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[[Image:World-BRICs.png|thumb|right|300px|The four BRIC countries: Brazil, Russia, India and China]]'''BRIC''' is a term used to refer to the combination of [[Brazil|'''B'''razil]], [[Russia|'''R'''ussia]], [[India|'''I'''ndia]], and [[China|'''C'''hina]]. |
[[Image:World-BRICs.png|thumb|right|300px|The four BRIC countries: Brazil, Russia, India and China]]'''BRIC''' is a term used to refer to the combination of [[Brazil|'''B'''razil]], [[Russia|'''R'''ussia]], [[India|'''I'''ndia]], and [[China|'''C'''hina]]. |
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General consensus is that the term was first prominently used in the thesis of the [[Goldman Sachs]] investment bank. The main point of this 2003 paper was to argue that the economies of the BRICs are rapidly developing and by the year 2050 will eclipse most of the current richest countries of the world. In addition, the term "BRIC" can also be used to refer to a purported [[trade]] and [[cooperation]] agreement between these countries that is said to have been signed in |
General consensus is that the term was first prominently used in the thesis of the [[Goldman Sachs]] investment bank. The main point of this 2003 paper was to argue that the economies of the BRICs are rapidly developing and by the year 2050 will eclipse most of the current richest countries of the world. In addition, the term "BRIC" can also be used to refer to a purported [[trade]] and [[cooperation]] agreement between these countries that is said to have been signed in 2002. Finally, due to the popularity of the Goldman Sachs thesis, "BRIC" has since become a more generic [[marketing]] term to refer to these four countries, or even to newly industrialized countries in general. |
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==The BRIC thesis== |
==The BRIC thesis== |
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=== ''Dreaming with BRICs: The Path to 2050'' (2003) === |
=== ''Dreaming with BRICs: The Path to 2050'' (2003) === |
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The [http://www.gs.com/insight/research/reports/99.pdf BRIC thesis] (defended in the paper ''Dreaming with BRICs: The Path to 2050'') recognises that Brazil, Russia, India and China have changed their political systems to embrace global [[capitalism]]. Goldman Sachs predicts China and India, respectively, to be the dominant global suppliers of [[manufactured good|manufactured goods]] and [[services]] while Brazil and Russia would become similarly dominant as suppliers of raw materials. Cooperation is thus hypothesized to be a logical next step among the BRICs because Brazil and Russia together form the logical commodity suppliers to India and China. Thus, the BRICs have the potential to form a powerful economic bloc to the exclusion of the modern-day [[G6]] status. Brazil is dominant in [[soy]] and [[iron ore]] while Russia has enormous supplies of [[petroleum|oil]] and [[natural gas]]. Goldman Sachs' thesis thus documents how commodities, work, technology, and companies have diffused outward from the [[United States]] across the world. |
The [http://www.gs.com/insight/research/reports/99.pdf BRIC thesis] (defended in the paper ''Dreaming with BRICs: The Path to 2050'') recognises that Brazil, Russia, India and China have changed their political systems to embrace global [[capitalism]]. Goldman Sachs predicts China and India, respectively, to be the dominant global suppliers of [[manufactured good|manufactured goods]] and [[services]] while Brazil and Russia would become similarly dominant as suppliers of raw materials. Cooperation is thus hypothesized to be a logical next step among the BRICs because Brazil and Russia together form the logical commodity suppliers to India and China. Thus, the BRICs have the potential to form a powerful economic bloc to the exclusion of the modern-day [[G6]] status. Brazil is dominant in [[soy]] and [[iron ore]] while Russia has enormous supplies of [[petroleum|oil]] and [[natural gas]]. Goldman Sachs' thesis thus documents how commodities, work, technology, and companies have diffused outward from the [[United States]] across the world. |
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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]], [[FDI|foreign investment]], domestic consumption, and domestic entrepreneurship. |
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]], [[FDI|foreign investment]], domestic consumption, and domestic entrepreneurship. |
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According to the study, India has the potential to grow the fastest among the four BRIC countries over the next 30 to 50 years. A major reason for this is that the decline in working age population will happen later for India and Brazil than for Russia and China. |
According to the study, India has the potential to grow the fastest among the four BRIC countries over the next 30 to 50 years. A major reason for this is that the decline in working age population will happen later for India and Brazil than for Russia and China. |
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=== Follow-up report (2004) === |
=== Follow-up report (2004) === |
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The Goldman Sachs global economics team released a follow-up report to its initial BRIC study in |
The Goldman Sachs global economics team released a follow-up report to its initial BRIC study in 2004. [http://www.rediff.com/money/2004/nov/10guest1.htm] 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 % in 2003 to more than 40 % in 2025. Also, their total weight in the world economy would rise from approximately 10 % in 2004 to more than 20 % in 2025. Furthermore, between 2005 and 2015 over 800 million people in these countries will have crossed the [[GDP per capita|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. According to the report, first China and then a decade later India will overtake the US as the world's largest car market. |
