What does 'Brazil, Russia, India And China - BRIC' mean
Brazil, Russia, India and China (BRIC) refer to the idea that China and India will, by 2050, become the world's dominant suppliers of manufactured goods and services, respectively, while Brazil and Russia will become similarly dominant as suppliers of raw materials. Due to lower labor and production costs, many companies also cite BRIC as a source of foreign expansion opportunity, and promising economies in which to invest.
BREAKING DOWN 'Brazil, Russia, India And China - BRIC'
BRIC is an acronym for the economies of Brazil, Russia, India and China combined, originally projected to be the fastest growing market economies by Jim O'Neill of Goldman Sachs first in 2001, but most prominently in a follow up paper published in 2003. It has been speculated that by 2050 these four economies would be wealthier than most of the current major economic powers.
The Goldman Sachs thesis doesn’t argue that these countries are a political alliance (like the European Union) or a formal trading association - but states instead they have the potential to form a powerful economic bloc. The countries haven’t announced any formal trade agreement between them, but leaders of the four countries have attended summits together, and acted in concert with each others interests. BRIC or ‘Big Four’ is now also used as a more generic marketing term to refer to these four emerging economies. Columbia University has established the BRICLab, where foreign, domestic, and financial policies of BRIC members are examined.
Introduction and Early Writing on BRIC
In 2001 Jim O’Niell wrote a report, published by Goldman Sachs noting that Brazil, Russia, India and China’s GDP was set to rise 1.7% in the next year, and then be in a position to continue to grow. In the paper Building Better Economic BRICs O’Niell runs through four scenarios on measuring and projecting GDP adjusted for PPP. In all those scenarios, the nominal GDP assumption for the BRICs rises from the 2001 measurement of 8% in USD, to 14.2%. While weighted heavily by China, the other countries grow relative to G7 countries.
Dominic Wilson and Roopa Purushothaman wrote a report "Dreaming with BRICs: The Path to 2050," once again published by Goldman Sachs making the claim that by 2050 BRIC could grow to a size larger than the G6, and that it’s quite possible that the largest economies in the world by GDP may not be the richest. This set of projections are based on the assumption that policies and institutions are established to help support economic growth, which as the report states, is by no means a guarantee. Given the amount of projected growth – by Wilson and Purushothaman’s measurements up to 300% – even falling somewhat short of the potential growth of any or all members of the BRIC group would still entail a large amount of potential growth. The report shows a projected per capita income for BRIC countries in 2050 that would be lower than G6 countries with the exception of Russia.
The Goldman Sachs global economics exam publish, Growth and Development: The Path to 2050, a 158 page report going highlighting challenges and opportunities for BRIC countries.
Roughly outlined, the report highlights India’s inefficient energy grid and consumption, projects possible growth the number of people living in BRIC countries earning more than $3,000 a year up to 800 million people within a decade. Additionally the report looks at the lack of a substantial presence in global capital markets, and notes the large populations of while per capita income levels will remain lower than industrialized economies, the aggregate wealth of the BRIC countries will exceed that of the G6 partly due to the large populations of the countries.
"BRICs and Beyond" is published by Goldman Sachs, a nearly 300 page report looking again at BRIC growth potential, environmental impact of the growing economies, and sustainability of growth. The report also looks at the Next 11, or N-11, (a term for eleven emerging economies) in relationship to the BRIC nations, and ascendency of new global markets.
BRIC Summits and Political Cooperation
While BRIC has no publicly disclosed formal quadrilateral trade agreement, the heads of state of the BRICS countries have met regularly since 2009 at a yearly summit. The first summit was held in the Russian city of Yekaterinburg in 2009, presidents Luiz Inácio Lula da Silva of Brazil, Hu Jintao of China, Dmitry Medvedev of Russia, and Prime Minister Manmohan Sing of India were all in attendance.
South Africa entered a bid to join the BRIC group in August of 2010 and was eventually invited in December of that same year, and attended the April 2011 summit in the Chinese city of Sanya, effectively changing the name of the group to BRICS.
Criticism of BRICs
While a lot has been made about the enormous potential growth of the BRIC nations, O’Neils thesis has been challenged over the years as the economic and geopolitical climate has shifted. A couple fundamental criticisms of the the investment concept include the idea perceived by some as implicit in the argument for continuous growth by raw material providers that natural resources are limitless. Those critiquing the model of growth say that it ignores the finite nature of fossil fuel, uranium, and other resources.
It’s been argued by Deutsche Bank Research and editorials written in Foreign Policy Magazine that China outstrips the other BRIC members economies by a huge amount, making up 70% GDP growth of the group countries, putting the country in a seemingly different category than other members of BRIC.
Still others have cited human rights issues in China and Russia, as well as Russia’s annexation of Crimea and direct or indirect support of Russian separatist fighters in Ukraine as reason to doubt a fundamental tenants of the BRIC thesis. An editorial written for Reuters and published in 2014 categorized Russia’s belligerency as evidence that globalization is not inevitable, nor is it irreversible.
Criticism aside, as of 2013 combined GDP has outpaced Goldman Sachs expectations by nearly half. The original BRIC theory will continue to evolve as time goes on as some projections fall short and others meet their mark.