Declining Economic Freedom and Growing Statism: The BRICs Are Hitting the Wall

James M. Roberts /

Economist Nouriel Roubini warned late last month at the World Economic Forum that economic growth in the so-called BRIC countries (Brazil, Russia, India, and China) is at risk: Their past successes were “hyped up,” and the futures of the BRICs are at risk due to rising statism.

This rising risk can be seen in the graph below—stagnating economic freedom scores of the BRICs in The Heritage Foundation/Wall Street Journal’s annual Index of Economic Freedom.

As Roubini notes, the “biggest developing nations risk overturning the achievements of the past decade by increasing the state’s role in the economy.” He reported that the BRICs have recently been moving away from market economies due to increased resource nationalization, protectionism, lack of momentum for additional structural market-oriented reforms to increase the size of the private sector, and a generally larger role by the state in enterprises and banks. These specific areas of concern for Roubini are reflected in the Index scores for each of the BRICs:

While the BRIC grouping itself—a dubious bond-marketing concoction by Goldman Sachs more than decade ago—is not important, the policies of large developing economies are. The warnings of the 2013 Index of Economic Freedom about stagnating economic freedom in the BRICs (and elsewhere) are very clear—and disturbing. Thankfully, the Index also includes a roadmap for the BRICs and others on how to return to the path to growth.