bric countries and other emerging economies of the world
TRANSCRIPT
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PRESENTED BY
STUDENTS OF T.Y.B.Com(A&F)
Name of the student Roll. No Signature
Riddhi Chavda 07
Vineeth Mudaliyar 36
Anushree Shetty
50
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ACKNOWLEDGMENT
We express our gratitude to our Economics Professor Shri. Oberoi for assigning us the
project on BRIC Countries and Other Emerging Economies of the World.
The topic is deliberated throughout the globe and by assigning this most relevant topic hasnot only given us an insight into the world economy but also has given us an opportunity to
go into the depth on various issues/analysis by worlds renowned economic analysts (Price
Water Coopers, Goldman Sachs, etc.)
The topic of the project has expanded our knowledge manifold which is very pertinent for
those who belong to the commerce stream.
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PREFACE
An effort has been made to give an insight into the futuristic economies of the world viz;
BRIC COUNTRIES AND OTHER EMERGING ECONOMIES OF THE WORLD.
The vision four decades down the lane seems to be more pragmatic despite the upheavals
in most of the developed countries and also the sporadic factors of throughout the globe.
The need for looking into the economies beyond the established economies/
development eco has arisen due to shift in global economic power away from the
developed G7 economies towards the developing world.
http://en.wikipedia.org/wiki/G7http://en.wikipedia.org/wiki/G7 -
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TABLE OF CONTENTS
Sr. No Contents Page No.
1. Introduction 6-8
2. Brazila) Introductionb) Economyc) Trading Policiesd) Other Aspects
9-11
3. Russiaa) Introductionb) Economyc) Trading policies
d)
Other Aspects
12-14
4. Indiaa) Introductionb) Economyc) Trading policiesd) Other Aspectse) India 2020
15-19
5. Chinaa) Introductionb)
Trading policiesc) Other Aspects
20-24
6. Dreaming with the BRICs 25-26
7. Statistics 27
8. Forecast 28-29
9. History
a)
Introductionb) Enlargementc) Financial Diversificationd) Criticism
30-34
10. Proposed Inclusionsa) Introductionb) Mexicoc) South Koread) United Korea
35-36
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11. Other Emerging Economies Of the Worlda) Beyond the BRICsb) Mexicoc) Indonesiad) Turkey
e)
Standards and Poorf) EAGLEg) BEMh) Global Growth Generationi) Six Major Emerging Economies
37-39
12. Conclusion 40
13. Abbreviations 41
14. Bibliography 42
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INTRODUCTION TO BRIC COUNTRIES
In economics, BRIC is a grouping acronym that refers to the countries ofBrazil, Russia,
India and China, which are all deemed to be at a similar stage of newly advanced economic
development. It is typically rendered as "the BRICs" or "the BRIC countries" or alternativelyas the "Big Four".
The acronym was coined byJim O'Neillin a 2001 paper entitled "Building Better Global
Economic BRICs". The acronym has come into widespread use as a symbol of the shift in
global economic power away from the developed G7 economies towards the developing
world.
The BRICs would organize themselves into an economic bloc, or a formal trading
association, as the European Union has done. However, there are some indications that the
"four BRIC countries have been seeking to form a 'political club' or 'alliance'", and therebyconverting "their growing economic power into greater geopolitical clout". On June 16, 2009,
the leaders of the BRIC countries held their first summit in Yekaterinburg, and issued a
declaration calling for the establishment of an equitable, democratic and multi polar world
order. Since then they have met in Braslia in 2010 and will in China in 2011.
Name Of The
Country
Name Of The
Republic
Head Of The State Head Of the
Government
Brazil Federative Republic Of
Brazil
Dilma Rousseff
Russia Russian Federation Dmitry Medvedev Vladimir Putin
India Republic Of India Pratibha Patil Manmohan Singh
China Peoples Republic OfChina
Hu Jintao Wen Jiabao
http://en.wikipedia.org/wiki/Acronymhttp://en.wikipedia.org/wiki/Countrieshttp://en.wikipedia.org/wiki/Brazilhttp://en.wikipedia.org/wiki/Brazilhttp://en.wikipedia.org/wiki/Russiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/People%27s_Republic_of_Chinahttp://en.wikipedia.org/wiki/Jim_O%27Neill_(economist)http://en.wikipedia.org/wiki/Jim_O%27Neill_(economist)http://en.wikipedia.org/wiki/Jim_O%27Neill_(economist)http://en.wikipedia.org/wiki/G7http://en.wikipedia.org/wiki/European_Unionhttp://en.wikipedia.org/wiki/Yekaterinburghttp://en.wikipedia.org/wiki/Polarity_in_international_relationshttp://en.wikipedia.org/wiki/New_world_order_(politics)http://en.wikipedia.org/wiki/New_world_order_(politics)http://en.wikipedia.org/wiki/Bras%C3%ADliahttp://en.wikipedia.org/wiki/Brazilhttp://en.wikipedia.org/wiki/Brazilhttp://en.wikipedia.org/wiki/Dilma_Rousseffhttp://en.wikipedia.org/wiki/Russiahttp://en.wikipedia.org/wiki/Dmitry_Medvedevhttp://en.wikipedia.org/wiki/Vladimir_Putinhttp://en.wikipedia.org/wiki/Hu_Jintaohttp://en.wikipedia.org/wiki/Wen_Jiabaohttp://en.wikipedia.org/wiki/Wen_Jiabaohttp://en.wikipedia.org/wiki/Hu_Jintaohttp://en.wikipedia.org/wiki/Vladimir_Putinhttp://en.wikipedia.org/wiki/Dmitry_Medvedevhttp://en.wikipedia.org/wiki/Russiahttp://en.wikipedia.org/wiki/Dilma_Rousseffhttp://en.wikipedia.org/wiki/Brazilhttp://en.wikipedia.org/wiki/Brazilhttp://en.wikipedia.org/wiki/Bras%C3%ADliahttp://en.wikipedia.org/wiki/New_world_order_(politics)http://en.wikipedia.org/wiki/New_world_order_(politics)http://en.wikipedia.org/wiki/Polarity_in_international_relationshttp://en.wikipedia.org/wiki/Yekaterinburghttp://en.wikipedia.org/wiki/European_Unionhttp://en.wikipedia.org/wiki/G7http://en.wikipedia.org/wiki/Jim_O%27Neill_(economist)http://en.wikipedia.org/wiki/People%27s_Republic_of_Chinahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Russiahttp://en.wikipedia.org/wiki/Brazilhttp://en.wikipedia.org/wiki/Countrieshttp://en.wikipedia.org/wiki/Acronym -
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The economic potential ofBrazil, Russia, India and China is such that they could become
among the four most dominant economies by the year 2050. The thesis was proposed by Jim
O'Neill, global economist at Goldman Sachs. These countries encompass over 25% of the
world's land coverage and 40% of the world's population and hold a combined GDP (PPP) of
18.486 trillion dollars. On almost every scale, they would be the largest entity on the globalstage. These four countries are among the biggest and fastest growing emerging markets.
Name Of The
Country
GDP (PPP)
($ billions)
Area
(sq.km)
Population
Brazil 2,182 8,514,877 192,787,000
Russia 2,219 17,075,400 141,927,297
India 4,001 3,287,240 1,179,618,000
China 10,084 9,640,821 1,336,970,000
18,486 38,518,338 2,851,302,297
However, 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.
