points in the years 2003 to 2009.
Research by IMF economists corroborates the notion that the BRICs are acting as a locomotive for poorer nations such as Zambia. Issouf Samake and Yongzheng Yang estimate that a 1 percentage point increase in BRIC demand and productivity leads to a cumulative 0.7 percentage point increase in low-income countries' output over three years. And that has translated, they argue, into a surprising economic resilience in the face of the worst recession for developed nations since World War II.
Not everyone in Zambia is prospering, of course. "It's just hand to mouth," said Gertrude Tembo, a 38-year-old mother of five who sells vegetables on the streets of Lusaka. "I've been selling on this street for the past 10 years and I am still here the way I started." What is enthusing Africa optimists, though, is that governance is generally improving too. The number of conflicts has fallen and power is increasingly changing hands peacefully through the ballot box, as it did in Zambia in September. "Since the new government has introduced pro-poor policies, such as the decision to reduce taxes for thousands of workers, a lot of people should feel the benefit of Zambia's positive economic growth," said Gervas Malibata, a rural development worker.
The picture is roughly the same in Peru. A commodity boom fueled by demand from Asia has laid the foundations for a surge in domestic consumption. Per capita income more than doubled from $2,000 in 2000 to $5,000 in 2010 and it is set to reach $6,700 in 2015, the IMF says. Peru has come a long way from the hyper-inflation and violence of leftist Shining Path insurgents that scarred the 1990s. "There are job opportunities now and, above all, there is stability," said Magra Trujillo, a 50-year-old nurse outside a middle-class shopping mall in Lima, the capital. "I know there will be opportunities for my children and grandchildren." Many poor Peruvians who propelled the leftist former army officer Ollanta Humala to victory in elections last June are still waiting for growth to trickle down from the construction, shopping, and real estate bonanza under way in Lima. Still, optimism prevails. "It's an incredible turnaround from 10 years ago, and lots of Peruvians are moving back home," said Javier Ugarte, a restaurant owner who was visiting his native Lima from San Diego. "The American dream actually seems to be more real in Peru now."
This rosy picture of demand from China and other emerging powerhouses extending across the globe invites an obvious question: How long can these countries' strong demand last? Maria Pinelli, global vice chair of strategic growth markets at consultants Ernst & Young, expects that the global middle class - people with daily per capita incomes between $10 and $100, expressed at purchasing power parity - will expand from around 2 billion now to 5 billion by 2030. Annual spending in this group will leap to $56 trillion from $21 trillion, offering juicy opportunities to multinational companies if they can outrace fast-moving local rivals on their home turf. "Speed to market will be absolutely essential because people in those countries are too entrepreneurial to let an opportunity pass. They'll figure it out before the multinationals do," she said. "That's a fundamental change."
Not everyone is so optimistic. Dani Rodrik, a professor of international political economy at Harvard University, is skeptical of assumptions that developing countries will maintain very high growth rates as they catch up with the West. Widespread convergence is a relatively recent phenomenon, he argues. "It would be nice if governments simply had to stabilize, liberalize and open up and markets would do the rest," Rodrik wrote in a paper. "Alas, that is not how sustained convergence was achieved in the past." Continued rapid expansion will require the kind of policies that advanced economies harnessed on the way to becoming rich, such as keeping currencies undervalued, controlling the financial sector, and favoring selected industries - in short, the Chinese recipe for growth. A Western backlash against the Beijing model, sparked perhaps by austerity fatigue, is a real risk. For now, though, people inside and outside China are making the most of the country's economic rise.
"In China there are plenty of opportunities for everyone to increase their standard of living," said David Zhang, who was born into a farming family and is now chief financial officer of a company listed in Hong Kong. "The Chinese will have cars and luxuries they haven't dared to dream about for centuries," said Zhang, who owns two BMWs.
Back in Birmingham, taxi driver Mohammed Iktias said the news that JLR's profits were up and the firm was taking on more workers had put a smile on his face. "When I heard that, it made me genuinely feel happy. It was good news for a change," Iktias said. "It didn't bring a tear to my eye, but it was close."
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