BRIC: Challenging the Western economic dominance
Posted on May 18th, 2011

By Philip Fernando

 BRIC: Brazil, Russia, India and China are the cynosure of the world. The four countries are beginning to be dominant economies. They would equal or surpass USA, Germany, Japan and France as a bloc within the next two decades. The economist who predicted that in 2001 was Jim O’Neill, chief economist for Goldman Sachs, who publicly, and in Goldman’s name got it right. BRIC’s amazing growth as an economic powerhouse by 2020 seemed smack on target.

 BRIC has come into everyday parlance describing the manner investments take hold as financiers and policymakers combine their strengths. It was reported that many financial institutions now run BRIC funds; business schools have launched BRIC courses. In Brazil, Rio de Janeiro organized the first BRIC think-tank this year. The concept is catching on like lightening.

It was standard practice to always look up to USA-Europe axis and its appendages when talking of economic norms. O’Neil has virtually re-drawn a new focal point of reference. The shift is quite discernible. Fundamental forays into thinking in terms of economic strength in areas like planning, investment outlook and assembly of resources impressed O’Neill as he made his forecast.

 The dominant globalization force prevalent for decades with USA setting the pace had taken a tumble. Market forces are not the dominant sacrosanct principles now.

 There is a greater depth of understanding among nations and key players like China and India with Brazil and Russia in their wake able to set the tone.

Paradigm change in the making

O’Neill was quite certain that the time for making the paradigm change would come. A closer examination of the non-Western way of economic policy perspective started to trickle down and soon it was a stream in spate. BRIC countries are poles apart geographically and culturally. Their impact seemed as if they are a bloc.

 They had the largest populations of the world amongst them as they plunged into global markets with great dynamism. They were acting as if they were in unison being governed by one body. Their economic focus jived.

 The achievement of BRIC seemed staggering. China is the world’s second largest and fastest-growing major economy, with average growth rates of 10 percent for the past 30 years. She is also the largest exporter, second largest importer of goods in the world and world’s top manufacturer in 2011, surpassing the United States..

Huge capital inflow to China

The inflow of capital into China is strikingly huge. In 2010, inbound foreign direct investment into China surpassed $100 bn for the first time, and investment overseas by Chinese companies in non-financial sectors totaled $59 billion. The country’s per capita GDP is $7,518 (IMF, 93rd in the world) in 2010.

 The economy of India is the tenth largest in the world by nominal GDP and the fourth largest by purchasing power parity (PPP). The country’s per capita GDP (PPP) is $3,339 (IMF, 129th) in 2010. India has shown amazing agility in pursuing multiple goals of growth and income re-distribution within a democratic setup.

 The economy of Brazil is the world’s seventh largest by nominal GDP and eighth largest by purchasing power parity. Brazil has moderately free markets and an inward-oriented economy. Its economy is the largest in Latin American nations and the second largest in the western hemisphere. Brazil is one of the fastest-growing major economies in the world with an average annual GDP growth rate of over 5 percent.

 The economy of Russia is the eleventh largest economy in the world by nominal value and the sixth largest by purchasing power parity (PPP). Russia is endowed with an abundance of natural gas, oil, coal and precious metals. Russia has undergone significant changes since the collapse of the Soviet Union, moving from a centrally planned economy to a more market-based and globally integrated economy.

Billionaires galore in Moscow

Russia for the first time showed steady economy gains, and partially closed the competitiveness gap with India and China among the BRIC economies. Important steps taken since the 1990s toward fiscal sustainability, as well as measures taken to liberalize and open the economy, have significantly boosted the country’s competitiveness.

 As of 2011, Russia’s capital, Moscow, now has the highest billionaire population of any city in the world. Economic reforms in the 1990s privatized most industry, with notable exceptions in the energy and defence-related sectors. That privatization process, including a much criticized “ƒ”¹…”loans-for-shares’ scheme that turned over major state-owned firms to politically connected “ƒ”¹…”oligarchs’, has left equity ownership highly concentrated.

 Four diverse economic entities are showcasing their strengths in an extraordinary manner.

Leave a Reply

You must be logged in to post a comment.

 

 


Copyright © 2019 LankaWeb.com. All Rights Reserved. Powered by Wordpress