, when industry and tourism come brandishing their ruthless excavators?

Is tourism the only way to close the gap? At the moment things look rather grim. Russia’s economy is built mainly on the export of raw materials but the number of jobs available related to this industry is limited. Meanwhile the level of education required to obtain a well-paying job isn’t being delivered in regions outside of Russia’s big cities. The ineffectiveness of the government of addressing these issues is not encouraging, rather than focusing on equality, the government hangs on the whims of the ultra-rich that control Russia’s industry. Although Russia’s financial centres will continue to pull the country forward, the majority of its population will remain in the dregs.

This same is true of India, China and South Africa. In all three the GINI coefficient has risen (a measure of inequality, 0 being perfect equality, and 100 absolute inequality). We might learn from Brazil on the other hand, which has actually managed to lessen the gap somewhat -55.07 in 2008 to 51.9 in 2012. Not bad compared to Russia’s staggering 0.84. This is the result of rises in labour wages and benefits. The question is how sustainable this current wave of progress is. The latest GINI coefficient for China, India and South Africa are 0.47, 0.33 and 0.63 respectively. Although on the increase, China and India’s GINI coefficient is lower than Brazil’s. Once it reaches this level, will Brazil’s also progress stop?