To get an insight about the BRIC it is necessary to have an insight about the economy of each
of the BRIC countries, i.e.; Brazil, Russia, India and China individually. An overview of each
of the BRIC countries is provided as under:
http://en.wikipedia.org/wiki/Economy_of_Brazilhttp://en.wikipedia.org/wiki/Economy_of_Russiahttp://en.wikipedia.org/wiki/Economy_of_Indiahttp://en.wikipedia.org/wiki/Economy_of_the_People%27s_Republic_of_Chinahttp://en.wikipedia.org/wiki/Jim_O%27Neill_(economist)http://en.wikipedia.org/wiki/Jim_O%27Neill_(economist)http://en.wikipedia.org/wiki/Gross_domestic_producthttp://en.wikipedia.org/wiki/Emerging_markethttp://en.wikipedia.org/wiki/European_Unionhttp://en.wikipedia.org/wiki/ASEANhttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/ASEANhttp://en.wikipedia.org/wiki/European_Unionhttp://en.wikipedia.org/wiki/Emerging_markethttp://en.wikipedia.org/wiki/Gross_domestic_producthttp://en.wikipedia.org/wiki/Jim_O%27Neill_(economist)http://en.wikipedia.org/wiki/Jim_O%27Neill_(economist)http://en.wikipedia.org/wiki/Economy_of_the_People%27s_Republic_of_Chinahttp://en.wikipedia.org/wiki/Economy_of_Indiahttp://en.wikipedia.org/wiki/Economy_of_Russiahttp://en.wikipedia.org/wiki/Economy_of_Brazil -
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BRAZIL
Introduction
The economy of Brazil is the world's seventh largest by nominal GDP and eighth
largest by purchasing power parity. Its economy is the largest in Latin American nations and
the second largest in the western hemisphere. Brazil is one of the fastest-growing major
economies in the world with an average annual GDP growth rate of over 5 percent. The
Brazilian economy has been predicted to become one of the five largest economies in the
world in the decades to come.
According to the World Economic Forum, Brazil was the top country in upward evolution
ofcompetitiveness in 2009, gaining eight positions among other countries, overcoming
Russia for the first time, and partially closing the competitiveness gap with India and China
among the BRIC economies. Important steps taken since the 1990s toward fiscal
sustainability, as well as measures taken to liberalize and open the economy, have
significantly boosted the countrys competitiveness fundamentals, providing a better
environment for private-sector development.
The owner of a sophisticated technological sector, Brazil develops projects that range
from submarines to aircraft and is involved in space research: the country possesses a satellite
launching centre and was the only country in the Southern Hemisphere to integrate the team
responsible for the construction of the International Space Station (ISS). It is also a pioneer
in many fields, including ethanol production.
Brazil, together with Mexico, has been at the forefront of the Latin American multinationalsphenomenon by which, thanks to superior technology and organization, local companies have
successfully turned global. These multinationals have made this transition notably by
investing massively abroad, in the region and beyond, and thus realizing an increasing
portion of their revenues internationally.
Brazil is also a pioneer in the fields of deep water oil research from where 73 percent of its
reserves are extracted. According to government statistics, Brazil was the first capitalist
country to bring together the ten largest car assembly companies inside its national territory.
The annual Brasil Investment Summit takes place in So Paulo and is the largest gathering in
Brazil of international investment experts covering opportunities in alternative vehicles,infrastructure, and advanced trading strategies
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)http://en.wikipedia.org/wiki/Gross_domestic_producthttp://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)http://en.wikipedia.org/wiki/Purchasing_power_parityhttp://en.wikipedia.org/wiki/Latin_Americahttp://en.wikipedia.org/wiki/Economic_growthhttp://en.wikipedia.org/wiki/World_Economic_Forumhttp://en.wikipedia.org/wiki/Competitivenesshttp://en.wikipedia.org/wiki/BRIChttp://en.wikipedia.org/wiki/Submarinehttp://en.wikipedia.org/wiki/Aircrafthttp://en.wikipedia.org/wiki/Centro_de_Lan%C3%A7amento_de_Alc%C3%A2ntarahttp://en.wikipedia.org/wiki/Centro_de_Lan%C3%A7amento_de_Alc%C3%A2ntarahttp://en.wikipedia.org/wiki/Southern_Hemispherehttp://en.wikipedia.org/wiki/International_Space_Stationhttp://en.wikipedia.org/wiki/Ethanolhttp://en.wikipedia.org/wiki/Multinational_corporationhttp://en.wikipedia.org/wiki/S%C3%A3o_Paulohttp://en.wikipedia.org/wiki/S%C3%A3o_Paulohttp://en.wikipedia.org/wiki/Multinational_corporationhttp://en.wikipedia.org/wiki/Ethanolhttp://en.wikipedia.org/wiki/International_Space_Stationhttp://en.wikipedia.org/wiki/Southern_Hemispherehttp://en.wikipedia.org/wiki/Centro_de_Lan%C3%A7amento_de_Alc%C3%A2ntarahttp://en.wikipedia.org/wiki/Centro_de_Lan%C3%A7amento_de_Alc%C3%A2ntarahttp://en.wikipedia.org/wiki/Aircrafthttp://en.wikipedia.org/wiki/Submarinehttp://en.wikipedia.org/wiki/BRIChttp://en.wikipedia.org/wiki/Competitivenesshttp://en.wikipedia.org/wiki/World_Economic_Forumhttp://en.wikipedia.org/wiki/Economic_growthhttp://en.wikipedia.org/wiki/Latin_Americahttp://en.wikipedia.org/wiki/Purchasing_power_parityhttp://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)http://en.wikipedia.org/wiki/Gross_domestic_producthttp://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal) -
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Economy
The Brazilian economys solid performance during the financial crisis and its strong and
early recovery, including 2010 growth of 7.5%, has contributed to the countrys transition
from a regional to a global power. Expected to continue to grow in the 4% to 5% range, the
economy is the worlds eighth-largest and is expected to rise to fifth within the next several
years. During the administration of former President Lula, surging exports, economic growth
and social programs helped lift tens of millions of Brazilians out of poverty. For the first
time, a majority of Brazilians are now middle-class, and domestic consumption has become
an important driver of Brazilian growth. President Dilma Rousseff, who took office on
January 1, 2011, has indicated her intention to continue the former presidents economic
policies, including sound fiscal management, inflation control, and a floating exchange rate.
Rising employment and strong domestic demand pushed inflation to nearly 6% in 2010,
leading the central bank to boost interest rates and the Rousseff government to announce cuts
in 2011 spending. The economic boom and high interest rates have attracted foreign currency
inflows that have driven up the value of the currency (the real) by nearly 40% since the start
of 2009. In an effort to limit the appreciation, the government has increased dollar reserves
and capital controls.
Brazil is generally open to and encourages foreign investment. It is the largest recipient of
foreign direct investment (FDI) in Latin America, and the United States is traditionally the
top foreign investor in Brazil. Since domestic savings are not sufficient to sustain long-term
high growth rates, Brazil must continue to attract FDI, especially as the government plans to
invest billions of dollars in off-shore oil, nuclear power, and other infrastructure sectors over
the next few years. The major international athletic competitions that Brazil will host every
year until the 2016 Rio Olympics are also leading the government to invest in roads, airports,
sports facilities, and other areas.
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Trade Policy
Brazil has been a leading player in the World Trade Organizations Doha Round negotiations
and continues to seek to bring that effort to successful conclusion. To further increase its
international profile (both economically and politically), the Rousseff administration is also
seeking expanded trade ties with developing countries, as well as a strengthening of theMercosul (Mercosur in Spanish) customs union with Uruguay, Paraguay, and Argentina. In
2008 Mercosul concluded a free trade arrangement with Israel, and another arrangement with
Egypt was signed in 2010.The trade bloc also plans to launch trilateral free trade negotiations
with India and South Africa, building on partial trade liberalization agreements concluded
with these countries in 2004. China has significantly increased its purchases of Brazilian soy,
iron ore, and steel in recent years, becoming Brazil's principal export market and an
important source of investment.
