BRIC Economies

The concept of BRICs

The concept of BRIC economies refers to the biggest four emerging economies of the world: Brazil, Russia, India, and China. The term was first used by Jim O’Neill in 2001 in his paper Building Better Global Economic BRICs. [1]

Over the years, the BRIC economies have displayed rapid economic growth so much so that they are the four largest economies outside of the OECD (Organization for Economic Co-operation and Development) as they are the only developing countries with annual Gross Domestic Profits (GDPs) of over $1 trillion. The share of foreign reserves under the control of BRIC economies makes them a significant component of the world economy. Accounting for 40% of the world’s total, all four are among the ten largest accumulators of reserve in the world. [2]


BRICs as a group

Despite willing to act in the world economy as a united group, it is observed that majority of the strength in BRIC is provided by China. China is said to be the leader among the four as it has more GDP than the other three combined. [3] Additionally, China’s growth in comparison to other three has been a lot more vigorous as observed in multiple appraisals done worldwide where in China was always ahead of the other three. Though the four countries are regarded sometimes as one unit, it is also worth noting that on an international scale only Russia and China have a say in world monetary policy and supporting institutions (e.g. IMF, World Bank) nor recognized political clout (e.g. the UN). [4]

Nonetheless, the BRIC countries do have a common agenda, and that is pushing international economic governance towards pluralism. In order to achieve that, they have announced the creation of a development bank to focus on infrastructure and development in emerging markets. This announcement has been perceived to be a direct challenge to the dominance of the World Bank and the IMF. [5]


Current issues

Since the concept of BRIC countries was introduced in 2001, the four nations have only produced encouraging results. However, in the recent years there have also been instances when the growth has lessened due to a two-way damaging effect from the global financial crisis. The strength of the BRIC economies lies in the cheap production costs, labor, and exports. The western consumer is no longer the bulk buyer to these countries which it once was owing to the financial crisis and austerity. On the other hand, the BRIC economies face the trouble of greater production costs on account of increased salaries which further leads to appreciation of the local currency. This reduces the bottom lines of the manufacturers significantly and makes it harder for the emerging markets to live up to their growth model. [6]

The current rate of growth of the BRIC economies is 4 to 6 percentage points below what they used to be in 2007 which was a peak period followed by the global financial crisis. Brazil, India, and Russia have been fighting an ineffective battle with inflation for most of 2013. When it comes to current accounts, Russia and China have surpluses with the rest of the world. However, the Chinese surplus has declined over the years as its government has tried to rebalance its economy. [7]


  4. BRIC Economies and American Foreign Policy by Karthik Narayanaswami – Academic Paper E1897 – Harvard University


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