What are Brazil, Russia, India and China (BRIC)?
BRIC is an acronym for the developing countries of Brazil, Russia, India and China – countries that are expected to be the future dominant suppliers of manufactured goods, services and raw materials by 2050. China and India will become the main global suppliers of manufactured goods and services, respectively, while Brazil and Russia will also become dominant as suppliers of raw materials. In 2020, South Africa joined the group, now called BRICS.
Key points to remember
- BRIC is an acronym for the economic bloc of countries including Brazil, Russia, India and China.
- In 2020, South Africa joined the BRIC group.
- Economists estimate that these four countries will become dominant suppliers of manufactured goods, services and raw materials by 2050 due to low labor and production costs.
- Critics argue that nations’ raw materials are limitless and growth models ignore the finite nature of fossil fuels, uranium and other critical and highly used resources.
Brazil, Russia, India and China (BRIC)
BRIC growth in world domination
In 1990, the BRIC countries represented 11% of the world’s gross domestic product (GDP). In 2020, this figure reached almost 30%. These figures include a peak in 2020, following a fall in value, surrounding the financial crisis of 2008.
The BRIC countries were originally intended to be the fastest growing market economies according to Jim O’Neill of Goldman Sachs in 2001. Goldman Sachs’ thesis does not claim that these countries are a political alliance, like the Union European Union (EU), or a trade association. Instead, he claims that they have power as an economic bloc. BRIC countries have not announced formal trade agreements, but leaders regularly attend summits together and often act in concert with their mutual interests. It has been postulated that in 2050 these economies would be richer than most of the major economic powers today.
This growth is due to lower labor and production costs in these countries. The initialization of the BRIC expanded to include South Africa as the fifth country in 2020. Many companies also cite the BRIC countries as a source of foreign expansion or foreign direct investment (FDI). Foreign companies are expanding in countries with promising economies to invest in.
Goldman Sachs, who coined the term, also created an investment fund specifically targeted at opportunities in BRIC economies. However, he merged this fund with a larger emerging market fund in 2020 after a slower growth outlook for economies.
Introduction and early writing on BRICs
In O’Neill’s 2001 report, published by Goldman Sachs, he noted that if global GDP were to increase 1.7% in 2002, the BRIC countries would have to grow faster than the G-7. The G-7 is a group of the world’s seven most advanced economies, which include Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
In the document “Building Better Economic BRICs”, O’Neill reviews four scenarios for measuring and projecting GDP, adjusted according to purchasing power parity (PPP). In these scenarios, the nominal GDP assumption for the BRICs drops from the 2001 measure of 8% in US dollars (USD) to 14.2% – or, when converted to PPP rates, from 23.3 % to 27.0%.
In 2003 Dominic Wilson and Roopa Purushothaman wrote a report “Dreaming with BRICs: The Path to 2050”, published again by Goldman Sachs, claiming that by 2050, the BRIC cluster could reach a size larger than the G7 when ‘it is measured in USD. The world’s largest economies would therefore look radically different in four decades, the world’s largest economic powers, in terms of per capita income, no longer being the wealthiest nations.
The work of 2007, BRIC and beyond focused on the growth potential of BRICs, as well as the environmental impact of these growing economies and the sustainability of their growth. The report examined the next 11 (N-11), a term for 11 emerging economies, in relation to the BRIC countries. The study also examined the general ascendancy of new global markets.
O’Neill’s BRIC thesis has been challenged over the years as the economic and geopolitical climate has evolved. Arguments include the notion that the raw materials in the BRIC countries, China, Russia and South Africa are limitless. Critics of growth models say they ignore the limited nature of fossil fuels, uranium and other critical and heavily used resources. It has also been argued that China outpaces the economies of other BRIC members in terms of GDP growth and political power, which puts it in a different category.