Other Aspects
Agriculture
Agriculture is a major sector of the Brazilian economy, and is key for economic growth and
foreign exchange. Agriculture accounts for about 6% of GDP (25% when including
agribusiness) and 36% of Brazilian exports. Brazil enjoyed a positive agricultural trade
balance of $55 billion in 2009. Brazil is the world's largest producer of sugarcane, coffee,
tropical fruits, frozen concentrated orange juice (FCOJ), and has the world's largest
commercial cattle herd (50% larger than that of the U.S.)
Environment, Science, and TechnologyAbout half of Brazil is covered in forests, and Brazil has the majority of the world's largest
rain forest, the Amazon. Brazil is a leader in science and technology in South America and a
global leader in some fields, such as bio fuels, agricultural research, deep-sea oil production,
and remote sensing. Brazil faces serious environmental obstacles in providing potable water
to its citizens and removing and treating their waste water. Brazil is one of the world's leading
producers of hydroelectric power.
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Other Recent Developments
The United States and Brazil signed an Air Services Liberalization Agreement in 2008 that
increased commercial air travel between the two countries. In 2010, they initialled an air
transportation agreement and an air transportation memorandum of understanding that,
when they are signed and enter into force, will continue and expand this process.
Brazil announced in early 2008 the discovery of the Tupi and Carioca oil fields off the coast of
Rio de Janeiro. The oil reserves in these fields are conservatively estimated at between 30
billion and 80 billion barrels, which would put Brazil in the top 10 countries in the world in
reserves. Output from the existing Campos Basin and the discovery of the new fields could
make Brazil a significant oil exporter by 2015.
Foreign Relations
Brazil is a charter member of the United Nations and participates in its specialized agencies.
It has contributed troops to UN peacekeeping efforts in the Middle East, the Democratic
Republic of the Congo, Cyprus, Mozambique, Angola, East Timor, and most recently Haiti.Brazil is currently leading the UN peacekeeping force in Haiti. In 2010-2011, Brazil is
serving as a non-permanent member of the UN Security Council. Prior to this, it had been a
member of the UN Security Council nine times. Brazil is seeking a permanent position on the
Council. As Brazil's domestic economy has grown and diversified, the country has become
increasingly involved in international economic and trade policy discussions. For example,
Brazil was a leader of the G-20 group of nations and in 2009 became a creditor country to the
International Monetary Fund (IMF). The U.S., Western Europe, and Japan are primary
markets for Brazilian exports and sources of foreign lending and investment.
IndustriesBrazil has the second biggest industrial sector in America. Accounting for 28.5 percent of the
GDP, Brazils diverse industries range from automobiles, steel and petrochemicals,
computers, aircraft and consumer durables. Proven mineral resources are extensive. Large
iron ore and manganese reserves are important sources of industrial raw materials and export
earnings. Deposits of nickel, tin, chromites, uranium, bauxite, lead, tungsten, gold, zinc are
exploited. High quality cooking grade required in steel industry is short in supply.
The International Space Station (ISS)
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RUSSIA
Introduction
The economy ofRussiais the eleventh largest economy in the world by nominal value and
the sixth largest by purchasing power parity (PPP). Russia has an abundance of natural gas,
oil, coal, and precious metals. It is also rich in agriculture. Russia has undergone significant
changes since the collapse of the Soviet Union, moving from a centrally planned economy to
a more market-based and globally integrated economy. Economic reforms in the 1990s
privatized most industry, with notable exceptions in the energy and defence-related sectors..
As of 2011, Russia's capital, Moscow, now has the highest billionaire population of any city
in the world.
In late 2008 and early 2009, Russia experienced the first recession after 10 years of rising
economy, until the stable growth resumed in late 2009 and 2010. Despite the deep but brief
recession, the economy has not been as seriously affected by the global financial
crisis compared to much of Europe, largely because of the integration of short-term
macroeconomic policies that helped the economy survive.
Economy
The Russian economy underwent tremendous stress in the 1990s as it moved from a centrally
planned economy to a free market system. Difficulties in implementing fiscal reforms aimed
at raising government revenues and a dependence on short-term borrowing to finance budget
deficits led to a serious financial crisis in 1998. The result was a rapid and steep decline
(60%) in the value of the rubble, flight of foreign investment, delayed payments on sovereign
and private debts, a breakdown of commercial transactions through the banking system, and
the threat of runaway inflation.
The Russian economy bounced back quickly from the 1998 crisis and enjoyed over 9 years of
sustained growth averaging about 7% due to a devalued rubble, implementation of key
economic reforms (tax, banking, labour and land codes), tight fiscal policy, and favourable
commodities prices. Household consumption and fixed capital investments both grew by
about 10% per year during this period and replaced net exports as the main drivers of
demand. Inflation and exchange rates stabilized due to a prudent fiscal policy (Russia ran abudget surplus from 2001-2008). Foreign exchange reserves grew to almost $600 billion by
mid-2008, the third-largest in the world, of which more than $200 billion were classified as
stabilization funds designed to shelter the budget from commodity price shocks. The global
economic crisis hit Russia hard, starting with heavy capital flight in September 2008, which
caused a crisis in its stock market. Several high-profile business disputes earlier in 2008
drove capital out of Russia. By mid-September, Russias stock market had collapsed, as
businesses sold shares to raise collateral for margin calls required by international lending
institutions. As the global financial crisis gathered steam in the fall of 2008, the
accompanying steep fall in global demand, commodity prices, and tightening of credit served
to almost bring Russias economic growth to a halt in the fourth quarter of 2008, to 1.1%
http://en.wikipedia.org/wiki/Russiahttp://en.wikipedia.org/wiki/Russiahttp://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)http://en.wikipedia.org/wiki/Purchasing_power_parityhttp://en.wikipedia.org/wiki/Soviet_Unionhttp://en.wikipedia.org/wiki/Planned_economyhttp://en.wikipedia.org/wiki/Market_economyhttp://en.wikipedia.org/wiki/Globalizationhttp://en.wikipedia.org/wiki/Global_financial_crisishttp://en.wikipedia.org/wiki/Global_financial_crisishttp://en.wikipedia.org/wiki/Global_financial_crisishttp://en.wikipedia.org/wiki/Global_financial_crisishttp://en.wikipedia.org/wiki/Globalizationhttp://en.wikipedia.org/wiki/Market_economyhttp://en.wikipedia.org/wiki/Planned_economyhttp://en.wikipedia.org/wiki/Soviet_Unionhttp://en.wikipedia.org/wiki/Purchasing_power_parityhttp://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)http://en.wikipedia.org/wiki/Russia -
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down from 9.5% during the same period in 2007. The Central Bank of Russia responded by
pumping liquidity into Russian banks, which helped avert a banking crisis. At the same time,
the government attempted a managed devaluation, which successfully avoided a run on the
rubble and bank deposits but at the cost of a steep decline in foreign exchange reserves to
$387 billion by mid-February 2009. By 2010, however, the Russian economy had begun amodest recovery, bolstered by government anti-crisis policies, the global rebound, and a rise
in oil prices. Russias leaders put renewed emphasis on promoting innovation as key to
economic modernization as well as on the need to diversify the economy away from oil and
gas.
