BRICs 101
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Transcript of BRICs 101
BRICs 101Who 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?
THE BRICsWho 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
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BRIC growth: 2000-2010
China India Russian Federation Brazil World
BRICs at a glance
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Brazil
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Russian Federation
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GDP per capita2010
BRICs at a glance
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BRIC populations2010
THE BRICs 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
THE BRICsWhy they matter
The world in 20502000
• US• Japan• Germany• UK• France• China• Italy• Canada• Brazil • Mexico• Spain
2010
• US• China• Japan• Germany• France• UK• Brazil• Italy• India• 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.