BRICs 101
Who they are, where they’re going
& why they matter
Introduction
• BRICs are news-makers
• The fourth BRIC(S) summit was held in March
2012, in New Delhi
• From the summit came
▫ BRICS bank
• This presentation will focus on some basic
information on the various BRIC countries, what
their future looks like and why BRICs are such
newsmakers.
South Africa, a BRIC?
Who they are
A background to BRICs
• Term coined by O’Neill in 2001
• Not homogenous at all
• Powerful group of emerging economies (White,
2012)
▫ 40% of world population
▫ 70% of global GDP growth
▫ Combined GDP of $14 trillion
• Policymakers latched on to the BRICs idea and
held their first summit in 2009
BRICs in the news
BRICs in the news
• “India test-launches Agni-V long range missile” -BBC
News
•
•
•
•
“High end Chinese brands coming soon” –China Daily
“Brazil, the next Fukushima?” - CNN
“Brazil set to cut forest protection” - Nature
“Russian manufacturing grows at fastest pace since
March 2011” - Bloomberg
• “China, Russia sign strategic trade deal” – Asia Times
• “Meat consumption in China now double that in the
United States.” – Earth Policy Institute
Chinese vs. US meat consumption
BRICs at a glance
BRIC growth: 2000-2010
20
15
10
5
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
-5
-10
China
India
Russian Federation
Brazil
World
2009
2010
BRICs at a glance
GDP per capita
2010
World
Russian Federation
India
Brazil
China
0
1000
2000
3000
4000
5000
6000
7000
BRICs at a glance
BRIC populations
2010
1600
1400
1200
1000
800
600
400
200
0
China
Brazil
India
Russian Federation
Where they’re going
Brazil
Brazil
• Large and well-developed agricultural, mining,
manufacturing, and service sectors
• Since 2003: macroeconomic stability
• Two quarters of recession
• 2010: GDP growth reached 7.5%
Brazil
• World’s sixth largest economy in terms of GDP
• High level of income equality declining
• An attractive destination for foreign investors
(CIA, 2012)
• Challenges:
▫ Ease of doing business
▫ Diversification
▫ Infrastructure
Russia
Russia
• From centrally planned to more market-based ,
globally integrated.
• Economic reforms (1990s): privatisation, but
SOEs in energy and defense-related sectors.
• Heavy state interference in private sector.
Russia
• Russia is commodity-driven:
▫ 2011: surpassed Saudi Arabia to become world’s
leading oil producer
▫ Second-largest producer of natural gas
▫ World's largest natural gas reserves
▫ Second-largest global coal reserves
▫ Eighth-largest crude oil reserves
• Vulnerable to boom and bust cycles
Russia
• Very hard hit by 2008 credit crunch
• Growth rebounded in late 2009
• Growth further encouraged by high oil prices in
2011
• Budget deficit reduced, along with
unemployment and inflation
• Growth challenges: corruption, access to capital,
infrastructure, workforce (CIA, 2012)
India
India
• From autarky to open-market economy
• Diverse economy
• Services: major source of economic growth
▫ >50% of output
▫ But only 33% of labour force
▫ IT services is an especially competitive sector
India
• Promising growth (O’Neill, 2007):
▫ Increased productivity
 Openness
 Financial deepening
 Infrastructure investment
• But challenges remain:
▫
▫
▫
▫
▫
Incomplete reforms
Ease of doing business
Environmental degradation
Education
Poverty & inequality.
China
China
• Increasingly market-oriented economy, playing
a major global role
▫ Currently the world's largest exporter.
▫ GDP second only to that of the USA.
• State-owned enterprises still play an important
role (CIA, 2012)
• Strategic planners
▫ Five Year Plans
China
• Good growth:
▫ Human capital
▫ Gradual path to openness
▫ Reform of SOEs
• Economic challenges:
▫
▫
▫
▫
▫
Stimulating domestic demand
Sustaining adequate job growth
Reducing corruption
Environment
Ageing population
China
• Demographics (O’Neil, 2009)
▫ An increasingly ageing population (One-child policy)
▫ Uneven development: coastal provinces more
developed than interior (hukou system)
• Revision of the one-child policy
▫ Slower labour force growth, could be offset by
urbanisation & human capital advances
▫ Ageing population could benefit saving & certain
sectors
▫ Pensions
▫ Unmarried males
China
• Revision of the hukou system
▫ Migration should be facilitated to allocate
resources more efficiently
▫ Other costs of migration: unemployment, job
hunting, living conditions
Why they matter
The world in 2050
2000
•
•
•
•
•
US
Japan
Germany
UK
France
• China
2010
• US
• China
•
•
•
•
Japan
Germany
France
UK
• Italy
• Canada
• Brazil
• Brazil
• India
• Mexico
• Spain
• Italy
• Canada
• Russia
2050
• China
• US
• India
• Japan
• Germany
• UK
• Brazil
•
•
•
•
Mexico
France
Canada
Italy
Other emerging markets to watch
• The Next Eleven (N-11)
• Will BRICS stay BRICS?
▫ BIICs
▫ BRINCS
▫ Do the summits matter?
• The conclusion:
▫ The world is changing, and BRICS (for now) are
important drivers of that change.