Trade Policy
After hitting lows in 2009, trade between the U.S. and Russia grew to $31.7 billion in 2010,
an increase of 35% from 2009. U.S. imports from Russia grew 41% year over year to $25.7
billion while exports to Russia increased just 13% to $6.0 billion. Russia is currently the
32nd-largest export market for U.S. goods. Russian exports to the U.S. were fuel oil,
inorganic chemicals, aluminium, and precious stones. U.S. exports to Russia were machinery,
vehicles, meat (mostly poultry), aircraft, electrical equipment, and high-tech products.
Russia's overall trade surplus in 2009 was approximately $100 billion--compared with $180
billion in 2008 and $129 billion in 2007--a reflection of the slower growth in exports and
severe contraction of imports. World prices continue to have a major effect on export
performance, since commodities--particularly oil, natural gas, metals, and timber--comprise
nearly 90% of Russian exports. Russian GDP growth and the surplus/deficit in the RussianFederation state budget are closely linked to world oil prices.
Other factors
Industry
Russia is one of the most industrialized of the former Soviet republics. However, years of
very low investment have left much of Russian industry antiquated and highly inefficient.
Besides its resource-based industries, it has developed large manufacturing capacities,
notably in metals, food products, and transport equipment. Russia is now the world's third-
largest exporter of steel and primary aluminium. Russia inherited most of the defence
industrial base of the Soviet Union, so armaments remain an important export category for
Russia. Efforts have been made with varying success over the past few years to convert
defence industries to civilian use, and the Russian Government is engaged in an ongoing
process to privatize many of the state-owned enterprises.
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Agriculture
Russia has relatively little area for agriculture, but given its massive expanses, the country
still accounts for about 9% of the world's arable land. Grain production for export is
concentrated in the south of European Russia. Poultry production has rebounded and is risingat 17% per year. Small plots averaging one acre in size, urban and suburban gardens, and
gardening cooperatives produce over half of Russia's food output. Former state and collective
farms have been largely privatized, but management quality is uneven and profitability is
highly dependent on proximity to major urban markets. Foreigners are not allowed to own
farmland, although long-term leases are permitted.
Gross Domestic Product
Tighter credit, collapsing global demand, global uncertainty, and rising unemployment hurt
investment and consumption, and led Russia to have -7.9% GDP growth in 2009--a sharp
contrast to the pre-crisis performance of 8.1% in 2007. However, 2010 saw Russias
economy return to growth with a 3.8% increase in GDP. Russias Economic Development
Ministry predicts that the nations GDP will grow 4.2% in 2011.
Investment/Banking
Foreign direct investment (FDI) in 2009 fell to less than $40 billion after reaching an all-time
high of $75 billion in 2008. Much of the FDI in recent years was Russian capital returning
home, from havens like Cyprus and Gibraltar, and these flows reversed during the economic
downturn. Moreover, although the annual flow of FDI into Russia was in line with those of
China, India, and Brazil, Russia's per capita cumulative FDI lagged far behind such countries
as Hungary, Poland, and the Czech Republic. Most foreign mergers and acquisitions in 2009
were in the politically sensitive energy sector, largely because of the huge capital
requirements required relative to other sectors. By the end of 2010, analysts predicted that the
total FDI for the year would again top $40 billion, but not reach the levels seen in 2008.
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INDIA
Introduction
The Economy of India is the ninth largest in the world by nominal GDP and the third
largest by purchasing power parity (PPP). The countrys per (PPP) is $3,339 (IMF, 129th) in
2010. Following strong economic reforms from the post-independence socialist economy, the
country's economic growth progressed at a rapid pace, as free market principles were initiated
in 1991 for international competition and foreign investment. Despite fast economic growth
India continues to face massive income inequalities, high unemployment and malnutrition.
Since 1991, continuing economic liberalisation has moved the country towards a market-
based economy. A revival of economic reforms and better economic policy in first decade of
the 21st century accelerated India's economic growth rate. In recent years, Indian cities have
continued to liberalise business regulations. By 2008, India had established itself as the
world's second-fastest growing major economy.
Major industries include telecommunications, textiles, chemicals, food processing, steel,
transportation equipment, cement, mining, petroleum, machinery, information technology-
enabled services and pharmaceuticals. The labour force totals 500 million workers. Major
agricultural products include rice, wheat, oilseed, cotton, jute, tea, sugarcane, potatoes,
cattle, water buffalo, sheep, goats, poultry and fish. In 2009-2010, India's top five trading
partners are United Arab Emirates, China, United States, Saudi Arabia and Germany.
Economy
India has fared the global financial crisis remarkably well. Despite the 2008-2009 downturns,
the government expects the annual GDP growth to return to around 9%. India's population is
estimated at more than 1.1 billion and is growing at 1.55% a year. It has the world's 12th
largest economy--and the third largest in Asia behind Japan and China. Services, industry,
and agriculture account for 54%, 29%, and 18% of GDP respectively. India is capitalizing on
its large numbers of well-educated people skilled in the English language to become a major
exporter of software services and software workers, but more than half of the population
depends on agriculture for its livelihood. 700 million Indians live on $2 per day or less, but
there is a large and growing middle class of more than 50 million Indians with disposable
income ranging from 200,000 to 1,000,000 rupees per year ($4,166-$20,833). Estimates are
that the middle class will grow ten-fold by 2025.
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Growth for the fiscal year ending March 31, 2009 was initially expected to be between 8.5-
9.0%, but has been revised downward by a number of economists to 7.0% or less because of
the financial crisis and resulting global economic slowdown. Foreign portfolio and direct
investment inflows have risen significantly in recent years. They contributed to the
$283.5 billion in foreign exchange reserves by December 2009. Government receipts from the
34-day 3G auction were $14.6 billion.
Economic growth is constrained by inadequate infrastructure, a cumbersome bureaucracy,
corruption, labour market rigidities, regulatory and foreign investment controls, the
"reservation" of key products for small-scale industries, and high fiscal deficits. Also, the tax
structure is complex, with compounding effects of various taxes.
U.S.-India bilateral merchandise trade in 2008 topped nearly $50 billion. Principal U.S.
exports are diagnostic or lab reagents, aircraft and parts, advanced machinery, cotton,
fertilizers, ferrous waste/scrap metal, and computer hardware. Major U.S. imports from India
include textiles and ready-made garments, Internet-enabled services, agricultural and relatedproducts, gems and jewellery, leather products, and chemicals. The rapidly growing software
sector is boosting service exports and modernizing India's economy.
The United States is India's largest investment partner, with a 13% share.. Automatic
approvals are available for investments involving up to 100% foreign equity, depending on
the kind of industry. Foreign investment is particularly sought after in power generation,
telecommunications, ports, roads, petroleum exploration/processing, and mining.
India's external debt was nearly $230 billion by the end of 2008, up from $126 billion in
2005-2006. Foreign assistance was approximately $3 billion in 2006-2007, with the United
States providing about $126 million in development assistance. The World Bank plans to
double aid to India to almost $3 billion a year, with focus on infrastructure, education, health,
and rural livelihoods
Trade and investment
Global trade
India is a founding-member ofGeneral Agreement on Tariffs and Trade (GATT) since 1947
and its successor, the WTO. While participating actively in its general council meetings,
India has been crucial in voicing the concerns of the developing world. For instance, India
has continued its opposition to the inclusion of such matters as labour and environment issues
and other trade into the WTO policies. Since liberalisation, the value of India's international
trade has increased sharply.
