What is Brazil, Russia, India, China And South Africa (BRICS)
Brazil, Russia, India, China and South Africa (BRICS) is an acronym for the combined economies of Brazil, Russia, India, China and South Africa. Economists at Goldman Sachs originally coined the term BRIC (without South Africa) in 2003. Analysts speculated that by 2050 these four economies would be the most dominant. South Africa was added to the list on April 13, 2011 creating "BRICS."
BREAKING DOWN Brazil, Russia, India, China And South Africa (BRICS)
As of 2011, five countries were among the fastest growing emerging markets. It's important to note that the Goldman Sachs thesis isn't that these countries are a political alliance (like the European Union) or a formal trading association. Instead, they have the potential to form a powerful economic bloc. Leaders from BRIC countries regularly attend summits together and often act in concert with each others’ interests.
Today, BRIC is also used as a more generic marketing term to refer to the four original emerging economies. Columbia University established a BRICLab that examines foreign, domestic, and financial policies of BRIC members.
Due to lower labor and production costs, many companies also cite BRICS as a source of foreign expansion opportunity.
Early Development of BRIC Thesis at Goldman Sachs
In 2001, the chairman of Goldman Sachs Asset Management Jim O’Niell noted that while global GDP was set to rise 1.7% in 2002, BRIC nations were forecasted to grow more quickly than the G7, the seven most advanced global economies. At the time the G7 included Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. In O’Niell’s paper "Building Better Economic BRICs" he ran through four scenarios to measure and model out GDP. These were adjusted for purchasing power parity (PPP). In O’Niell’s scenarios, nominal GDP assumption for BRICs rises from the 2001 measurement of 8% in USD, to 14.2% -- or, when converted at PPP rates, 23.3% to 27.0%.
In 2003 Dominic Wilson and Roopa Purushothaman followed up with their report "Dreaming with BRICs: The Path to 2050.” This was again published by Goldman Sachs. Wilson and Purushothaman claimed that by 2050 the BRIC cluster could grow to a size larger than the G7 (in USD), and the world’s largest economies would therefore look drastically different in four decades. I.e. the largest global economic powers no longer would be the richest, according to income per capita.
In 2007 another report, "BRICs and Beyond" was published that centered on BRIC growth potential, along with the environmental impact of these growing economies and the sustainability of their rise. The report considered a Next 11, or N-11 (a term for eleven emerging economies), in relationship to the BRIC nations, as well as the overall ascendency of new global markets.