Reconfiguring the global service economy? The case of the BRICs

Abstract

Since O’Neill (2001) first suggested it was time to build better global economic BRICs the inexorable growth of Brazil, Russia, India and China has eclipsed the performance of the G7 countries. While the drivers of economic growth in each BRIC country vary, they are all predicated primarily on rapid expansion of inwardly invested and/or domestic manufacturing or low-skill, technology-intensive business process and customer support services. These changes are reshaping the geography of the global economy but the BRICs are still at the investment-driven stage of development; consolidation and further enhancement of their competitiveness will require a transition towards the third, innovation-based, stage. This will require greater engagement with knowledge intensive services both as inputs to the production of high quality, high technology goods and services for the global market and as participants in their own right in that market which is currently dominated by service transnationals based in the G7. This chapter explores the notion that the BRIC economies that fail to develop critical mass in knowledge intensive services will be “hollow” economies unable to sustain the competitive momentum of the last decade.