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Foreign direct investment
India is a preferred destination for FDI. India has strengths in telecommunication,
information technology and other significant areas such as auto components, chemicals,
apparels, pharmaceuticals, and jewellery. Despite a surge in foreign investments, rigid FDI
policies were a significant hindrance. However, due to positive economic reforms aimed atderegulating the economy and stimulating foreign investment, India has positioned itself as
one of the front-runners of the rapidly growing Asia-Pacific region. India has a large pool of
skilled managerial and technical expertise. The size of the middle-class population stands at
300 million and represents a growing consumer market.
Other Aspects
Agriculture
India ranks second worldwide in farm output. Agriculture and allied sectorslike forestry, logging and fishing accounted for 15.7% of the GDP in 200910, employed
52.1% of the total workforce, and despite a steady decline of its share in the GDP, is still the
largest economic sector and a significant piece of the overall socio-economic development of
India. India is the largest producer in the world of milk, jute and pulses, and also has the
world's second largest cattle population with 175 million animals in 2008. It is the second
largest producer of rice, wheat, sugarcane, cotton and groundnuts, as well as the second
largest fruit and vegetable producer, accounting for 10.9% and 8.6% of the world fruit and
vegetable production respectively. India is also the second largest producer and the largest
consumer of silk in the world.
Foreign Relations
India's size, population, and strategic location give it a prominent voice in international
affairs and its growing economic strength, military prowess, and scientific and technical
capacity give it added weight. India is now strengthening its political and commercial ties
with the United States, Japan, the European Union, Iran, China, and the Association of
Southeast Asian Nations. India is an active member of the South Asian Association for
Regional Cooperation (SAARC).
Government
According to its constitution, India is a "sovereign, socialist, secular, democratic republic."
Like the United States, India has a federal form of government. However, the central
government in India has greater power in relation to its states, and has adopted a British-style
parliamentary system.
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India 2020:
Positive views:
Indias GDP in 2020 will be around $3 trillion at todays prices and exchange rates.
In global rankingsIndia will have become bigger than Russia and Brazil (two of the BRIC
economies), and should also overtake Canada and Spain.
Airbus, has said that Indias will be the fastest growing aviation market in the next 20 years.
India will also be the fifth or sixth largest maker of, as well as market for, cars. And since
India by the end of the coming decade will account for 10 to 12 per cent of world economic
growth, the country will become a gigantic magnet for the worlds companies that will come
to do business.
Nevertheless, expect sustained improvement in Indias socio-economic indicatorslikea halving of the percentage of people below whichever poverty line you choose, a literacy
rate by 2020 of 80 per cent (close to todays world average of 84 per cent), and life
expectancy finally crossing the 70-year mark, perhaps even approaching 75 years.
With many of these changes and greater urbanisationmore than a third of the people
should be living in towns and cities in 2020politics can be expected to undergo a
change, for the better. Citizens will be less concerned about voting their caste; instead, they
will cast their vote for the politicians who they think are more likely to provide them with
electricity, water, good public transport and clean air.
Counter Views
The advent of scale change in India will create turmoil in global markets. If Indias oil
demands more than doubles over the next 10 years, oil producers will have to deliver an extra
9 million barrels of oil per day to feed the extra demand from just these two countries. Since
the total increase in world oil production in the last three decades was barely 9 mbd, oil prices
catch fire at some point in the next few years.
Its going to be a disruptive decade ahead for other markets too: in metals, energy and even
agro-commodities, as Indian demand starts looking more like what Chinese demand has been
in the recent past. If this explains why China has been busy in a one-country race to grab the
worlds resources, wherever they may be, perhapsit is time India took the natural resource
game a little more seriously.
As the domestic market grows, domestic manufacture cannot be far behind. The problem, of
course, is that in the age of climate change, this becomes highly problematic. More
immediately, expect bitter battles over land. The harsh fact is that India has 350 people per
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square kilometresomething like eight or 10 times the global average. By the end of the
decade, it could be 400 people per sq km. typically, then, if a large industrial project or power
plant wants 5,000 hectares of land (or 50 sq km), it could displace as many as 20,000 people.
Less, if the land is in an under-populated area, but still substantial.
Conclusion
One could argue that all countries go through such phasesand that this is a stage through
which India too is passing before market regulation, political oversight and the institutions of
governance improve and become more effective. That positive outcome is possible, of
course, but has to be worked for and will not happen automatically. Indian democracy haswithstood the test of poverty. It now has to demonstrate that it can withstand the test of
growing prosperity.
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CHINA
Introduction
The People's Republic of China ranks since 2010 as the world's second largest economy after
the United States. It is one of the world's fastest-growing major economies, with consistentgrowth rates of 5% - 15% over the past 30 years. China is also the largest exporter and
second largest importer of goods in the world. China became the world's top manufacturer in
2011, surpassing Germany.
China, together with other emerging economies such as (Botswana) it has also sustained a
healthy average growth rates of over 6% per annum for several decades, China's rapid-fire
growth is as longer-lived as the Japanese counterpart in the 60's to 80's and is not showing
signs of slowing. In China, as in other developing countries and emerging economies, growth
has occurred across a vast population (nearly 1.3 billion), thus, liberating millions of people
from poverty and unlocking massive segments of demand. In 2004, China accounted for 12%
of the world's total energy consumption and 15% of total fresh water consumption. It
consumed 50% of the world's production ofcement.
China launched its Economic Stimulus Plan to specifically deal with the Global financial
crisis of 20082009. It has primarily focused on increasing affordable housing, easing credit
restrictions for mortgage and SMEs, lower taxes such as those on real estate sales and
commodities, pumping more public investment into infrastructure development, such as the
rail network, roads and ports. By the end of 2009 it appeared that the Chinese economy was
showing signs of recovery. At the 2009 Economic Work Conference in December 'managing
inflation expectations' was added to the list of economic objectives, suggesting a strong
economic upturn and a desire to take steps to manage it.
In 2010, China's GDP was valued at $5.87 trillion, surpassed Japan's $5.47 trillion, and
became the world's second largest economy after the U.S. China could become the world's
largest economy (by nominal GDP) sometime as early as 2020. China is the largest creditor
nation in the world and owns approximately 20.8% of all foreign-owned US Treasury
securities.
Trade
The U.S. trade deficit with China fell by 15.4% in 2009 to $227 billion. The top three U.S.
exports to China in 2008 were electrical machinery ($9.5 billion), oil seeds and related
products ($9.3 billion), and nuclear reactors and related machinery ($8.4 billion
China is now one of the most important markets for U.S. exports in 2009; those percentages
were down far less than U.S. exports to other major trading partners in the year following the
global financial crisis. U.S. agricultural exports continue to play a major role in bilateral
trade, totalling $12.2 billion in 2009 and thus making China the United States' fourth-largestagricultural export market.
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Export growth continues to play an important role in China's rapid economic growth. To
increase exports, China has pursued policies such as fostering the rapid development of
foreign-invested factories, which assemble imported components into consumer goods for
export, and liberalizing trading rights.
Other Aspects
Agriculture
China is the world's most populous country and one of the largest producers and consumers
of agricultural products. Almost 40% of China's labour force is engaged in agriculture, even
though only 13.5% of the land is suitable for cultivation and agriculture contributes only 11%
of China's GDP. China is among the world's largest producers of rice, corn, wheat, soybeans,
vegetables, tea, and pork. Major non-food crops include cotton, other fibres, and oilseeds.
China hopes to further increase agricultural production through improved plant stocks,
fertilizers, and technology.
