What Is Brazil, Russia, India, and China (BRIC)?
BRIC is an acronym for the developing nations of Brazil, Russia, India, and China – countries believed to be the future dominant suppliers of manufactured goods, services, and raw materials by 2050. 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. As of 2010, South Africa joined the group, which is now referred to as BRICS.
- BRIC is an acronym for the economic bloc of countries consisting of Brazil, Russia, India, and China.
- In 2010, South Africa joined the BRIC group.
- Economists believe these four nations will become dominant suppliers of manufactured goods, services, and raw material by 2050 due to low labor and production costs.
- Critics argue that the nations’ raw materials are limitless and the growth models ignore the finite nature of fossil fuels, uranium, and other critical and heavily used resources.
Brazil, Russia, India and China (BRIC)
BRIC’s Growth in Global Dominance
In 1990, BRIC countries accounted for 11% of global gross domestic product (GDP). By 2014, this figure rose to nearly 30%. These figures include a high in 2010, following a plunge in value, surrounding the 2008 financial crisis.
BRIC countries were originally projected to be the fastest-growing market economies by Jim O’Neill of Goldman Sachs in 2001. The Goldman Sachs thesis does not argue that these countries are a political alliance, like the European Union (EU), or a formal trading association. Instead, it asserts 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 one another’s interests. It has been postulated that by 2050 these economies would be wealthier than most of the current major economic powers.
This growth is due to lower labor and production costs in these countries. The BRIC initialization expanded to include South Africa as the fifth nation in 2010. Many companies also cite BRIC nations as a source of foreign expansion or foreign direct investment (FDI) opportunities. Foreign business expansion happens in countries with promising economies in which to invest.
Goldman Sachs, which coined the term, also created an investment fund especially targeted at opportunities in the BRIC economies. However, it merged that fund with a broader emerging markets fund in 2015 following a slowdown in growth prospects for the economies.
Introduction and Early Writing on BRICs
In O’Neill’s 2001 report, published by Goldman Sachs, he noted while global GDP was set to rise 1.7% in 2002, BRIC nations were forecast to grow more quickly than the G-7. The G-7 are a group of the seven most advanced global economies, which include Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
In the paper “Building Better Economic BRICs,” O’Neill runs through four scenarios for measuring and projecting GDP, adjusted for purchasing power parity (PPP). In these scenarios, the nominal GDP assumption for BRIC rises from the 2001 measurement of 8% in US dollars (USD) to 14.2%—or, when converted at PPP rates, 23.3% to 27.0%.
In 2003, Dominic Wilson and Roopa Purushothaman wrote a report “Dreaming with BRICs: The Path to 2050,” again published by Goldman Sachs, claiming that by 2050 the BRIC cluster could grow to a size larger than the G7 when measured in USD. The world’s most significant economies would, thus, look drastically different in four decades, with the largest global economic powers, by income per capita, no longer being the wealthiest nations.
The 2007 work, BRICs and Beyond focused on BRIC growth potential, along with the environmental impact of these growing economies and the sustainability of their rise. The report considered the Next 11, (N-11), a term for 11 emerging economies, in relation to the BRIC nations. The study also looked at the overall ascendency of new global markets.
Criticism of BRICs
O’Neill’s BRIC thesis has been challenged over the years as the economic and geopolitical climate has shifted. Arguments include the notion that raw materials in BRIC nations China, Russia, and South Africa are limitless. Those critiquing the growth models say they ignore the finite nature of fossil fuels, uranium, and other critical and heavily used resources. It has also been argued that China outstrips the other BRIC members’ economies in GDP growth and political muscle, putting it into a different category.
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