In 2001 Goldman Sachs chief strategist Jim O’Neill published a paper entitled “Building Better Global Economic BRICs”. This popularized the BRIC nations, Brazil, Russia, India, China (and eventually adding South Africa). He targeted these nations as being more than traditional emerging markets- rather high growth markets. While each country has its own strengths and weakness O’Neill argued that favorable demographics aided by the internet and globalization would help these countries to overtake the G7 countries in terms of total GDP. Since 2001, all countries have seen incredible growth but the outlook going forward paints a different picture for each. Without further ado, let’s learn about BRICS and where they are at now.
Widely considered the leader in South America, Brazil has had a history of a resource-rich economy. Coupled with mismanagement and corruption in the government. With a growing population and proximity to the US market, Brazil is positioned to become a growing powerhouse.
In recent years Brazil has seen its economy slump- largely due to low commodity prices and slower growth in China. In addition, they are currently in the process of impeaching President Dilma Rousseff on charges of corruption. Despite that and high government regulation Brazil remains the most sought-after country when considering which South American country to expand to.
Much like Brazil, Russia enjoys a resource-rich landscape as well as close access to the European and Asian markets. Over the past decade, they have seen a growth in the manufacturing and service sectors. That being said, Russia has the smallest population of the BRIC countries and its population has been shrinking recently. Also, since Putin has been in power Russia has been increasingly not interested in taking on Western capitalistic principles.
Putin remains very popular with a high approval rating. After invading Ukraine and having sanctions enforced the Russian economy and currency have seen a significant decline. This has served to bolster anti-western sentiment and forced Russia to look East to developing economic relationships.
As the largest democracy in the world, India enjoys the best demographic potential with a growing population of 1.2 billion. India is uniquely immune to potential global downturns as it is a low export economy with the consumer market primarily being internal. Another positive for India is that English is widely spoken and the language of international business.
Despite its enormous potential, India is infamous for its bureaucracy with many protectionist policies that discourage FDI and expansion. In addition, its many different cultures/languages/religions make cooperation between states a difficult challenge.
When penning the BRIC terms in 2001 even Jim O’Neill couldn’t have predicted the meteoric growth of China into the premier manufacturing and exporting country worldwide. As of 2016, China is the second largest economy in the world. From 2000 to 2010 China’s aggressive growth, especially in infrastructure, helped to boost the world economy. Providing demand for raw materials and many other good and services.
China, with its young population of 1.3 billion, is now shifting to a service and consumer-oriented economy. While historically seen as a black box for expanding abroad, China is increasingly creating attractive conditions for companies to expand and take advantage of the growing market.
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