Industry
Industry and construction account for about 48.6% of China's GDP. Major industries are
mining and ore processing; iron; steel; aluminium; coal, machinery; textiles and apparel;
armaments; petroleum; cement; chemicals; fertilizers; consumer products including footwear,
toys, and electronics; automobiles and other transportation equipment including rail cars and
locomotives, ships, and aircraft; telecommunications equipment; commercial space launchvehicles; and satellites. China has become a preferred destination for the relocation of global
manufacturing facilities. Its strength as an export platform has contributed to incomes and
employment in China. In recent years, authorities have been giving greater attention to the
management of state assets--both in the financial market as well as among state-owned-
enterprises--and progress has been noteworthy.
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Science and Technology
Science and technology have always preoccupied China's leaders; indeed, China's political
leadership comes almost exclusively from technical backgrounds and has a high regard for
science. Chinese science strategists see China's greatest opportunities in newly emerging
fields such as biotechnology and computers, where there is still a chance for China to becomea significant player. Most Chinese students who went abroad have not returned, but they have
built a dense network of trans-Pacific contacts that will greatly facilitate U.S.-China scientific
cooperation in coming years. The U.S. space program is often held up as the standard of
scientific modernity in China. Chinas small but growing space program, which successfully
completed its third manned orbit in September 2008, is a focus of national pride.
The U.S.-China Science and Technology Agreement remains the framework for bilateral
cooperation in this field. A 5-year agreement to extend the Science and Technology
Agreement was signed in April 2006. The agreement is among the longest-standing U.S.-
China accords, and includes over 11 U.S. Federal agencies and numerous branches that
participate in cooperative exchanges under the Science and Technology Agreement and its
nearly 60 protocols, memoranda of understanding, agreements, and annexes. The agreement
covers cooperation in areas such as marine conservation, renewable energy, and health..
Energy
Driven by strong economic growth, China's demand for energy is surging rapidly. China is
the world's largest energy consumer and the world's third-largest net importer of crude oil,
after the United States and Japan. China is also the second-largest energy producer in the
world, after the United States. China's electricity consumption is expected to grow by over
4% a year through 2030, which will require more than $2 trillion in electricity infrastructure
investment to meet the demand. In 2009, China led the world in clean energy investment with
$34.6 billion and has installed renewable energy capacity of 52.5 gigawatts (GW), second in
the world behind the United States.
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Coal continues to make up the bulk of China's energy consumption (70% in 2008), and China
is the largest producer and consumer of coal in the world. As China's economy continues to
grow, China's coal demand is projected to rise significantly.. China's continued and
increasing reliance on coal as a power source has contributed significantly to China's
emergence as the world's largest emitter of acid rain-causing sulfur dioxide and green housegases, including carbon dioxide.
In July 2009, during the U.S.-China Strategic and Economic Dialogue, the two countries
negotiated a Memorandum of Understanding (MOU) to Enhance Cooperation on Climate
Change, Energy, and the Environment in order to expand and enhance cooperation between
the two sides on clean and efficient energy, to protect the environment, and to ensure energy
security. The two sides also signed an MOU on Cooperation on Energy Efficiency in
Buildings.
Foreign Investment
China is one of the leading FDI recipients in the world, receiving over $108 billion in 2008
according to the Chinese Ministry of Commerce. Foreign-invested enterprises produce about
half of China's exports, and China continues to attract large investment inflows. Foreign
exchange reserves were $2.39 trillion at the end of 2009, and have now surpassed those of
Japan, making China's foreign exchange reserves the largest in the world. China's outboundforeign direct investment has also surged in recent years, reaching $52 billion in 2008.
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Key national projects
The "West-to-East Electricity Transmission," the "West-to-East Gas Transmission," and the
"SouthNorth Water Transfer Project" are the government's three key strategic projects,
aimed at realigning overall economic development and achieving rational distribution of
national resources across China.
Recently, the longest sea bridge of the world was built connecting the ends of the Jiaozhou
Bay. The 42.5-km span stretches across the wide blue waters of Jiaozhou Bay and connects
the booming northern port city of Qingdao with an airport built on a nearby island and the
industrial suburb of Huangdao. A total of 450,000 tons of steel was used in the construction -
enough for almost 65 Eiffel Towers - and 2.3 million cubic metres of concrete. Chinese
officials said that the bridge would be strong enough to withstand a magnitude 8 earthquake,
typhoons or the impact of a 300,000-ton ship. The bridge has eclipsed the previous world
record span, the Lake Pontchartrain Causeway in Louisiana, by at least four km. However, itwill be eclipsed in 2016 by another Chinese trestle bridge, which will linking Hong Kong
with Macau and Guangdong province and will be about 50 km long.
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DREAMING WITH THE BRICs: THE PATH TO 2050
The BRIC thesis recognizes that Brazil, Russia, India and China have changed their political
systems to embrace global capitalism. Goldman Sachs predicts that China and India,
respectively, will become the dominant global suppliers ofmanufactured goods and services,while Brazil and Russia will become similarly dominant as suppliers of raw materials. It
should be noted that of the four countries, Brazil remains the only nation that has the capacity
to continue all elements, meaning manufacturing, services, and resource supplying
simultaneously. 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 states currently of"Group of Eight" status. Brazil is dominant in soy and iron ore
while Russia has enormous supplies ofoil and natural gas. Goldman Sachs' thesis thus
documents how commodities, work, technology, and companies have diffused outward from
the United States across the world.
"India's influence on the world economy will be bigger and quicker than implied in our
previously published BRICs research". They noted significant areas of research and
development, and expansion that are happening in the country, which will lead to the
prosperity of the growing middle-class.
India has 10 of the 30 fastest-growing urban areas in the world and, based on current trends,
we estimate a massive 700 million people will move to cities by 2050. This will have
significant implications for demand for urban infrastructure, real estate, and services.
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In the revised 2007 figures, based on increased and sustaining growth, more inflows into
foreign direct investment, Goldman Sachs predicts that "from 2007 to 2020, India's GDP per
capita in US$ terms will quadruple",
China might surpass the US in equity market capitalization terms by 2030 and become the
single largest equity market in the world. By 2020, US GDP might be only slightly larger
than China's GDP. Together, the four BRICs may account for 41% of the world's market
capitalization by 2030,
Based on Forbes report released on March 2011, BRIC countries for the first time have
surpassed Europe in count of billionaires by 301 billionaires or one billionaire ahead over
Europe. It was the significant increase by 108 more billionaires than the previous years.
