Transcript BRICS
BRICs 101 Who they are, where they’re going & why they matter Introduction • BRICs are news-makers • The fourth BRIC(S) summit was held in March 2012, in New Delhi • From the summit came ▫ BRICS bank • This presentation will focus on some basic information on the various BRIC countries, what their future looks like and why BRICs are such newsmakers. South Africa, a BRIC? Who they are A background to BRICs • Term coined by O’Neill in 2001 • Not homogenous at all • Powerful group of emerging economies (White, 2012) ▫ 40% of world population ▫ 70% of global GDP growth ▫ Combined GDP of $14 trillion • Policymakers latched on to the BRICs idea and held their first summit in 2009 BRICs in the news BRICs in the news • “India test-launches Agni-V long range missile” -BBC News • • • • “High end Chinese brands coming soon” –China Daily “Brazil, the next Fukushima?” - CNN “Brazil set to cut forest protection” - Nature “Russian manufacturing grows at fastest pace since March 2011” - Bloomberg • “China, Russia sign strategic trade deal” – Asia Times • “Meat consumption in China now double that in the United States.” – Earth Policy Institute Chinese vs. US meat consumption BRICs at a glance BRIC growth: 2000-2010 20 15 10 5 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 -5 -10 China India Russian Federation Brazil World 2009 2010 BRICs at a glance GDP per capita 2010 World Russian Federation India Brazil China 0 1000 2000 3000 4000 5000 6000 7000 BRICs at a glance BRIC populations 2010 1600 1400 1200 1000 800 600 400 200 0 China Brazil India Russian Federation Where they’re going Brazil Brazil • Large and well-developed agricultural, mining, manufacturing, and service sectors • Since 2003: macroeconomic stability • Two quarters of recession • 2010: GDP growth reached 7.5% Brazil • World’s sixth largest economy in terms of GDP • High level of income equality declining • An attractive destination for foreign investors (CIA, 2012) • Challenges: ▫ Ease of doing business ▫ Diversification ▫ Infrastructure Russia Russia • From centrally planned to more market-based , globally integrated. • Economic reforms (1990s): privatisation, but SOEs in energy and defense-related sectors. • Heavy state interference in private sector. Russia • Russia is commodity-driven: ▫ 2011: surpassed Saudi Arabia to become world’s leading oil producer ▫ Second-largest producer of natural gas ▫ World's largest natural gas reserves ▫ Second-largest global coal reserves ▫ Eighth-largest crude oil reserves • Vulnerable to boom and bust cycles Russia • Very hard hit by 2008 credit crunch • Growth rebounded in late 2009 • Growth further encouraged by high oil prices in 2011 • Budget deficit reduced, along with unemployment and inflation • Growth challenges: corruption, access to capital, infrastructure, workforce (CIA, 2012) India India • From autarky to open-market economy • Diverse economy • Services: major source of economic growth ▫ >50% of output ▫ But only 33% of labour force ▫ IT services is an especially competitive sector India • Promising growth (O’Neill, 2007): ▫ Increased productivity Openness Financial deepening Infrastructure investment • But challenges remain: ▫ ▫ ▫ ▫ ▫ Incomplete reforms Ease of doing business Environmental degradation Education Poverty & inequality. China China • Increasingly market-oriented economy, playing a major global role ▫ Currently the world's largest exporter. ▫ GDP second only to that of the USA. • State-owned enterprises still play an important role (CIA, 2012) • Strategic planners ▫ Five Year Plans China • Good growth: ▫ Human capital ▫ Gradual path to openness ▫ Reform of SOEs • Economic challenges: ▫ ▫ ▫ ▫ ▫ Stimulating domestic demand Sustaining adequate job growth Reducing corruption Environment Ageing population China • Demographics (O’Neil, 2009) ▫ An increasingly ageing population (One-child policy) ▫ Uneven development: coastal provinces more developed than interior (hukou system) • Revision of the one-child policy ▫ Slower labour force growth, could be offset by urbanisation & human capital advances ▫ Ageing population could benefit saving & certain sectors ▫ Pensions ▫ Unmarried males China • Revision of the hukou system ▫ Migration should be facilitated to allocate resources more efficiently ▫ Other costs of migration: unemployment, job hunting, living conditions Why they matter The world in 2050 2000 • • • • • US Japan Germany UK France • China 2010 • US • China • • • • Japan Germany France UK • Italy • Canada • Brazil • Brazil • India • Mexico • Spain • Italy • Canada • Russia 2050 • China • US • India • Japan • Germany • UK • Brazil • • • • Mexico France Canada Italy Other emerging markets to watch • The Next Eleven (N-11) • Will BRICS stay BRICS? ▫ BIICs ▫ BRINCS ▫ Do the summits matter? • The conclusion: ▫ The world is changing, and BRICS (for now) are important drivers of that change.