BRIC has become the well-known acronym for Brazil, Russia, India and China.

Economists have determined that these countries could rank among the world's dominant economies by mid century based on gross domestic product. Some important growth factors in these countries are the huge reserves of natural resources and a large and well-qualified work force with relatively low wage levels. A growing consumer demand stimulated by increases in income across broad categories of the large BRIC population is also an important factor. In economics, BRIC (typically rendered as "the BRICs" or "the BRIC countries") is an acronym that refers to the fast-growing developing economies of Brazil, Russia, India, and China. The acronym was first coined and prominently used by Goldman Sachs in 2001 Sachs argued that, since they are developing rapidly, by 2050 the combined economies of the BRICs could eclipse the combined economies of the current richest countries of the world. The four countries, combined, currently account for more than a quarter of the world's land area and more than 40% of the world's population.[4][5] However, there are strong indications that the "four BRIC countries have been seeking to form a 'political club' or 'alliance'", and thereby converting "their growing economic power into greater geopolitical clout".[7][8] On June 16, 2009, the leaders of the BRIC countries held their first summit in Yekaterinburg, and issued a declaration calling for the establishment of a multipolar world order.[9]

Brazil, Russia, India And China - BRIC

Investopedia explains Brazil, Russia, India And China - BRIC The BRIC thesis posits that China and India will become the world's dominant suppliers of manufactured goods and services, respectively, while Brazil and Russia will become similarly dominant as suppliers of raw materials. 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 - but they have the potential to form a powerful economic bloc. BRIC is now also used as a more generic marketing term to refer to these four emerging economies.

Due to lower labor and production costs, many companies also cite BRIC as a source of foreign expansion opportunity.

BRIC: The world's biggest emerging economies 1 Jan 2010, 0222 hrs IST, REUTERS LONDON: The worlds four biggest emerging economies are grabbing growing volumes of global capital flows, with firms and fund managers increasingly viewing BRIC consumer demand as a high-return, relatively safe investment bet. Brazil, Russia, India and China, with 40% of the worlds population, account for about 20% of its gross domestic product, a share Goldman Sachs said will rise to equal that of the G7 industrialised countries as early as 2032. There was a sign this year of the shape of things to come as China overtook the US as the worlds biggest car market. And as incomes of 2.5 billion people steadily rise, companies profits as well as stock markets will feel the effect. No surprise that cash direct investment and portfolio capital is increasingly gravitating to these giants. Fund tracker EPFR Global said BRIC-geared equity funds absorbed almost $20 billion in January to November 2009. This is double 2007 levels and equivalent to 40% of what was taken by emerging stock funds, some of which also went to the BRICs. The trend of BRIC outperformance has been very powerful and should continue as growth is concentrated in these markets, said Martial Godet, who helps manage 37 billion euros in emerging stocks at BNP Paribas Asset Management in Paris. We are betting on the largest, highest-growth markets with the biggest populations and good liquidity levels. To capitalise on BRIC consumer demand, Goldman Sachs suggests investing in a basket of 50 developed market stocks positioned to benefit from the BRICs theme, and one of 50 BRICs companies that are likely to emerge as global market winners. Already, BRICs are outgunning broader emerging stocks the MSCI BRIC index is up 90% in 2009 versus 70% for MSCI EM, with only China lagging. An investment in Brazilian stocks in 2000 would have quadrupled by now while cash put in emerging stocks would merely have doubled. And a buyer of world stocks would have lost money. As monetary policies start to tighten next year, investors on average expect BRIC stocks to rise 20-25% in 2010 after the near triple-digit returns of 2009. But in future the BRICs as the most liquid emerging markets will gain most from higher allocations to emerging markets. Goldman Sachs economist Jim ONeill, who first came up with the BRIC concept, projects the BRICs to comprise almost half global stock markets by 2050 from less than 10% now. He says it is inevitable more cash will move to the BRIC markets. If you think of a GDP-weighted benchmark, it would be considerably higher than the current

MSCI-type ones, ONeill said, referring to indices that use GDP to weight countries. For some asset managers, especially the sovereign wealth funds, this is what they are moving towards. Fund managers say cash will go where growth is or where the value is. With China and India posting the highest growth in the world, and Russia trading at a 40% discount to emerging markets, the bloc should remain an investment magnet. Consumer demand is seen as key to the post-crisis global recovery, and at the heart of the BRIC story is the consumer. This is the main driver behind the surging tide of direct investment into the BRICs which took in 16% of global direct investment flows in 2008. This is a third up from the previous year, a total $265 billion, or over half of what was received by the 16-nation European Union, United Nations agency UNCTAD says. Take Chinas car market, which made headlines earlier this year. With 10 cars per 1,000 Chinese, there is a lot more room for sales growth than the US which has one car for two people. What is happening is a rebalancing of global consumption, away from advanced economies and towards emerging markets, says Goldman Sachs, a process expedited by the shock caused to household wealth and employment by the financial crisis. GS predicts Chinese household consumption to rise 10% in 2010, with Brazilian and Indian demand also up over 5%, while spending in the developed world remains flat. Global corporates have cottoned on. Japanese electronics firm Panasonic for instance said last month it aims for 15-20% annual sales growth in the BRICs to compensate for falling demand from Japans shrinking population. No wonder then that firms are rushing to set up production in the BRICs UNCTADs 20092011 investment outlook survey found all four countries to be in the top five most favoured investment destinations with China topping the list. What investors in BRIC are saying is: we believe in GEM (global emerging markets), but to a great extent, whats happening in GEM is in these four countries, said Alex Tarver, who helps manage $1.9 billion in BRIC stocks at HSBC. It is a microcosm and one thats large enough to drive regional growth.
Economy | 28.08.2009