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FORECASTS
Gross Domestic Product [2050-2006] (US$ billions)
Rank
2050Country 2050 2045 2040 2035 2030 2025 2020 2015 2010
1 China 70,710 57,310 45,022 34,348 25,610 18,437 12,630 8,133 4,667
2United
States38,514 33,904 29,823 26,097 22,817 20,087 17,978 16,194 14,535
3 India 37,668 25,278 16,510 10,514 6,683 4,316 2,848 1,900 1,256
4 Brazil 11,366 8,740 6,631 4,963 3,720 2,831 2,194 1,720 1,346
5 Mexico 9,340 7,204 5,471 4,102 3,068 2,303 1,742 1,327 1,009
6 Russia 8,580 7,420 6,320 5,265 4,265 3,341 2,554 1,900 1,371
7 Indonesia 7,010 4,846 3,286 2,192 1,479 1,033 752 562 419
8 Japan 6,677 6,300 6,042 5,886 5,814 5,570 5,224 4,861 4,604
9United
Kingdom5,133 4,744 4,344 3,937 3,595 3,333 3,101 2,835 2,546
10 Germany 5,024 4,714 4,388 4,048 3,761 3,631 3,519 3,326 3,083
11 Nigeria 4,640 2,870 1,765 1,083 680 445 306 218 158
12 France 4,592 4,227 3,892 3,567 3,306 3,055 2,815 2,577 2,366
13South
Korea4,083 3,562 3,089 2,644 2,241 1,861 1,508 1,305 1,071
14 Turkey 3,943 3,033 2,300 1,716 1,279 965 740 572 440
15 Vietnam 3,607 2,569 1,768 1,169 745 458 273 157 88
16 Canada 3,149 2,849 2,569 2,302 2,061 1,856 1,700 1,549 1,389
17 Philippines 3,010 2,040 1,353 882 582 400 289 215 162
18 Italy 2,950 2,737 2,559 2,444 2,391 2,326 2,444 2,072 1,914
19 Iran 2,663 2,133 1,673 1,273 953 716 544 415 312
20 Egypt 2,602 1,728 1,124 718 467 318 229 171 129
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At World Economic Forum 2011, there are 365 corporate executives from BRIC and other
emerging nations out of 1000 participants. It is a record number of executives from emerging
markets. Nomura Holdings Inc's co-head of global investment banking said that "It's areflection of where economic power and influence is starting to move." The IMF estimates
emerging markets may expand 6.5 percent in 2011, more than double the 2.5 percent rate for
developed countries. BRIC's takeover made record by 22 percent of global deals or increase
by 74 percent in one year and more than quadruple in the last five years
Groups Countries 2050 2045 2040 2035 2030 2025 2020 2015 2010
BRIC
Brazil,
Russia,
India,China
128,324 98,757 74,483 55,090 40,278 28,925 20,226 13,653 8,640
G7
Canada,
France,
Germany,
Italy,
Japan,
United
Kingdom,
USA
66,039 59,475 53,617 48,281 43,745 39,858 36,781 33,414 30,437
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HISTORY
Introduction
Various sources refer to a purported "original" BRIC agreement that predates the Goldman
Sachs thesis. Some of these sources claim that President Vladimir 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 quadrilateral agreements. Evidence of agreements of this type is abundant and is
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, observers 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.
Also, because of the popularity of the Goldman Sachs thesis "BRIC", this term has
sometimes been extended whereby "BRICK" (K for South Korea), "BRIMC" (M for
Mexico), "BRICA" (GCC Arab countriesSaudi Arabia, Qatar, Kuwait, Bahrain, Oman and
the United Arab Emirates) and "BRICET" (including Eastern Europe and Turkey) have
become more generic marketing terms to refer to these emerging markets.
In an August 2010 op-ed, Jim O'Neill of Goldman Sachs argued that Africa could be
considered the next BRIC. Analysts from rival banks have sought to move beyond the BRIC
concept, by introducing their own groupings of emerging markets. Proposals include CIVETs
(Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa), the EAGLES (Emerging
and Growth-Leading Economies) and the 7 per cent Club (which includes those countries
which have averaged economic growth of at least 7 per cent a year).
Enlargement
Pretoria sought BRIC membership over 2010 and the process for formal admission began as
early as August 2010. South Africa was officially admitted as a BRIC nation on December
24, 2010 after being invited by China and the other BRIC countries to join the group. The
capital S in BRICS stands for South Africa. President Jacob Zuma is expected to attend the
BRICS summit in Beijing in April 2011 as a full member. South Africa stands at a unique
position to influence African economic growth and investment. According to Jim ONeillof
Goldman Sachs who originally coined the term, Africa's combined current gross domestic
product is reasonably similar to that of Brazil and Russia, and slightly above that of India.
South Africa is a "gateway" to Southern Africa and Africa in general as the most developed
African country. China is South Africas largest trading partner, and India wants to increase
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commercial ties to Africa. South Africa is also Africas largest economy, but as number 31 in
global GDP economies it is far behind its new partners.
Jim O'Neill expressed surprise when South Africa joined BRIC since South Africa's economy
is a quarter of the size of Russia's (the least economically powerful BRIC nation).He
believed that the potential was there but did not anticipate inclusion of South Africa at thisstage. In the original essay that coined the term, Goldman Sachs did not argue that the BRICs
would organize themselves into an economic bloc, or a formal trading association which this
move signifies.
Marketing
The BRIC term is also used by companies who refer to the four named countries as key to
their emerging markets strategies. By comparison the reduced acronym IC would not beattractive, although the term "Chindia" is often used. The BRIC's study specifically focuses
on large countries, not necessarily the wealthiest or the most productive and was never
intended to be an investment thesis. If investors read the Goldman's research carefully, and
agreed with the conclusions, then they would gain exposure to Asian debt and equity markets
rather than to Latin America. According to estimates provided by the USDA, the wealthiest
regions outside of the G6 in 2015 will be Hong Kong, South Korea and Singapore.
http://en.wikipedia.org/wiki/Jim_O%27Neill_(economist)http://en.wikipedia.org/wiki/Emerging_markethttp://en.wikipedia.org/wiki/Chindiahttp://en.wikipedia.org/wiki/Chindiahttp://en.wikipedia.org/wiki/Latin_Americahttp://en.wikipedia.org/wiki/Hong_Konghttp://en.wikipedia.org/wiki/Singaporehttp://en.wikipedia.org/wiki/Singaporehttp://en.wikipedia.org/wiki/Hong_Konghttp://en.wikipedia.org/wiki/Latin_Americahttp://en.wikipedia.org/wiki/Chindiahttp://en.wikipedia.org/wiki/Emerging_markethttp://en.wikipedia.org/wiki/Jim_O%27Neill_(economist) -
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On the other hand, when the "R" in BRIC is extended beyond Russia and is used as a loose
term to include all of Eastern Europe as well, then the BRIC story becomes more compelling.
At issue are the multiple serious problems which confront Russia (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 rateobscures the fact that the country is wealthier than China or India on a per-capita basis, has a
more developed and global integrated financial system and has an economy potentially more
diverse than the other BRICs due to its raw material and manufacturing potential. Brazil's
stock market, the Bovespa, has gone from approximately 9,000 in September 2002 to over
70,000 in May 2008
Financial diversification
It has been argued that geographic diversification would eventually generate superior risk-
adjusted returns for long-term global investors by reducing overall portfolio risk while
capturing some of the higher rates of return offered by the emerging markets ofAsia, Eastern
Europe and Latin America. By doing so, these institutional investors have contributed to the
financial and economic development of key emerging nations such as Brazil, India, China,
and Russia. For global investors, India and China constitute both large-scale production
platforms and reservoirs of new consumers, whereas Russia is viewed essentially as an
exporter of oil and commodities- Brazil and Latin America being somehow "in the middle".
CriticismA criticism is that the BRIC projections are based on the assumptions that resources are
limitless and endlessly available when needed. In reality, many important resources currently
necessary to sustain economic growth, such as oil, natural gas, coal, other fossil fuels, and
uranium might soon experience a peak in production before enough renewable energy can be
developed and commercialized, which might result in slower economic growth than
anticipated, thus throwing off the projections and their dates. 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 BRIC countries can develop before exceeding the ability of theglobal economy to supply.
