What Is Brazil, Russia, India, and China (BRIC)?
BRIC is an acronym for the developing nations of Brazil, Russia, India, and China. They are countries that some believe will be the dominant suppliers of manufactured goods, services, and raw materials by 2050.
China and India will become the world's dominant suppliers of manufactured goods and services. Brazil and Russia will become similarly dominant as suppliers of raw materials.
In 2010, South Africa joined the group and it became known as BRICS.
- BRIC is an acronym that was coined by Goldman Sachs economist Jim O'Neill for the economic bloc of developing countries of Brazil, Russia, India, and China.
- Economists believed that these four nations would become dominant suppliers of manufactured goods, services, and raw material by 2050.
- That dominance would be driven by their low labor and production costs.
- Critics argued that the nations' raw materials were limitless and growth models ignored the finite nature of fossil fuels, uranium, and other critical, heavily used resources.
- The acronym was changed to BRICS in 2010 when South Africa joined the BRIC group.
In 1990, the countries that would become known as BRIC accounted for 11% of global gross domestic product (GDP). By 2014, this figure had risen to nearly 30%. These figures reflect a high in 2010 that followed a plunge in value related to the 2008 financial crisis. In 2010, South Africa was invited to join BRIC, which then became known as BRICS.
In 2001, Goldman Sachs economist Jim O'Neill created the acronym BRIC and projected that the BRIC countries would be the fastest growing market economies. His thesis didn't argue that these countries were a political alliance, such as the European Union (EU), or a formal trading association. Instead, it asserted that they had power as an economic bloc.
The leaders of BRICS countries regularly attend summits together and often act in concert with one another's interests. It has been postulated that by 2050, these economies could be wealthier than most of the current major economic powers. This economic growth would be due to the lower labor and production costs in the BRIC countries.
Many companies also point to the BRICS nations as opportunities for foreign expansion or foreign direct investment (FDI) by other nations. Foreign business expansion happens in countries with promising economies in which to invest.
Goldman Sachs created an investment fund that targeted opportunities in the BRIC economies. However, it merged that fund with a broader emerging markets fund in 2015 following a slowdown in growth prospects for the economies.
Early Views of BRIC
In O'Neill's 2001 report, "Building Better Global Economic BRICs," he noted that while global GDP was set to rise 1.7% in 2002, BRIC nations were forecast to grow more quickly than the G-7. The G-7 is a group of seven countries with the most advanced global economies (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States).
O'Neill ran through four scenarios that measured and projected GDP, adjusted for purchasing power parity (PPP). In these scenarios, the nominal GDP assumption for BRIC rose from the 2001 measurement of 8% in U.S. dollars (USD) to 14.2%, or, when adjusted for PPP, 23.3% to 27.0%.
In 2003, the Goldman Sachs report by Dominic Wilson and Roopa Purushothaman called "Dreaming with BRICs: The Path to 2050," claimed that by 2050, the BRIC cluster could grow larger than the G7 when measured in USD. The world’s most significant economies would, thus, look drastically different in four decades. The largest global economic powers, by income per capita, might no longer be the wealthiest nations.
The 2007 book, BRICs and Beyond focused on BRIC growth potential, along with the environmental impact of these growing economies and the sustainability of their rise. The study considered the BRIC nations in relation to the Next 11 (N-11), another term coined by Jim O'Neill to represent 11 emerging economies. The study also looked at the overall ascendency of new global markets.
The G7 group became the G8 group when Russia joined it in 1998. However, Russia was expelled in 2014 after it annexed Crimea.
Criticism of BRIC
O’Neill’s BRIC thesis has been challenged over the years as the economic and geopolitical climate has shifted. Arguments include the notion that raw materials in BRIC nations China, Russia, and South Africa are limitless.
Those critiquing the growth models say they ignore the finite nature of fossil fuels, uranium, and other critical and heavily used resources. It has also been argued that China outstrips the other BRIC members' economies in GDP growth and political muscle. Thus, it belongs in a different category.
What Is BRICS?
BRICS is an acronym that refers to the developing countries of Brazil, Russia, India, China, and South Africa. It was updated from the original BRIC in 2010, when South Africa was invited to join the group. The group showed great potential for economic growth.
Who Is Jim O'Neill?
Jim O'Neill is a British economist who, when working at Goldman Sachs, coined the term BRIC. It was intended to refer to Brazil, Russia, India, and China. At the time in 2001, O'Neill believed them to be countries with economies that would grow rapidly and ultimately challenge the economic power of the G7 nations.
Is China an Emerging Market?
China is generally considered to be a developing nation. It is developing (rather than developed) despite having one of the largest economies in the world. This is due to, among other things, a relatively low GDP and an economy that depends primarily on agriculture.