BRIC Countries: Engines of Economic Growth and Development

The four, large developing BRIC countries (Brazil, Russia, India and China) have the demographic and economic potential to rank among the world’s largest and most influential economies in the 21st century. Together, the four original BRIC countries comprise more than 2.8 billion people or 40 percent of the world’s population, cover over a quarter of the world’s land area over three continents, and account for more than 25 percent of global GDP.

One BRIC, Two BRICs

The BRIC designation was first coined by Jim O’Neil of Goldman Sachs in a 2001 paper titled “The World Needs Better Economic BRICs.” The BRIC countries have since gone on to meet and seek out opportunities for cooperation in trade, investment, infrastructure development and other arenas. China invited South Africa to join the group of BRIC nations in December, 2010 and hosted the third annual BRICs Summit in April, 2011.

BRICs and the World Economy

As early as 2003, Goldman Sachs forecasted that China and India would become the first and third largest economies by 2050, with Brazil and Russia capturing the fifth and sixth spots. From 2000 to 2008, the BRIC countries’ combined share of total world economic output rose from 16 to 22 percent. Together, the BRIC countries accounted for 30 percent of the increase in global output during the period. The rapid economic growth and demographics of China and India are expected to give rise to a large middle class whose consumption would help drive the BRICs’ economic development and expansion of the global economy.

China and the BRIC Countries

To date, the scale of China’s economy and pace of its development has out-distanced those of its BRIC peers. China alone contributed more than half of the BRIC countries’ share and greater than 15 percent of the growth in world economic output from 2000 to 2008.

Science and Technology

The BRIC countries of China, India and Brazil account for much of the dramatic increase in science research investments and scientific publications. Since 2002, global spending on science R&D has increased by 45 percent to more than $1,000 billion (one trillion) U.S. dollars. From 2002 to 2007, China, India and Brazil more than doubled their spending on science research, raising their collective share of global R&D spending from 17 to 24 percent.

Next 11 Emerging Economies

In a nod to the interest in other emerging markets, Goldman Sachs identified another group of economically dynamic and promising developing countries in 2005. The Next 11 consists of a broader group of emerging markets with the potential to play significant roles in the global economy, including: Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico, Nigeria, Pakistan, Philippines, Turkey and Vietnam.

Despite China’s invitation, Goldman Sachs’ O’Neil has long contended that South Africa’s population of 50 million people, a fraction of Russia’s 143 million and China’s 1.34 billion people, is too small for BRIC status. At roughly $285 billion in 2009, South Africa’s economy was less than one quarter that of Russia’s, the smallest of the original BRIC country economies at about $1,232 billion.

Growth Environment Score (GES)

The Growth Environment Score (GES) was introduced by Goldman Sachs in the same paper that identified the Next 11. The GES is an index developed to measure the extent to which structural conditions and policy settings in a country are conducive to transforming the economic potential of the BRICs, Next 11 and other countries into reality.

The GES consists of 13 sub-indices that fall under one of five categories of economic growth determinants:

o Macroeconomic stability – inflation, government deficit and external debt
o Macroeconomic conditions – investment and openness
o Technological capabilities – penetration of phones, PCs and internet
o Human capital – average years of secondary education and life expectancy
o Political conditions – political stability, rule of law and corruption

In the original 2005 version of the GES, the scores for each of the four BRIC countries fell in the top half and above the mean of the rankings for all developing countries.

Source by Jason S Walters