Academics and experts have suggested that China is in a league of its own compared to the
other BRIC countries. As David Rothkopfwrote inForeign Policy, "Without China, the
BRICs are just the BRI, a bland, soft cheese that is primarily known for the whine [sic] that
goes with it. China is the muscle of the group and the Chinese know it. They have
effective veto power over any BRIC initiatives because without them, who cares really? They
are the one with the big reserves. They are the biggest potential market. They are
the U.S. partner in the G2 (imagine the coverage a G2 meeting gets vs. a G8 meeting) and the
E2 (no climate deal without them) and so on." Deutsche BankResearch said in a report that"economically, financially and politically, China overshadows and will continue to
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overshadow the other BRICs." It added that China's economy is larger than that of the three
other BRIC economies (Brazil, Russia and India) combined. Moreover, China's exports and
its official forex reserve holdings are more than twice as large as those of the other BRICs
combined. In that perspective, some pension investment experts have argued that China
alone accounts for more than 70% of the combined GDP growth generated by the BRICcountries [from 1999 to 2010]: if there is a BRIC miracle its first and foremost a Chinese
one. The "growth gap" between China and other large emerging economies such as Brazil,
Russia and India can be attributed to a large extent to China's early focus on ambitious
infrastructure projects: while China invested roughly 9% of its GDP on infrastructure in the
1990s and 2000s, most emerging economies invested only 2% to 5% of their GDP. This
considerable spending gap allowed the Chinese economy to grow at near optimal conditions
while many South American and South Asian economies suffered from various development
bottlenecks (poor transportation networks, aging power grids, mediocre schools...).
There are many uncertainties and assumptions in the BRIC thesis that could mean that any orall of these four countries will not live up to their promise. The pre-eminence 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 large-scale disregard for human rights
and democracy could be a problem in the future. Human rights issues do not inform the
foreign policies of these two countries to the same extent as they do the policies of other large
states such as Japan, India, the EU states and the USA. There is also the possibility of conflict
over Taiwan in the case of China and smaller democracies that lie in the vicinity of these two
authoritarian giants will no doubt be affected by human rights issues being relegated to a
lower global priority.
There is also the issue of population growth. The population of Russia has been declining
rapidly in the 1990s and only recently did the Russian government predict the population to
stabilize and grow in 2020. Brazil's and China's populations will begin to decline in several
decades with their demographic windows closing in several decades as well. This may have
implications for those countries' future, for there might be a decrease in the overall labour
force and a negative change in the proportion of workers to retirees.
Brazil's economic potential has been anticipated for decades, but it had until recently
consistently failed to achieve investor expectations. Only in recent years has the country
established a framework of political, economic, and social policies that allowed it to resumeconsistent growth. The result has been solid and paced economic development that rival its
early 70's "miracle years", as reflected in its expanding capital markets, lowest
unemployment rates in decades, and consistent international trade surpluses - that led to the
accumulation of reserves and liquidation of foreign.
Finally, India's relations with its neighbour Pakistan have always been tense. In 1998, there
was a nuclear standoff between Pakistan and India. Border conflicts with Pakistan, mostly
over the long held dispute over Kashmir, have further aggravated any economic ties. This
impedes progress by limiting government finances, increasing social unrest, and limiting
potential domestic economic demand. Factors such as international conflict, civil unrest,
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unwise 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.
Other critics suggest that BRIC is nothing more than a neat acronym for the four largest
emerging market economies, but in economic and political terms nothing else (apart from the
fact that they are all big emerging markets) links the four. Two are manufacturing basedeconomies and big importers (China and India), but two are huge exporters of natural
resources (Brazil and Russia).The Economist, in its special report on Brazil, expressed the
following view: "In some ways Brazil is the steadiest of the BRICs. Unlike China and Russia
it is a full-blooded democracy; unlike India it has no serious disputes with its neighbours. It is
the only BRIC without a nuclear bomb." The Heritage Foundation's "Economic Freedom
Index", which measures factors such as protection of property rights and free trade ranks
Brazil ("moderately free") above the other BRICs. Henry Kissinger has stated that the BRIC
nations have no hope of acting together as a coherent bloc in world affairs, and that any
cooperation will be the result of forces acting on the individual nations.In a not-so-subtle dig critical of the term as nothing more than shorthand for emerging
markets generally, critics have suggested a correlating term, CEMENT (Countries
inEmergingMarketsExcluded byNew Terminology). Whilst they accept there has been
spectacular growth of the BRIC economies, these gains have largely been the result of the
strength of emerging markets generally, and that strength comes through having BRICs and
CEMENT.
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PROPOSED INCLUSIONS
Introduction
Mexico and South Korea are currently the world's 13th and 15th largest by nominal
GDP, just behind the BRIC and G7 economies, while both are experiencing rapid GDP
growth of 5% every year, a figure comparable to Brazil from the original BRICs. While
South Korea was not originally included in the BRICs, recent solid economic growth led to
Goldman Sachs proposing to add Mexico and South Korea to the BRICs, changing the
acronym to BRIMCK, with Jim O'Neill pointing out that Korea is better placed than most
others to realize its potential due to its growth-supportive fundamentals.
A Goldman Sachs paper published later explained why Mexico and South Korea weren't
included in the original BRICs. According to the paper, among the other countries they
looked at, only Mexico and South Korea have the potential to rival the BRICs, but they are
economies that they decided to exclude initially because they looked to them as already more
developed. However, due to the popularity of the Goldman Sachs thesis, "BRIMC" and
"BRICK" are becoming more generic marketing terms to refer to these six countries.
In their paper "BRICs and Beyond", Goldman Sachs stated that "Mexico, the four BRIC
countries and South Korea should not be really thought of as emerging markets in the
classical sense", adding that they are a "critical part of the modern globalised economy" and
"just as central to its functioning as the current G7".
Mexico
Primarily, along with the BRICs, Goldman Sachs argues that the economic potential of
Brazil, Russia, India, Mexico and China is such that they may become (with the USA) the six
most dominant economies by the year 2050. Due to Mexico's rapidly advancing
infrastructure, increasing middle class and rapidly declining poverty rates it is expected to
have a higher GDP per capita than all but three European countries by 2050, this new found
local wealth also contributes to the nation's economy by creating a large domestic consumermarket which in turn creates more jobs.
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OTHER EMERGING ECONOMIES OF THE WORLD
Beyond the BRICs: A broader look at emerging market growth prospects
The rapid growth and increasing global significance of what is called the E7 emerging
economies: the BRIC economies of Brazil, Russia, India and China, plus Mexico, Indonesiaand Turkey have a significant impact on the world economy.
Mexico
The economy ofMexicois the 13th largest in the world in nominal terms and the 11th by
purchasing power parity, according to the World Bank. The economy contains rapidly
developing modern industrial and service sectors, with increasing private ownership. Recent
administrations have expanded competition in ports, railroads,
telecommunications, electricity generation, natural gas distribution and airports, with the aim
of upgrading infrastructure. As an export-oriented economy, more than 90% of Mexican trade
is under free trade agreements (FTAs) with more than 40 countries, including the European
Union, Japan, Israel, and much ofCentral and South America. According to the Forbes
Global 2000 list of the world's largest companies in 2008, Mexico had 16 companies in the
list.
Indonesia
Indonesiais the largest economy in Southeast Asia and is one of the emerging
market economies of the world. The country is also a member ofG-20 major economies.
[10]
Ithas a market economy in which the government plays a significant role by owning more than
164 enterprises and administers prices on several basic goods, including fuel, rice,
and electricity. In the aftermath of the financial and economic crisis that began in mid-1997,
the government took custody of a significant portion of private sector assets through
acquisition ofnonperforming bank loans and corporate assets through the debt restructuring
process. Since 2004, the national economy has recovered and undergone another period of
rapid economic growth.
Turkey
Theeconomy ofTurkeyis largely developed. The country is among the world's leading
producers of agricultural products; textiles; motor vehicles, ships and other transportation
equipment; construction materials; consumer electronics and home appliances. In recent
years, Turkey had a rapidly growing private sector, yet the state still plays a major role
in industry, banking, transport, and communications.
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