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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, whereas only about 24 million people in the BRIC economies will have similar income levels. The report also highlights India's great inefficiency in energy use and mentions the dramatic under-representation of these economies in the global capital markets. These contradictions emphasize the enormous populations that exist within the BRICs, which makes it relatively easy for their aggregate wealth to eclipse the G6 while per-capita income levels remain far below the norm of today's industrialized countries. This phenomenon, too, will affect world markets as multinational corporations will attempt to take advantage of the enormous potential markets in the BRICs by producing, for example, far cheaper automobiles and other manufactured goods affordable to the consumers within the BRICs in lieu of the luxury models that currently bring the most income to automobile manufactures. |
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, whereas only about 24 million people in the BRIC economies will have similar income levels. The report also highlights India's great inefficiency in energy use and mentions the dramatic under-representation of these economies in the global capital markets. These contradictions emphasize the enormous populations that exist within the BRICs, which makes it relatively easy for their aggregate wealth to eclipse the G6 while per-capita income levels remain far below the norm of today's industrialized countries. This phenomenon, too, will affect world markets as multinational corporations will attempt to take advantage of the enormous potential markets in the BRICs by producing, for example, far cheaper automobiles and other manufactured goods affordable to the consumers within the BRICs in lieu of the luxury models that currently bring the most income to automobile manufactures. |
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==Marketing== |
==Marketing== |
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The BRIC term is also used by companies who refer to the four named countries as key to their [[emerging markets]] strategies. In reality, the use of this acronym often obscures a lesser role given to Brazil, and sometimes to Russia too. In such a sense, the reduced acronym IC (English "[[ick]]") would not be attractive. On the other hand, when Russia is used as a loose term to include all of Eastern Europe as well, the attention is more serious. At issue are the multiple serious problems which confront Russia (declining population, potentially unstable government, environmental degradation, critical lack of modern infrastructure, etc), and the comparatively much lower growth rate seen in Brazil. However, Brazil's lower growth rate obscures the fact that the country is already much more wealthy than China or India on a per-capita basis and has an economy potentially more diverse than the other BRICs due to its raw material and manufacturing potential. |
The BRIC term is also used by companies who refer to the four named countries as key to their [[emerging markets]] strategies. In reality, the use of this acronym often obscures a lesser role given to Brazil, and sometimes to Russia too. In such a sense, the reduced acronym IC (English "[[ick]]") would not be attractive. On the other hand, when Russia is used as a loose term to include all of Eastern Europe as well, the attention is more serious. At issue are the multiple serious problems which confront Russia (declining population, potentially unstable government, environmental degradation, critical lack of modern infrastructure, etc), and the comparatively much lower growth rate seen in Brazil. However, Brazil's lower growth rate obscures the fact that the country is already much more wealthy than China or India on a per-capita basis and has an economy potentially more diverse than the other BRICs due to its raw material and manufacturing potential. |
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== See also== |
== See also== |
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* [[Global warming]] |
* [[Global warming]] |
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* [[Treaty of Good-Neighborliness and Friendly Cooperation Between the People's Republic of China and the Russian Federation]] |
* [[Treaty of Good-Neighborliness and Friendly Cooperation Between the People's Republic of China and the Russian Federation]] |
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{{International power}} |
{{International power}} |
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Revision as of 10:55, 1 May 2006
BRIC is a term used to refer to the combination of Brazil, Russia, India, and China.
General consensus is that the term was first prominently used in the thesis of the Goldman Sachs investment bank. The main point of this 2003 paper was to argue that the economies of the BRICs are rapidly developing and by the year 2050 will eclipse most of the current richest countries of the world. In addition, the term "BRIC" can also be used to refer to a purported trade and cooperation agreement between these countries that is said to have been signed in 2002. Finally, due to the popularity of the Goldman Sachs thesis, "BRIC" has since become a more generic marketing term to refer to these four countries, or even to newly industrialized countries in general.
The BRIC thesis
Goldman Sachs argues that the economic potential of Brazil, Russia, India, and China 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. These countries are forecast to encompass over forty percent of the world's population and hold a combined GDP [PPP] of 14.951 trillion dollars. On almost every scale, they would be the largest entity on the global stage. However, it is important to note that it is not the intent of Goldman Sachs to argue that these four countries are a political alliance (such as the European Union) or any formal trading association, like ASEAN. Nevertheless, they have taken steps to increase their political cooperation, mainly as a way of influencing the United States position on major trade accords, or, through the implicit threat of political cooperation, as a way of extracting political concessions from the United States, such as the proposed nuclear cooperation with India.
