bric countries and other emerging economies of the world.docx

7/22/2019 BRIC COUNTRIES AND OTHER EMERGING ECONOMIES OF THE WORLD.docx

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PREFACE

An effort has been made to give an insight into the futuristic economies of the world viz;

BRIC COUNTRIES. 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 4-5

2. Brazila) Introduction

b) Economyc) Trading Policiesd) Other Aspects

6-9

3. Russiaa) Introduction

b) Economyc) Trading policies

d)

Other Aspects

10-12

4. Indiaa) Introduction

b) Economyc) Trading policiesd) Other Aspectse) India 2020

13-17

5. China

a) Introductionb)

Trading policiesc) Other Aspects

18-22

6. Dreaming with the BRICs 23-24

7. Statistics 25

8. Forecast 26-27

9. History

a)

Introductionb) Enlargementc) Financial Diversificationd) Criticism

28-32

10. Proposed Inclusionsa) Introduction

b) Mexicoc) South Koread) United Korea

33-34


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11. Other Emerging Economies Of the World

a) Beyond the BRICsb) Mexicoc) Indonesiad) Turkey

e)

Standards and Poorf) EAGLEg) BEMh) Global Growth Generationi) Six Major Emerging Economies

35-37

12. Conclusion 38

13. Abbreviations 39

14. Bibliography 40


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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 polarworld

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 Pranab Mukherjee 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 Statesposition 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 largestby nominal GDP and eighth

largestby 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 ethanolproduction.

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 largestby 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

largestby 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 growthprogressed at a rapid pace, as free marketprinciples 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.
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/List_of_countries_by_GDP_(PPP)http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capitahttp://en.wikipedia.org/wiki/IMFhttp://en.wikipedia.org/wiki/Economic_growthhttp://en.wikipedia.org/wiki/Free_markethttp://en.wikipedia.org/wiki/Income_in_Indiahttp://en.wikipedia.org/wiki/Economic_liberalisation_in_Indiahttp://en.wikipedia.org/wiki/Market_economyhttp://en.wikipedia.org/wiki/Market_economyhttp://en.wikipedia.org/wiki/Economic_development_in_Indiahttp://en.wikipedia.org/wiki/List_of_countries_by_GDP_(real)_growth_ratehttp://en.wikipedia.org/wiki/Labour_forcehttp://en.wikipedia.org/wiki/Oilseedhttp://en.wikipedia.org/wiki/Water_buffalohttp://en.wikipedia.org/wiki/List_of_the_largest_trading_partners_of_Indiahttp://en.wikipedia.org/wiki/List_of_the_largest_trading_partners_of_Indiahttp://en.wikipedia.org/wiki/List_of_the_largest_trading_partners_of_Indiahttp://en.wikipedia.org/wiki/List_of_the_largest_trading_partners_of_Indiahttp://en.wikipedia.org/wiki/Water_buffalohttp://en.wikipedia.org/wiki/Oilseedhttp://en.wikipedia.org/wiki/Labour_forcehttp://en.wikipedia.org/wiki/List_of_countries_by_GDP_(real)_growth_ratehttp://en.wikipedia.org/wiki/Economic_development_in_Indiahttp://en.wikipedia.org/wiki/Market_economyhttp://en.wikipedia.org/wiki/Market_economyhttp://en.wikipedia.org/wiki/Economic_liberalisation_in_Indiahttp://en.wikipedia.org/wiki/Income_in_Indiahttp://en.wikipedia.org/wiki/Free_markethttp://en.wikipedia.org/wiki/Economic_growthhttp://en.wikipedia.org/wiki/IMFhttp://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capitahttp://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/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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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.
http://en.wikipedia.org/wiki/General_Agreement_on_Tariffs_and_Tradehttp://en.wikipedia.org/wiki/Developing_countryhttp://en.wikipedia.org/wiki/Developing_countryhttp://en.wikipedia.org/wiki/General_Agreement_on_Tariffs_and_Trade


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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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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 exporterand

second largest importerof 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 waterconsumption. 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

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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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STATISTICS(Global Rankings)

Categories Brazil Russia India China

Area 5th 1st 7th 3rd

Population 5th 9th 2nd 1st

Population growth rate 107th 221st 90th 156th

Labour force 5th 7th 2nd 1st

GDP (nominal) 8th 11th 10th 2nd

GDP (PPP) 7th 6th 4th 2nd

GDP (nominal) per capita 55th 54th 137th 95th

GDP (PPP) per capita 71st 51st 127th 93rd

GDP (real) growth rate 15th 88th 5th 6th

Human Development

Index73rd 65th 119th 89th

Exports 18th 11th 16th 1st

Imports 20th 17th 11th 2nd

Current account balance 47th 5th 169th 1st

Received FDI 11th 12th 29th 5th

Foreign exchange reserves 7th 3rd 6th 1st

External debt 28th 24th 26th 23rd

Public debt 47th 122nd 29th 98th

Electricity consumption 9th 4th 5th 2nd

Number of mobile phones 5th 4th 2nd 1st

Number of internet users 5th 7th 4th 1st

Motor vehicle production 6th 19th 7th 1st

Military expenditures 12th 5th 10th 2nd

Active troops 14th 5th 3rd 1st

Rail network 10th 2nd 4th 3rd

Road network4th 8th 3rd 2nd
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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).

EnlargementPretoria 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

theiremerging 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.
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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 forlong-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 powerover 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

overTaiwan 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 Kissingerhas 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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South Korea

South Korea is by far the most highly developed country when compared to the BRICs and

N-11s, with a GDP per capita higher than Italy and Spain. Commentators such as William

Pesek Jr. from Bloomberg argue that Korea is "Another 'BRIC' in Global Wall", suggestingthat it stands out from the Next Eleven economies. By GDP (PPP), South Korea already

overtook a G7 and G8 economy, Canada, in 2009. It then surpassed Spain in 2010 and at

current speed, will take overItalybefore 2018

United Korea

In September 2009, Goldman Sachs published its 188th Global Economics Paper named "A

United Korea?" which highlighted in detail the potential economic power of a United Korea,

which will surpass all current G7 countries except the United States, such as Japan,the United Kingdom, Germany and France within 3040 years of reunification, estimating

GDP to surpass $6 trillion by 2050. The young, skilled labour and large amount of natural

resources from the North combined with advanced technology, infrastructure and large

amount of capital in the South, as well as Korea's strategic location connecting three

economic powers, is likely going to create an economy larger than the bulk of the G7.

According to some opinions, a reunited Korea could occur before 2050, or even between

2010 and 2020. If it occurred, Korean reunification would immediately raise the country's

population to over 70 million.
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bric countries and other emerging economies of the world.docx

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