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'''BRICs''' ([[Brazil]], [[Russia]], [[India]], and [[China]]) are four countries whose economic potential is such that they may become among the four most dominant economies by the year 2050. The thesis was proposed by [[Jim O'Neil]], global economist at [[Goldman Sachs]]. The coalition would encompass over forty percent of the world's population and hold a combined [[Gross domestic product|GDP]] [PPP] of 12.14 trillion dollars. On almost every scale, it would be the largest entity on the global stage. These four countries are not a political alliance (such as the [[European Union]]) or any formal trading association, like ASEAN. BRIC is merely a term of reference. |
'''BRICs''' ([[Brazil]], [[Russia]], [[India]], and [[China]]) are four countries whose economic potential is such that they may become among the four most dominant economies by the year 2050. The thesis was proposed by [[Jim O'Neil]], global economist at [[Goldman Sachs]]. The coalition would encompass over forty percent of the world's population and hold a combined [[Gross domestic product|GDP]] [PPP] of 12.14 trillion dollars. On almost every scale, it would be the largest entity on the global stage. These four countries are not a political alliance (such as the [[European Union]]) or any formal trading association, like ASEAN. BRIC is merely a term of reference. |
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== ''Dreaming with BRICs: The Path to 2050'' (2003) == |
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The BRIC thesis recognises that Brazil, Russia, India and China have changed their political systems to embrace global [[capitalism]]. China and India are predicted to be, one can argue that they are, dominant in the field of manufacturing and also in services (for India in particular) while Brazil and Russia would be dominant countries to supply these countries with commodities ([[soy]] and [[iron ore]] for Brazil, [[Petroleum|oil]] from Russia). In this process, commodities, work, technology, and companies have diffused outward from the United States across the world. Following the end of the [[Cold War]] or even before, the governments comprising BRIC all initiated economic or political reforms to allow their countries to enter the world economy. In order to compete, these countries have simultaneously stressed education, foreign investment, domestic consumption, and domestic entrepreneurship. |
The BRIC thesis recognises that Brazil, Russia, India and China have changed their political systems to embrace global [[capitalism]]. China and India are predicted to be, one can argue that they are, dominant in the field of manufacturing and also in services (for India in particular) while Brazil and Russia would be dominant countries to supply these countries with commodities ([[soy]] and [[iron ore]] for Brazil, [[Petroleum|oil]] from Russia). In this process, commodities, work, technology, and companies have diffused outward from the United States across the world. Following the end of the [[Cold War]] or even before, the governments comprising BRIC all initiated economic or political reforms to allow their countries to enter the world economy. In order to compete, these countries have simultaneously stressed education, foreign investment, domestic consumption, and domestic entrepreneurship. |
Revision as of 19:38, 18 December 2005
BRICs (Brazil, Russia, India, and China) are four countries whose economic potential is such that they may become among the four most dominant economies by the year 2050. The thesis was proposed by Jim O'Neil, global economist at Goldman Sachs. The coalition would encompass over forty percent of the world's population and hold a combined GDP [PPP] of 12.14 trillion dollars. On almost every scale, it would be the largest entity on the global stage. These four countries are not a political alliance (such as the European Union) or any formal trading association, like ASEAN. BRIC is merely a term of reference.
Dreaming with BRICs: The Path to 2050 (2003)
The BRIC thesis recognises that Brazil, Russia, India and China have changed their political systems to embrace global capitalism. China and India are predicted to be, one can argue that they are, dominant in the field of manufacturing and also in services (for India in particular) while Brazil and Russia would be dominant countries to supply these countries with commodities (soy and iron ore for Brazil, oil from Russia). In this process, commodities, work, technology, and companies have diffused outward from the United States across the world. Following the end of the Cold War or even before, the governments comprising BRIC all initiated economic or political reforms to allow their countries to enter the world economy. In order to compete, these countries have simultaneously stressed education, foreign investment, domestic consumption, and domestic entrepreneurship.
The BRIC thesis is merely just that. Prediction of events in future has always been notoriously difficult. There are many uncertainties and assumptions that could mean that any of these four countries do not live up to their promise. The preeminence of China and India as major manufacturing countries with unrealised potential has been widely recognised, but some commentators state that China's lack of full democracy could be a problem in the future, as is the possibility of conflict over Taiwan. Likewise, the population of Russia is declining, and this may have implications for its future. The potential of Brazil has been speculated upon for many decades without amounting to fulfilling this potential. Factors such as international conflict, civil unrest, political policy, outbreaks of disease and terrorism are all factors that are difficult to predict and that could have an effect on the destiny of any country. India, China and Russia are all in dispute regarding territory for example. Nonetheless, the BRIC thesis is based upon thorough analysis of key economic indicators.
Follow-up report (2004)
Growth
The Goldman Sachs global economics team released a follow-up report to its initial BRIC study in 2004. [1] This new report takes the analysis one step forward and focuses on the impact the growth of these four economies will have on global markets. In this report it is estimated that the BRIC economies' share of world growth could rise from 20 per cent in 2003 to more than 40 per cent in 2025. Also, their total weight in the world economy would rise from approximately 10 per cent in 2004 to more than 20 per cent in 2025. Furthermore, between 2005 and 2015 over 800 million people in these countries will have crossed the annual income threshold of $3,000. In 2025, it is calculated that approximately 200 million people in these economies will have annual incomes above $15,000. Therefore, the huge pickup in demand will not be restricted to basic goods but impact higher-priced branded goods as well. First China and a decade later India would overtake the US as the world's largest car market.
Remarks
Despite the balance of growth swinging so decisively towards the BRIC economies, the average wealth level of individuals in the more advanced economies will continue to far outstrip the BRIC economy average. Goldman Sachs estimates that by 2025 the income/capita in the G6 will exceed $35,000, only about 24 million people in the BRIC economies will have similar income levels. Highlighting India's great inefficiency in energy use, the data indicates that within 15 years India's contribution to global oil demand growth will overtake China's. India's share of actual global oil demand will also peak near 17-18 per cent, similar to China's. This tremendous increase in oil demand will increase world oil prices. The Goldman Sachs report mentions also the dramatic under-representation of these economies in the global capital markets. The share of these economies in global capital markets was in 2004 about 3.5 per cent, and depending on the extent of capital market development, they could account for anything between 10 and 17 per cent of global equity markets by 2020. Market capitalisation in the BRIC economies could increase by a factor of four (or about $4 trillion). These markets would still however remain dwarfed by the size and liquidity of Wall Street.