Dreaming with BRICs: The Path to 2050 (2003)
The BRIC thesis (defended in the paper Dreaming with BRICs: The Path to 2050) recognises that Brazil, Russia, India and China have changed their political systems to embrace global capitalism. Goldman Sachs predicts China and India, respectively, to be the dominant global suppliers of manufactured goods and services while Brazil and Russia would become similarly dominant as suppliers of raw materials. Cooperation is thus hypothesized to be a logical next step among the BRICs because Brazil and Russia together form the logical commodity suppliers to India and China. Thus, the BRICs have the potential to form a powerful economic bloc to the exclusion of the modern-day G6 status. Brazil is dominant in soy and iron ore while Russia has enormous supplies of oil and natural gas. Goldman Sachs' thesis thus documents how 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. According to the study, India has the potential to grow the fastest among the four BRIC countries over the next 30 to 50 years. A major reason for this is that the decline in working age population will happen later for India and Brazil than for Russia and China.
Follow-up report (2004)
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 % in 2003 to more than 40 % in 2025. Also, their total weight in the world economy would rise from approximately 10 % in 2004 to more than 20 % 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. According to the report, first China and then a decade later India will overtake the US as the world's largest car market.
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, whereas only about 24 million people in the BRIC economies will have similar income levels. The report also highlights India's great inefficiency in energy use and mentions the dramatic under-representation of these economies in the global capital markets. These contradictions emphasize the enormous populations that exist within the BRICs, which makes it relatively easy for their aggregate wealth to eclipse the G6 while per-capita income levels remain far below the norm of today's industrialized countries. This phenomenon, too, will affect world markets as multinational corporations will attempt to take advantage of the enormous potential markets in the BRICs by producing, for example, far cheaper automobiles and other manufactured goods affordable to the consumers within the BRICs in lieu of the luxury models that currently bring the most income to automobile manufactures.
Criticism
There are many uncertainties and assumptions in the BRIC thesis that could mean that any or all of these four countries will 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 and Russia's lack of full democracy could be a problem in the future, as is the possibility of conflict over Taiwan in the case of China. Likewise, the population of Russia is steadily declining, and this may have implications for its future. Finally, Brazil's economic potential has been anticipated for decades, but it has so far consistently failed to achieve investor expectations. The BRICs have enormous populations of extremely impoverished people. This impedes progress by limiting government finances, increasing social unrest, and limiting potential domestic economic demand. 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. Finally, the economic emergence of the BRICs will have unpredictable consequences for the global environment. Indeed, proponents of a set carrying capacity for the Earth may argue that, given current technology, there is a finite limit to how much the BRICs can develop before exceeding the ability of the global economy to supply them and of the environment to support them.
The agreement
Various sources (see external links below) refer to a purported "original" BRIC agreement that predates the Goldman Sachs thesis. Some of these sources claim that President Vladimir Putin of Russia was the driving force behind this original cooperative coalition of developing BRIC countries. However, thus far, no text has been made public of any formal agreement to which all four BRIC states are signatories. This does not mean, however, that they have not reached a multitude of bilateral or even trilateral agreements. Evidence of agreements of this type are abundant and are available on the foreign ministry websites of each of the four countries. Trilateral agreements and frameworks made among the BRICs include the Shanghai Cooperation Organization (member states include Russia and China, associate members include India) and the IBSA Trilateral Forum, which unites Brazil, India, and South Africa in annual dialogues. Also important to note is the G-20 coalition of developing states which includes all the BRICs except for Russia, which is not a member of the WTO. The G-20 operates during World Trade Organization negotiations.
Marketing
The BRIC term is also used by companies who refer to the four named countries as key to their emerging markets strategies. In reality, the use of this acronym often obscures a lesser role given to Brazil, and sometimes to Russia too. In such a sense, the reduced acronym IC (English "ick") would not be attractive. On the other hand, when Russia is used as a loose term to include all of Eastern Europe as well, the attention is more serious. At issue are the multiple serious problems which confront Russia (declining population, potentially unstable government, environmental degradation, critical lack of modern infrastructure, etc), and the comparatively much lower growth rate seen in Brazil. However, Brazil's lower growth rate obscures the fact that the country is already much more wealthy than China or India on a per-capita basis and has an economy potentially more diverse than the other BRICs due to its raw material and manufacturing potential.
See also
- Asian Tigers
- Boom and bust
- China's military expenditure
- China's peaceful rise
- Doha Development Agenda
- Global warming
- Treaty of Good-Neighborliness and Friendly Cooperation Between the People's Republic of China and the Russian Federation