BRIC nations growing in stature as world order shifts

Groansicht des Bildes mit der Bildunterschrift: Luiz Inacio Lula da Silva has led Brazil to a new world role The upcoming German-Brazilian business summit is the latest indication of how important developing nations are becoming. The recent first summit of the four BRIC nations was a reflection of a newly emerging world order.

When future generations look back at the current financial crisis, they'll almost certainly take notice of an important shift in the balance of world power. Because with wealthy Western nations - and particularly the United States - still reeling from the hits they took, the road has suddenly opened for emerging nations to make a grab for a greater share of economic power, and with it, global influence. For many observers, it's no coincidence that at this critical juncture, the group of emerging nations known under the acronym BRIC (Brazil, Russia, India and China) held their first-ever summit. The acronym was coined in 2001 by an analyst for Goldman Sachs, who argued that by 2050, the combined economies of the BRIC nations would eclipse the combined economies of the current richest countries in the world. The bank never posited that BRIC would organize itself into an economic bloc, although recently there have been signs that the acronym has come to represent much more than was originally intended. "The economic crisis is what pushed them together," said Thomas Renard, a research fellow at Egmont, Royal Institute for International Relations in Brussels. He notes that last March, the BRIC nations issued their first joint communiqu during a G-20 meeting, calling essentially for a "reform of international financial institutions." Still, he maintains that BRIC is far from being a political entity. "The term BRIC wrongly implies that they are actually a bloc in any concrete way," Renard said. "They are more of an informal group within the international forums who meet sometimes to exchange their points of view and who, when they reach common agreement, will defend their position. But while they have many things that unite them, there is also a lot that divides them." Pressing for economic change

Combined, the BRIC countries currently have a 15-percent share of the world economy and a 42percent share of global currency reserves. The countries' leaders have argued that this warrants a greater say in global decisions.

Bildunterschrift: Groansicht des Bildes mit der Bildunterschrift: Some argue BRIC is trying to undermine the dollar's status as a global currency Their increased economic power was underscored recently when Brazil and Russia joined China in announcing they would shift some $70 billion (50 billion euros) of reserves into multicurrency bonds issued by the International Monetary Fund. The move was interpreted by some as an attempt to topple the dollar; in part because the Russian president said at the time that his proposal to create a new world currency could be discussed at the summit. But fiscal experts say that BRIC will tread carefully where the dollar is concerned, as triggering a dollar crisis would be akin to shooting themselves in the foot. "The BRICs are putting the US on notice that there has to be a cutback on spending and that they need to get their house in order," Mark Mobius, emerging markets expert at Templeton Asset Management, told Bloomberg. "Any attack on the dollar will hurt them. But they want to make sure this kind of mess doesn't happen again." Clearly though, BRIC is using its new influence to put pressure on the IMF to reshape its voting structure to better reflect the shift in economic power. Brazil, for example, is the world's 10th largest economy, but has just 1.38 percent of the IMF board's votes, compared to 2.09 percent for Belgium, an economy one-third the size. China as a superpower? China, too, is well-positioned to become a greater actor on the world stage, despite its past preference for playing a supporting role.

Bildunterschrift: Groansicht des Bildes mit der Bildunterschrift: With its booming economy, China has quickly become a global force "China has realized that it might become a global power much faster than it thought," said Renard. "And the US is realizing that now, too. It is treated as a de facto global power by the US, at least with regard to economic matters, with the two countries for all intents and purposes forming a 'G2'." But while the thought of China as a superpower is perceived by many in the West as a threat, Renard says that it's an unfounded fear. "The world today is characterized by interdependence," he said. "Even for China, it's not a time to think about individual gains, rather it's about minimizing the damage that we all suffer." The "rise of the rest" While Renard is certain that the current trend is from a unipolar world to a multipolar one, he says we're unlikely to witness the emergence of a new superpower to rival the US anytime soon. "To be a world power, you need more than money," Renard said. "You need military power and soft powers, such as cultural power. And in these respects, the US is still the leader." Instead, Renard says it's more accurate to talk about bad US policies that have damaged American influence abroad coinciding with the "rise of the rest." The "rest" not only includes new emerging powers, such as the BRIC nations, but also "non-state actors such as transnational organizations like al Qaeda and supranational institutions like the EU, all of which are increasingly challenging American predominance." Author: Deanne Corbett Editor: Rob Mudge