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BRICs 2050

BRIC or BRICs are terms used in economies to refer

to the combination of Brazil, Russia, India and China.

There countries are not a political alliance, likeEuropean Union, or a formal trading association, but

they have the potential to form a powerful economic

bloc.

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Demographic factors

Structuralfactors

Unique advantage

Growthfactors

�Mature markets

�Declining reliance on Aid

�Low Fiscal deficits

�Current account surplus and

large fo rex reserves

�Declining central

government¶s consumption

expenditures

�Posit ive change in business

environment

�Brazil ± Commodities and

natural resources

�Russia ± Technology, oil

�India ± Technology, IT& ITES

�China ± Cheap abundant

labour 

�Size of the economies

�Diversity

�Rising middle class

�Low market penetration

�Fastest growing economies

�Biggest source of labour 

�Rising consumption

expenditures

�Trade dependency

�Rising focus on innovation

Global demandpatterns

Income & demographicChanges

Currency

Movements

Economic

GrowthRise of BRICs

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BRICsBrazil

Over the next 50 years, Brazils GDP growth rateaverages 3.6%.

The size of Brazils economy overtakes Italy by2025; France by 2031; UK and Germany by 2036.

Challenges: lack of openness, lower educationlevels, lower savings and investment, higherpublic and foreign debt.

Lower convergence rate at first, then catch-up

with China.Critical issues: Foreign and public debtconstraints; Infrastructure; Openness to trade

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BRICsRussia

By 2050, Russias GDP per capita is by far thehighest of the BRICs.

Demographic dynamics drive GDP per capita

path.Russias economy overtakes Italy in 2018;

France in 2024; UK in 2027 and Germany in2028.

Critical issues: Life after Putin; The Transitionfrom Oil.

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BRICs

India Indias growth rate remains above 5% throughout

the period.

Indias GDP outstrips that of Japan by 2032.

India could raise its income per capita in 2050 to

35 times current levels.

Still, Indias income per capita will be significantly

lower than any of the countries we look at.

Critical issues: Openness; Basic Education; Policy

Coherence.

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BRICsChina

Chinas GDP growth rate falls to 5% in 2020 from its8.1% growth rate projected for 2003.

By the mid-2040s, growth slows to around 3.5%.

Even so, China becomes the worlds largest economy

by 2041. High investment rates, tapers off though projection

period.

Chinas per capita income could be roughly what thedeveloped economies are now (about US$30,000 percapita).

Critical issues: Financial System Reform; PoliticalTransition.

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� The Rise of BRICs would embark upon a shift in global production networks which would lead major changes indemand supply (for example the rise of East Asian

tigers) much of which is already on happening.� The first and foremost impact is going to be on

environment, a global common. Much of this changewould rest upon what BRICs countries choose to do in

near future (for example emission cuts, clean fueltechnology, etc.).

� A shift in Global governance would the other major impact of the rise in BRICs.

�Sustained strong growth in BRICs economies might havesimilar impacts on their major trading partners. The riseof BRICs would be a driving force towards demand

 pricing range of commodities which would open up newopportunities for transnational corporations.

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� Higher growth may lead to higher returns and increased demand

for capital in these markets²and for the means to finance it.

� The pattern of capital flows might move further in their favor and

major currency realignments would take place (Goldman Sachs,

2003).

� Rising exchange rates could contribute a significant amount to the

rise in forex reserves in the BRICs which would further reduce

demand side constraints in balance of payments.

� About 1/3 of the increase in forex reserves would come from

rising currencies, with the other 2/3 from faster growth.

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India scores below the other three BRIC nations, and is currentlyranked 110 out of a set of 181 countries.

If India were able to undertake the necessary reforms, it could raiseits growth potential by as much as 2.8% per annum.

Ten key areas where reform is needed-

� Improve governance

� Raise educational achievement

� Increase quality & quantity of universities

� Control inflation

� Introduce a credible fiscal policy

� Liberalize financial market

� Increase trade with nightbours

� Increase agricultural productivity

� Improve infrastructure

� Improve environmental quality