beyondbrics

By Peter Johansson, Seung Ho Park and William Wilson

Everyone knows that emerging nations have hard power – the military and economic might a nation state uses to get what it wants in the world. Chinese, Russian and Indian nuclear weapons are a prime example.

But emerging nations are also developing their soft power – the phrase coined by US political scientist Joseph Nye to describe a state’s capacity to influence others through persuasion and attraction, instead of coercion.

The rise in emerging market (EM) hard power over the past decade has been dramatic. In 2000, the emerging world accounted for 20 per cent of global GDP, but by 2010 this figure had risen to approximately one-third. Over the same period its shares of world trade have risen from 8 per cent to 20 per cent while its share of global equity market capitalisation had risen from 7 per cent to 30 per cent.

The crucial question that arises then is whether soft power in the emerging world has risen commensurately to its hard power. If it has, then the combination of rising soft and hard power will give many EM countries more global clout.

Soft power is arguably an even more important topic for much of the developed world. With future defence budgets and foreign aid now in the early stages of being significantly cut, the developed world will possess less hard power. Soft power tools – especially those not financed by the government – will need to be employed more effectively. Unless the rich world’s countries are able to maintain (or possibly augment) their soft power in the coming decade, they certainly will face a world where their ability to influence events will be greatly diminished.

To better understand the drivers of soft power, the Skolkovo-E&Y Institute has compiled an index incorporating a wide variety of factors. Scaled on a score of 1-100, the top seven OECD and EM countries for 2010 are listed below.

Soft Power Rankings

Anecdotally, one would have expected that the past six years had taken their toll on US soft power. The US has been widely blamed for the recent financial crisis, and the poor performance of Wall Street institutions and Washington politicians have been a familiar global story. However, the US scored 87 in 2010, a full 37 points ahead of second place France and an enormous 56 points better than China. Our results clearly indicate that the US remains undisputed worldwide in soft power.

The US did well in eight of our ten categories: immigration (total of foreign-born immigrants), universities (quantity of globally ranked universities) and media exports (the royalties and fees earned from the export of goods such as films, music and books) provided the biggest boost to US soft power. These are followed by political freedom, iconic power (Time Magazine’s 100 most influential people), most admired companies, rule of law (the quality of a nation’s institutions) and inbound tourism (global interest in the host country). The US scored low in only two categories, CO2 emissions and voter turnout.

Unlike any of the other EMs, China’s soft power is almost exclusively derived from its sheer size. China’s soft power within the emerging world is primarily driven by the growth and visibility of its multi-national corporations, increased tourism and the rapid expansion and ranking of its universities.

It has established thousands of cultural centres to help disseminate its language. From 2002 through 2009, there was an 80 per cent increase in US college Chinese language enrolments. State coffers heavily subsidise its athletes, resulting in more Olympic gold than most EM countries.

That said, there are serious limits to Chinese soft power. China seems to offer little besides its economic juggernaut. The downsides of China’s single-minded emphasis on economic growth (hard power) are becoming more apparent every day. Rampant corruption, environmental degradation and rapidly increasing income inequality are increasing social unrest – and there are no signs of it abating. The graph below illustrates China hitting below its economic weight relative to its soft power within the emerging world. The line shows the best fit for real GDP and soft power for the largest EM economies.

India’s strong performance in the index is largely attributed to its high English fluency. Fluency in English has given the Indian diaspora enormous power to connect globally. India also scores well on freedom although endemic corruption and poverty hurts its image and soft power throughout the world.

Russia may score third among the EM nations but it is a one-trick pony when it comes to its soft power. The lion’s share of Russia’s soft power comes from one category – immigration (to Russia from the former Soviet republics). The 35m ethnic Russians living in the former CIS countries gives Russia enormous soft power in that region but it remains largely nonexistent elsewhere.

Brazil is a country that seems to be on the move. Along with its increasing hard power through faster economic growth, Brazil’s global image seems to be on the upswing, with its soft power jumping from 16th to 4th place among EM countries. Brazil now scores well above average among the EMs in voter turnout, freedom, royalties and Olympic competition. Brazil’s weakest categories are universities (for three out of the last six years, it did not even have one university ranked in the global top 200) and its lack of command of English which has “isolated” Brazil from the rest of the world.

Lastly, there is relatively little variation in soft power for most countries across the sample period, an indication it typically takes many years to acquire. This suggests that despite the fact that the EMs are growing rapidly, it will probably take many years for them to generate substantial soft power. The EMs should look toward improving their institutions (educational and rule of law) as the most effective way to improve their soft power. In the meantime, the EMs’ advantages in their growing hard power will more than anything else lift their global influence over the short-and-medium term.

Peter Johansson, Seung Ho Park and William Wilson are professors at the Skolkovo-E&Y Institute for Emerging Market Studies

Related reading:
China needs more than a five-year charm offensive, FT
Guest post: China’s culture power, beyondbrics
Mandarin has the edge in Europe’s classrooms, FT
Foreign relations: Brazilian influence grows ever stronger, FT